Here are some product questions to answer as thoroughly and as honestly as possible before you go into the cost, time and effort of starting and maintaining an affiliate program.
Does the product have broad appeal?
If the product has a large enough market—a large number of people are interested in it or the benefits it provides—that’s a huge advantage. If you were to type a keyword for your product, such as “weight loss,” “smartphone app,” or “income from home,” into your favorite search engine, how many entries would come up? If there are thousands of entries or “hits” that tells you there is widespread interest in the topic or topic.
If the product—or something similar—is widely sold on places like eBay, Amazon, or Walmart, that’s another positive sign. If many affiliates and online marketers are already involved, this is also a huge positive.
Is it a quality product?
If the product has broad appeal in general, then great! But what is the quality of your particular product? Quality is important regardless of what product or service you are offering. If what you offer is inferior or of poor quality, there will be complaints and requests for refunds. This will result in not only losing prospects and customers but also affiliates.
Gaining affiliation can be difficult, but losing one is very easy. If your product has a bad reputation, it means shrinking sales and losing affiliates as a result.
Marketing only helps in finding potential customers. That doesn’t stop them from asking for a refund and leaving because of the shortcomings of your offer. After that, no marketing money will be returned to them.
Does the product have enough profit margin?
There are thousands of great products out there. Just walk through the aisles of your local supermarket, pharmacy or shopping mall. But to make a profit after paying you an attractive affiliate commission, you need a substantial spread or margin between the price of your offer and the cost of producing and distributing it.
In order to make a profit to the merchant and have enough room for the required affiliate commission, we think the price should have a gross profit margin of at least 75%, if possible, to make it worthwhile. For example, if a product costs $25 to produce/create, the retail price should be $100 so you’re left with $75: 50 percent of the product price ($50 in this case) and 25 percent for the affiliate commission. Net profit for the merchant ($25 in this case). This is no longer a hard and fast rule of thumb. If necessary, the merchant can modify it to take a lower net profit or pay a lower affiliate commission. The point is that after product costs and transaction fees, the retail price should have enough room to split a reasonable profit for both the merchant and the affiliate to attract the affiliate sales force.
Are product transactions easily done through the Internet?
Most affiliate programs are tied to digital content (PDFs, audio, video, apps, etc.) or services (web hosting, coaching, advertising, etc.) because it’s relatively easy to transact online with current technology and marketing automation.
But what if you’re selling physical products? What about potted plants or perishable foods? Some of these things are difficult to transact before even getting to the affiliate part of the equation. If transactional selling is complicated or overly involved, can it still be done through affiliate marketing?
The answer is … uh … yes and no (gee, how committed). Many of these offbeat or unusual/complicated transactions usually can’t be done through a traditional affiliate program, but that doesn’t mean they can’t be done—you just need to know your own. Homework has to be done on how they are done at this point. or category by others.
For example, mortgage applications are not typically done through traditional affiliate marketing, but have been successfully done through a cost-per-action model, where the affiliate is paid when the prospect takes an action. Completes tasks such as filling out forms or providing information. As name and email address.
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