The process of getting executives within your company to sign off on an affiliate program (See Getting Executive Buy-In for an Affiliate Program.) will be easier if you have a firm handle on the costs associated with starting a program. This will allow you to set realistic expectations and gain a full commitment to move forward and maintain a successful program.
And while there is no magic number for startup costs, there are some guidelines and factors to carefully consider.
You must determine if additional technology will be required. You may need more servers to handle an increased traffic load. You also may have to update your back-end ecommerce system to handle the volume of affiliate sales and allow for tracking. Do you have the technical personnel to help create data feed and add tracking pixels to checkout pages? Will you need to install tracking software and other reporting applications for monitoring and measuring results? Is your current email program able to handle increased communication with affiliates and customers? Do you have software for creating an affiliate newsletter?
You are also likely to need the help of other departments within your company. You must make sure these personnel resources can handle any additional work. If the resources aren’t there, you’ll need to hire contractors or third parties to perform any additional functions – public relations, SEO, design, legal, content creation and email. You may also have to hire a second person to help manage the program. Most industry watchers say that it takes at least two people to run a successful program.
You will also have to calculate the costs of promoting the program. Of course, you can spread the word using social media – like Facebook and Twitter (See Using Social Media to Promote You Brand.) but will also you be paying for ads on relevant websites? Will you be paying for inclusion in directories? Are you planning to buy advertising in industry trade publications? What affiliate recruiting efforts do you have planned? (See Strategies for Recruiting Affiliates.) Will you be traveling to tradeshows and conference to promote the program and recruit affiliates?
It is also very important to have a deep understanding of your commission structure. (See How to Set Commission Rates.)Once you have that structure in place, you should have a better idea of how much you will spend on affiliate commissions and how much they are likely to yield in revenue for your company.
Setting up an affiliate program can cost tens of thousands of dollars. Be sure to evaluate the financial health of your company and determine if it can cover the additional costs over a sustained period of time. Your company will need to make at least a 6 to 9 month commitment to get the program up and running smoothly.
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