I was once in business with a vendor who wanted to create their own affiliate program and have myself and others promote their product. Although in the end the profits made by both parties weren’t that big, I learned a ton about this topic and especially how to save your money when you’re doing it and what to avoid.
This is basically a case study, so here’s the background:
The vendor I did business with had DVDs to sell to a hot niche market. I didn’t even think such a popular topic existed until I did some research, but because the vendor had the product and there was a niche perfectly suited for it, we had an incredible opportunity.
From the vendor’s end, the following was covered: The product (physical DVDs) and a website designer who would be able to make a beautiful sales page when necessary. Unfortunately that person also charged a lot for his work and while I could have been the person to do it, we decided to do it with him since he was very talented.
However, what none of us had was the actual affiliate program. The website designer recommended a software that would cost $1,000’s to set up but would protect the product owner from the DVD being copied and distributed around the internet.
However that same software program did not include the most important thing:
A actual code and program to monitor which affiliate (we’ll also call them the referrer) makes sales so they can be paid fairly.
I was the one who said I’d find out what to do. Luckily at the time, I had a programming friend who along with another friend of his tried to help me figure this out. While they did it for free and it took them hours of research to find a cheap way to create coding which we could give out affiliate links to people, in the end, the task would be too expensive and take up a lot of time to figure out.
Going by the web designers suggestion and the projected costs my programming friends mentioned, the price of this whole thing would go over $10,000 easily and there would also be a continuous cost to maintaining the site, paying people to handle the shipments and more.
This was a cost the vendor could not afford and my interest in this whole project was to make commissions of overall sales for the DVDs so it wasn’t in my best interest to start this off by paying so much.
What we all decided to do:
Although we had a lot of complications to go through, the biggest was again figuring out how we were going to set up the coding to get affiliate links working but an opportunity at the time made this problem VERY cheap for us…
At the time, I was a top seller for a network called Clickbank and it solved that problem in several days. Basically instead of figuring out the hard things such as:
Hiring people to create and monitor the affiliate program for $1,000’s, Clickbank would handle it for a one time fee of less than $50, while also taking 7%+ $1 of each sale made.
Any buyer issues and questions such as refunds would also be handled by Clickbank so that would also cut down on the costs of support.
Even though I had elite status in Clickbank, the major benefits I just mentioned were and are available to anyone who joins them and we were also fortunate that around that time, they also began allowing physical products to be sold, although at first we were debating whether to transfer the DVDs into a digital recording to cut down on production costs (we ended up sticking to shipping DVDs instead).
With the site completed from the website designer, all we had to do was input the link codes given to us by Clickbank and we were all set up with an affiliate program of our own, saving us $10,000+ initially and many more dollars in the future, although we were giving up a very small percentage to Clickbank as well as dividing profits with each referrer who would make sales.
I then began the process of finding people who would be interested in promoting the product for us.
How much we made and how it all ended:
The whole project ran for a little over a year. About $14,000 in revenue was made, but $7,000 of that was to affiliates and the remaining $7,000 which the vendor got was broken down into the fees Clickbank charged with production costs, the profit was over $5,000+. I received 10% of that.
The good news is that while it was only a year that the business was going on, the sales were gradually rising so while year 1 may not have been that big, progression and an accumulation of more productive people selling for us in the future would add to it in the later years, but sadly due to other opportunities that arose for the vendor, the operation had to be shut down.
Had we invested in making our own program for the projected price of over $10,000 (up front), we would have been at a big loss the first year and we don’t know how much costs and revenues would be in the later years, but because we did it the first way, sacrificed a portion of each sale/s to Clickbank, we increased sales volumes and ended up in a profit, although not too major:
Should you make your own affiliate program or get started the way we did?
If you have a product, be it digital or physical, but lack the upfront costs to open up a physical business or make one online with an affiliate program. definitely do it through Clickbank (Amazon and eBay may also have similar opportunities). You are not just paying less, but you’re also protecting yourself if you end up losing money because you won’t have to pay a lot to try this.
Until you are making a good profit doing this, there is no reason to risk putting in so much money with lack of experience in:
- Hiring website designers to make your site. Possibly $500-$2,000+.
- Hiring programmers to create an affiliate program and provide maintenance. $1,000-$5,000+.
- Hiring people to communicate with your customers and handle support/refunds. $100’s-$1,000+.
- Paying companies to find affiliates for you. $100+.
- Paying for an autoresponder to handle customer funnels and future sales. $19-$50+ month.
Those costs alone will break $10,000 easily if you’re inexperienced and have no connections in this industry, but through say, Clickbank, many of those problems are handled by them and you pay A LOT less (We spent less than $100).
Yes you are giving up profits when you pay affiliates but they are going to be the ones who drive your sales. Whether you’d make your own affiliate program or not, you’d STILL have to pay them and also offer a good enough percentage for them to handle it.
Have you ever had to create one of these programs on your own? If so, how difficult and expensive was it?