Affiliate programs enable businesses to generate a lot traffic and consequently boost sales through promotion by third party individuals or sites. It is a cost-effective way to advertise your products and services as you dominantly pay for only efforts that turn into sales.Setting up an affiliate system can be an easy or overwhelming task depending on how many affiliates you want to recruit, your payment policy, availability of time and the kind of product or service offered.When it comes to affiliate systems, there are two options for a business : you can outsource the entire system or run your own customised affiliate system on your web host. Each has its own advantages and disadvantages.If you have a relatively small amount of affiliates to deal with, then you can run your own affiliate software but if you are going to recruit an unspecified or a large number of affiliates, then you may need to outsource. The reason is, you will find it easy to deal with a huge number of sign ups, track payments, manage banners, monitor clicks, among others. The shortcoming is that you will have to pay flat fees or a percentage of sales generated to the company maintaining your system. A self-managed affiliate system will work well if you have a small number of recruits , have the time to answer queries and send out a few checks each month.DIFFERENT TYPES OF AFFILIATESThere are several types of affiliate programs you can
choose from. There is the pay per sale whereby an individual is paid only if a sale is generated from that affiliate's link. It's certainly the least attractive to people unless the product or service is in high demand and the most profitable for businesses. Another type is the pay-per-lead whereby you pay for traffic only. Here the affiliate is paid only if a visitor is generated from the affiliate site. Its attractive to affiliates but costly to website owners because of the possibility of non-converting visits. This type is good for high-sales producing sites as you can pay affiliates from sales generated. Another option is the pay-per-click in which case you only pay if your link is clicked. If you have a site which has a high conversion rate , then this option is ideal for you.You can also opt for the tiered system. With single tiers, your affiliates receive a single payment whenever someone refers a client to you and it is ideal for less popular products or services or when you are starting up. In a two-tier programs, an affiliate can receive a percentage of sales generated by an affiliate who signs up from his site and it is profitable for websites with high conversion rates. A variant of this, the multi-tier, offers an affiliate residual income from sub-affiliates who sign up under him and indefinitely. This type is good if you have high sales and can support perpetual payments.CONSIDERATIONSAn important consideration in setting up an affiliate is whether you will approve affiliates manually or automatically. It may be recommendable to start an affiliate program with your established customer sites and progress to new ones. You may have to control the affiliates if you are dealing with pay per click as the quality of visitors will be a factor in sales generation. Manually reviewing also enables you to judge the website or individual affiliates to see if he befits your company status (for example is the site objectionable?) or likely to spam which case may bring you trouble.If you use your own affiliate system, then one of your biggest challenge would be how to pay affiliates a percentage of what you receive from customers. In this regard, you can rely on a software such as Affiliateshop(www.affiliateshop.com) to track and manage recurring commissions.CONCLUSIONSo depending on your needs, you can go for an outsourced affiliate system or a self-run type. You may go for an outsourced affiliate system such as Commission Junction(www.cj.com) or Linkshare(www.linkshare.com) if you anticipate huge transactions. If you would require credit card processing such an affiliate involving downloadable products like ebooks, then clickbank(www.clickbank.com) may be a good option.If you intend to run your own affiliate system, then a popular choice is AssocTRAC which comes with a wide array of support.