How to start an affiliate programme

When you’re starting an affiliate programme, you’ve got a lot of decisions to make.

If you don’t know what an affiliate programme is, you can read my beginner’s guides to Affiliate Marketing over at 18a – there’s one for Merchants (shops – the people looking to drum up business) and one for Affiliates / Publishers (blogs, news sites – the people wanting to earn commission). In a nut shell, affiliate marketing is the process of a publisher sending shoppers / visitors to a merchant’s website, and earning a commission when those visitors buy something from the merchant.

I’ve got a client looking to set up an affiliate programme for their business and in a chat with him on the phone just now, I was asking him so many questions it reminded me of how much there is to consider when starting out!

So – below is just an overview of some of the things you need to consider when starting your own in-house programme (if you’re going via a network, they might help you with some of these decisions):

1) What rate of commission are you going to pay, and will it be tiered?

You need to consider your margins on what you’re selling and you need to decide if you’ll offer different rates of commission (tiered commission) to different affiliates. For example, you might decide that people who send you over a certain amount of sales a month, get a higher commission rate as a thank you / to encourage them to do even better. Have a look at your competitors and see what they’re paying.

2) What will you pay commission on?

You need to be clear with your affiliates as to whether the total amount of the sale which you’re willing to pay commission on includes VAT and any delivery costs.

3) Will you pay repeat commissions?

If your product is any kind of subscription based service / membership / something with recurring charges for your customers, are you offering your affiliates a cut of the initial sign up costs, or of all the costs you ever earn from a customer they send you?

4) How and when will you pay your affiliates?

Do you need to get their address to post them a cheque? Will you only pay them by PayPal? Will it be a BACs run once a month?

5) Will there be a payment threshold?

Related to no. 4 above, will your affiliates need to reach a certain amount before you’ll pay them? This will depend largely on your commission amounts and your internal processes – it might cost you more in administration to pay a small affiliate £1.50 each month than the sale was worth to you! So in that case, it might be that they need to reach £10 before you’ll make the payment.

6) Can their earnings expire?

Some merchants set a payment threshold and then state that their affiliates have to meet that threshold within a certain amount of time. So they might have a time limit of 12 months and a threshold of £100… if I raise £40 of commission within 12 months, I won’t get paid and on the 13th month I’ll start again from £0.    I’d say try to avoid doing this if you can – it’s not popular with affiliates. If you do have to do it, explain why to your affiliates – that it messes up your tax year if it goes over etc.

7) When you will confirm a payment?

If someone orders something from your website, what’s the returns period? If they return the item and get a refund, but you’ve already paid for the commission, are you going to have a problem? Do you need, therefore, to have a 30 day delay between a purchase being made and confirming the conversion to your affiliate? If your product is service based, do you offer any kind of free trial? In which case you won’t want to confirm the transaction until the free trial has ended and you know the money is in the bank.

8) Are you going to have acceptance criteria?

Are you going to have a form on your website where anyone can sign up and be automatically approved? Or are you going to have a vetting process? If so, make a list of what you will need from your affiliates so potential publishers can decide whether they meet your requirements.