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How To Start An Affiliate Program For Your Small Business

January 27, 2020

Written By: Spencer Mecham

Owning a small business can be one of the toughest career paths out there. Small businesses owners are asked to wear a dozen hats, most of which are completely unfamiliar to them.

One of these hats that many small businesses struggle with is marketing. Driving targeted traffic is literally the life blood of any business, but most small business owners have little understanding of how to do this. It’s especially hard when there are quite literally dozens of different ways to drive traffic and generate leads for a business.

The one I want to write about is my personal favorite. It accounts for more than fifty percent of all sales that my business makes, and is extremely risk averse.

It’s called affiliate marketing.

What Is Affiliate Marketing?

I get asked what I do just about every single day. It’s always a hard question because when I say I do affiliate marketing it always brings a new question.

“What is affiliate marketing?”

And I get to decide just how detailed I need to get for them to have a basic understanding of what I do. My answers range from, “I’m basically a marketing agency,” to much more detailed explanations about what affiliate marketing is.

Affiliate marketing at its core is just a partnership between a marketer and a company. The company pays the affiliate marketer when they refer customers to the company. Some companies will pay per lead, and others will only pay per actual customer that signs up and buys the product.

Most companies make it fairly easy to sign up as an affiliate and promote their products. For some it’s as simple as going to their website and signing up in a matter of minutes. Others require an approval process so they can vet who is associating with their business.

Once the affiliate is approved, the company gives them a special link that is unique to them. This link tracks customers as they click and purchase products and then the company pays affiliates based on the data collected from the link.

Here is an example of an affiliate link my affiliates get when they sign up to promote. Notice that at the end of the link their is a question mark and then an affiliate ID. That tells my affiliate software to track anyone who comes in via that link as a referral from that ID.

Payments are typically done as a contractor, meaning there are no legal requirements to provide benefits, healthcare, etc.

The best thing about affiliate marketing though is that everyone wins.

The company wins because they are able to get new customers at a guaranteed rate. Only affiliates that produce results make any money. So the company gets new customers at virtually no risk to them.

The affiliate wins because they are able to utilize their audience and expertise to potentially make way more money then they could if they just worked a regular 9-5 marketing job.  They are paid on results, so the affiliate is incentivized to work hard and they are rewarded when they succeed. They also have a lot of freedom that being an affiliate marketer gives, not to mention they don’t have to deal with all the headaches that owning a product can bring.

And finally the customer wins because they are introduced to a produce that can benefit them that they probably didn’t know about.

Affiliate marketing is a standard practice in both B2B businesses and B2C businesses. I personally am in the B2B space where I help small businesses find softwares that can improve their business. I am able to provide valuable content for free to these business owners and then I get paid when I refer them.

How Do Businesses Benefit?

Affiliate marketing can literally apply to any niche or field of business. I teach multiple courses on affiliate marketing and have students in all kinds of spaces.

While I personally promote B2B products like softwares, I have students that promote digital courses, physical products, agencies, memberships, events, books, and more.

A few years ago Amazon (I think we’ve all heard of them)  announced that more than 40% of their sales came as a result of affiliates. That means that affiliate marketing is more than likely their number one source of traffic and revenue in their business.

For me personally I drive nearly 70% of all my digital course sales from my affiliate program. I’ve also brought tens of thousands of new potential customers to my email list as they are referred to my site and sign up for free offers.

In fact more than 80% of businesses utilize some sort of affiliate program. Virtually every established brand in the world is part of that 80%. Where else can you find a marketing channel that is guaranteed to cost you money only if it brings in money?

Is Affiliate Marketing Right For Your Business?

Now while I love affiliate marketing and do it all day every day, that doesn’t mean it’s right for every business out there. It does have a few cons to consider.

The biggest con most brands find is a loss of control. Once you have affiliates out there promoting your brand you no longer control the messaging or the branding. Obviously you do for your own campaigns and websites, but affiliates sometimes do and say things that can damage a brand.

Most companies that worry about this rectify the problem by being very picky about who they allow to promote their products.  The downside of that is that you now have to spend time picking through applications and choosing the right candidates.

Brands need to be careful to know their numbers as well. If they are not aware of their profit margins they may find themselves paying affiliate more than they can afford to and come to realize they are actually losing money on each customer brought in my affiliates.

That being said, if a company has a firm hand on it’s brand and it’s numbers, it can do incredible things and reach entirely new audiences with a well-run affiliate program.

How To Create An Affiliate Program For Your Business?

Many companies make the mistake of assuming that if they make an affiliate program, affiliates will come. This would be great, but let’s be honest, nothing in life is that easy.

Affiliate marketers need to be incentivized just like anyone else. If 80% of companies have some sort of affiliate program than it is likely that at least one of your competitors is wooing affiliates. Here is how to get started setting up a program that will actually succeed.

Choose A Niche Market

I often talk to companies about who their product should serve and they answer me with “everyone”. Unfortunately this is rarely a good strategy. Instead it is important to do what is called niching down. Essentially this is targeting a very specific group of people. This way you can create your messaging, branding, and affiliate relationships around that group of people.

So for this phase you need to figure out who your product serves best. You can break this down in a million ways. Gender, interest, age, etc. The more narrow you get, the better you can serve that particular group of people, and the easier it will be to connect with affiliate in that niche.

How To Locate Affiliate Marketers

Before you start reaching out to affiliates you need to figure out what your offer is going to be. Remember, you have to incentivize them! They have an audience, and you need their audience. Unfortunately there are a lot of other products they could be promoting and you want them to promote YOU. I get inboxed multiple times every single day asking me to promote someone’s products. The vast majority don’t get picked.

The offers that I pick are both generous in their commissions, and extra-generous for those affiliates that knock it out of the park.

Pictured below is a car I was able to win with one affiliate program. The car is $500 a month and was an incentive if I could get 100 active users to a certain software. The nice thing about incentives like this is you only have to reward them to the very best, but they still incentivize hundreds of other affiliates to work at getting there.

Other offers I love are recurring commissions (meaning if the customer continues to buy things you continue to pay affiliates) and scaled commissions. Scaled commissions are basically where you pay out a low percentage of sales to affiliates that don’t bring in much, and a higher percentage of those that do.

The next step is pretty easy because those influencers that could potentially be your affiliates are already out there making waves online. There are lots of free ways to find them depending on the platform. Almost all social media platforms have softwares out there built around finding the most influential users in each category. Then it’s just a matter of reaching out and introducing incentives in a way that, well, incentivizes.

Create Quality Content That Sells

My favorite affiliate programs all try and make my job as easy as possible. This is done by giving me high-quality content I can use.

Some programs give me access to an image database I can use for social posts. Others give access to free trainings that I can give my audience. Still others give me example emails that I can tweak in a few minutes and send out to my email list.

The point here is that the easier you make it to promote your product, the more likely affiliates will do so.

I give all my affiliates access to banners, email swipes, and as much data as I possibly can. I also have them on a special email list so I can keep them up to date with changes in the company or affiliate program.

Rinse And Repeat

Don’t forget that this is a process. You will need someone that is staying on top of consistently doing all these steps. From creating quality content for your affiliates to use, to reaching out to continually bring aboard new affiliates.

Once you have a good number of promoters in a niche, you can move on to another niche that has problems your products can solve and start the whole process over again.

Appreciate Your Affiliate Marketers

Remember, affiliate marketers are people and people like to be appreciated. I can’t tell you how many times I’ve started to push a product harder just because they sent me a small Christmas package or a Happy Birthday message. Sure it might sound cheesy, but it’s human nature to respond to appreciation with a positive action.

The converse side of this is if affiliates feel ignored, they are much less likely to promote. Even something as simple as weekly updates or monthly little contests and incentives can do a lot. These cost very little from a company perspective, but do a lot to keep your products on the top of the affiliates mind.

And of course the cardinal rule is to always pay your affiliates on time. Once you lose an affiliates trust it will be extremely hard to get it back.


As with everything in life there will be challenges along the way. Affiliates are people and people are not always reliable. You will likely eventually run into some affiliate trying to take advantage of your company in one way or another. This is the nature of the game. Take comfort in knowing that most affiliates will be honest and don’t let the occasional bad seed ruin a good thing.

You may also find some affiliates are damaging your brand and reputation with the content they post and the ways they are promoting your content. Remember, your brand reputation is much more important than any one single affiliate.

The Logistics

The logistics of setting up your affiliate program can be confusing depending on who you go with. As an affiliate and a company that uses affiliates I’ve used just about every software out there.

Some softwares leave me frustrated on every turn. Affiliates want access to data! They need to know what is working and what is not working. Which pieces of content are resonating and bringing people in. They cannot do their work successfully if they cannot figure out where their strengths and weaknesses are.

On the other side you as the company want data too. You want to know which affiliates are killing it and how they are doing it. You want to be able to catch affiliates that break rules and take advantage of your company. Most importantly you want enough data to make good decisions in regards to affiliates incentives and the future of your affiliate program.


While creating an affiliate program has pros and cons like everything else out there I believe the pros far outweigh the cons. The world is moving quickly to an influencer model where companies can reach massive audiences for relatively small sums by connecting with the right influencers and creating the right partnerships.

With the cost of advertising always going up, an affiliate program is a powerful way to reach the exact audience you want for a fraction of the cost.

PS: Here are some books I would also recommend for affiliate marketing:

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