Implementing an affiliate program is a low-cost way to promote your business since your affiliate partners do much of the publicity for you. These programs help you and your partners get a stable lead-generation tool, and your affiliates get a commission (or other incentives). For these programs to work well for both parties, you need to discuss the affiliate program terms and conditions upfront. Your terms and conditions should clearly indicate your expectations of affiliates and how they can best promote your brand and generate sales. They can also help set language when you advertise your affiliate program.
Why You Need Terms and Conditions for Your Affiliate Program
Terms and conditions are critical to the affiliate recruitment process. Clearly defining your terms and conditions helps you engage better partners for your affiliate management program. Without them, you are giving your partners permission to market your brand however they want. Your terms and conditions discourage these practices. Not having terms and conditions can open your company up to disputes with your affiliates, loss of revenue, and even lawsuits.
Affiliate marketing is now well established and is subject to FTC regulations. Having terms and conditions in place helps you comply with these regulations. There are many topics you can include in your terms and conditions. Protect yourself by outlining everything you expect of your partners.
What to Include in Your Affiliate Terms and Conditions
Your terms and conditions clearly define how your affiliates can market your product and set up expectations for payments. Use terms and conditions to establish your rules. They should be written clearly and in definitive terms. Don’t use vague language. The terms and conditions will outline what your affiliates need to do to earn commissions and so they know what they are and aren’t allowed to post on behalf of your brand. Include the following information.
Commission Plan & Payout Terms
One of the first questions your affiliates will ask before participating in your program is how much they will make and how often they will be getting paid. Most affiliate programs use commission-based payment terms. Each affiliate is paid a percentage of sales, which can be recorded by link clicks or tracking codes such as coupons.
In this section of your terms and conditions, clearly define the payment structure, including the commission amount (e.g., 15% of each sale excluding taxes and shipping), minimum payout, payment schedule, terms for returned or fraudulent sales, bonuses, and other information related to payments.
As a business owner, you have the right to reject affiliate applicants who don’t fit in with your brand. You might not want to partner with someone whose content doesn’t align with your company’s values and vision.
Explain the specifics, including the kinds of content you find unacceptable and promotional strategies you don’t want your affiliates to use. Perhaps you want to exclude affiliates who promote illegal activities like gambling. If your brand is mainly aimed at families with small children, you might discourage affiliates who promote drinking alcohol and other activities intended for adults.
Putting this information in your enrollment terms helps keep you from sifting through applicants whose materials aren’t a good fit for your brand.
You want your affiliates to promote your brand, but you don’t want them to leverage your brand to compete with you. If your logo and brand name are trademarked, set up clear rules for how affiliates can use them. You can keep affiliates from misspelling your brand and buying misspelled domain names to sell counterfeit products.
A good general approach is to add language that keeps your affiliates from using your trademark without your authorization and prohibits them from modifying it in any way. Adding language in your terms and conditions to protect your trademark keeps people from using it to benefit themselves while bypassing your business.
If there are things you don’t want your affiliates to do as part of their efforts to promote your company, lay it out in the terms and conditions. Some affiliates will use pay per click (PPC) and paid ads to promote their affiliate link, driving traffic and making more commissions. Doing so puts them in direct competition with you. Some brands don’t mind the direct competition, while others choose to restrict these ads.
Others who offer affiliate programs restrict the use of coupons and trademarks. You might not specifically prohibit certain activities but may instead choose to create language regarding using them. If you allow your affiliates to offer coupons but want to cap them at a specific discount, specify it in the terms and conditions.
Suspension or Termination
Not all your affiliates will work out. Sometimes, you may need to terminate a partner. Defining activities that might get them suspended from the program helps you weed out partners during the application process. The following activities are commonly cited as reasons to suspend or terminate an affiliate:
- False or misleading ads
- Failure to disclose the affiliate relationship (which is a violation of FTC rules)
- Misusing intellectual property in your ads
- Conducting fraudulent transactions
You might consider other activities grounds for suspension or termination based on your company and marketing goals for your affiliate program. Determine what you consider unacceptable before writing your terms and conditions, and make sure that all these activities are explicitly stated. Your affiliates should be able to understand them easily.
You can also include general language indicating that either party can terminate the partnership agreement at any time. Detail if or how affiliates will be paid any remaining commissions once their agreement has been terminated.
Link Usage and Tracking
To attract legitimate affiliates, you might include rules and restrictions on how your affiliates can create and display links. Your terms and conditions should consist of information about how sales and commissions will be tracked and reported.
If you offer a back-end dashboard or some kind of management software that affiliates can use to track their sales and commissions, include the information in this section of your terms and conditions. Your affiliates will ask these questions upfront. Clearly stating how sales and commissions are tracked and logged can save you from fraudulent claims by affiliates down the road.
Refunds and Fraudulent Transactions
You may have included language in your payment terms indicating a waiting period before affiliates can be paid their commission. Most companies use these if someone returns their purchase, or the purchase turns out to be fraudulent. Others allow affiliates to keep earned commissions even if a customer returns the project.
You might choose to hold commissions for 15 days to make sure that the sale is final, or you can choose to let your affiliates keep their commission if the customer asks for a refund. Whatever you decide, your affiliates need to know this upfront.
Since affiliate programs are regulated by the FTC, each affiliate is required to include language on their link, letting customers know that it is an affiliated link. Certain states and industries may also have regulations for affiliate programs.
Before setting up your program, look through LeadDyno’s library of resources to see if there are any additional legal requirements that need to be covered in your terms and conditions. If you can’t find what you need in their library, consider meeting with a business lawyer to cover all of your bases.
Summary of Terms
If you have a lot of information in your terms and conditions, your affiliates might not read the whole document before signing it. Including a summary of essential information to make it clear for everyone, even if they don’t read all of the terms and conditions.
In the summary of your Terms and Conditions, briefly describe the acceptable content that affiliates can associate with your brand, the requirements for compliance with FTC regulations, and the behaviors that will lead to termination. Including these terms in the body of the document and again in the summary makes it clear to affiliates what you will expect of them. It is also a good tool for discouraging applicants who won’t be a good fit for your brand.
How We Can Help You
When you’ve set your affiliate marketing goals and have an idea of the kinds of partners you want to recruit, you can start working out the details of your program. Start outlining what you want to cover in your terms and conditions. Then, check out the samples in LeadDyno’s resource library for what you should include in your affiliate program terms and conditions.
Once your terms and conditions are complete, have a professional review them for potential gaps. Then, integrate them with your LeadDyno software. Your terms and conditions can be incorporated into your application process, helping you attract the right affiliates for your brand.
When expectations from your affiliate partnership are indicated upfront, the relationship is more likely to benefit both parties. Your terms and conditions are vital to establishing great relationships with your partners.