Come Out On Top – Maximizing The Profits From Your Affiliate Marketing Program

Creating an affiliate marketing program can be an excellent way to boost your company’s revenue, reach, and reputation. A relatively low startup cost can make an affiliate program attractive for most businesses. As long as your affiliates are successful at selling your product, you will make money.
The money you make from your affiliate program isn’t entirely dependent on the skills of your affiliates. Before they even begin selling for you, you need to strike a deal with them. When creating your program, the terms, conditions, and rates you set need to be very carefully considered. The deal you decide on will determine your profit potential. Here are some tips on how to maximize your revenue.
Striking the Right Balance
The scale of the profits of each sale should tip in your favor, but if it tips too far in your favor, you’ll do yourself more harm than good. Keep too much of the profits, and few (if any) affiliates will want to join your program and sell for you. You need to be generous enough to your affiliates that you give them plenty of incentive to sell. Keep in mind that the higher the percentage you make off of each sale, the lower the volume of sales you’ll have to profit from in the first place.

Percentage or Flat Rate Commission?
Most affiliate programs offer a percentage commission, and it’s common to offer 10 to 40 percent. If you sell expensive products, a low percentage could still be a significant payout to your affiliates. But expensive products are harder to sell, and many prefer a smaller payout per sale on more inexpensive products that they can sell more of. Once again, it’s a balancing act, and it will depend on the price of your products. If sales can vary greatly, consider the average sales cost when determining your percentage; your affiliates should have the same figures to base their assessment of the deal off of.
The alternative is to offer a flat rate, and this means your affiliates will have no surprises when it comes to how much they’ll earn off of each referral, which some affiliates prefer. If you really want to attract affiliates, consider offering a choice between a percentage and a flat rate commission.
One-Time or Recurring Commission?
When your affiliates refer a customer to you, will they earn a commission off only their referral’s first purchase, or all future purchases, too? In affiliate marketing, it’s considered most ethical to offer recurring commission, but you can set your own terms. If what you sell is more of a one-time thing (a seminar, a book, etc.), you won’t hurt your profit margin very much by offering recurring commission, and it will attract more affiliates. If there is a higher probability of repeat business, a one-time commission, or a cap on a recurring commission, will give you the bigger advantage.
Open or Closed?
Most affiliate programs are open to anyone who wants to join, but some choose to close to only select or chosen affiliates. Most closed affiliate programs sell expensive, elite products. There is no real profit advantage to a closed program. By running an open affiliate program, you won’t limit its earning potential. Limiting your program to only a few affiliates won’t make your product more exclusive; it will only reach a smaller audience.
In the end, whatever terms you decide on, an affiliate program only stands to make you money. As long as you give your affiliates a piece of the pie worth working for, you’ll always have a win-win situation.
Mey Lau is a marketing strategy expert and writer in tandem with SEOMap.  Check out OmniStar to read more of her work.