In today’s fierce business world, affiliate marketing isn’t simply an outreach channel, but a powerful growth engine for direct-to-customer (DTC) brands. Combine that with a well-built e-commerce store, and you can catch a lot of interested eyes.
From the consumer’s side, many people now rely on authentic reviews and recommendations from trusted content creators, and once you learn how to tap into the creator economy, you’ll have access to a massive pool of high-quality affiliates ready to promote the products they genuinely like.
We’re writing this guide to help brands that have some traction and room to grow but are not sure how to start an affiliate program. If you get consistent traffic and have positive reviews, this is for you.
Table of Contents
What Is an Affiliate Program and How Does It Work?
An affiliate program is a performance-based partnership where affiliates earn a commission when they drive a sale to you. You only pay when results happen – no upfront ad costs.
The process is simple. Your affiliates will share a link that can be traced to them if a customer clicks it and makes a purchase. That way, the brand makes a sale, the affiliate gets paid, and the customer buys through a trusted source. A win-win-win.
Is Your Business Ready to Start an Affiliate Program?
Nick Youngson CC BY-SA 3.0 Alpha Stock Images
Launching an affiliate program can be tempting, but you need to be prepared to do it right to get conversions.
First, you’ll need a high-quality and genuinely recommendable product. Affiliate marketing works so well because it relies on that genuineness.
To avoid a hard time securing affiliates, it’s best to have good ratings (preferably 4+ stars) and reviews to show your credibility.
Your store also needs to be ready to receive and convert traffic. If your conversion rate is under 2%, we recommend you work on optimizing the UI/UX and work towards that target before running an affiliate program.
Setting Clear Goals for Your Affiliate Program
You should define some clear goals before starting, so you can refer to them when making decisions and to ensure the program aligns with business growth.
Consider whether your program objectives will be primarily revenue-driven, where you prioritize sales and customer acquisition; or awareness-driven, where the focus is on exposure.
Metrics to Track
Next, define your success metrics so you can start tracking them early and optimize your affiliate marketing ROI over time.
Revenue-Driven Program
If you’re going with a revenue-driven program, the most important metrics are:
- Total affiliate-generated revenue
- Return on ad spend (ROAS)
- Cost per acquisition (CPA)
- Conversion rate
- Average order value (AOV)
- Active affiliate rate
Awareness-Driven Program
But if your program will focus on awareness, track these metrics:
- Clickthrough rates (CTR)
- Impressions
- Engagement rates
- Social mentions
- Brand searches
- Audience reach
Choosing the Right Affiliate Program Model
The structure of your affiliate program shapes who joins, how you work with them, how much control you have, and more. It’s best to pick the right model for your business early and stick with it.
Open vs. Invite-Only
Open programs allow anyone to apply and get access quickly. They can grow fast and reach broad audiences, but they’re also hard to control as you scale, or can be susceptible to fraud or brand image manipulation.
Invite-only programs grow at a slower but steadier pace. You manually vet who joins and can set the expectations early and individually to protect your brand.
Public Networks vs. In-House Programs
If starting everything from scratch sounds too daunting, you can opt for an affiliate network like Impact or Awin, which can host your program and share it with its large network of affiliates to match you with the best ones for your brand.
Naturally, this comes at the cost of the network fee, but it also comes with tracking, payments, and discovery in one place, all built-in and ready to go.
Alternatively, you can build everything in-house if you prefer full control and customization.
Affiliate-Only vs. Hybrid Affiliate
Affiliate-only programs target performance commissions, like publishers and blog sites. It’s low-risk because you only pay for results, and it’s easier to scale, but it’s hard to attract big names like in the social media creator space.
For that, you’ll need a hybrid affiliate program that also includes a creator flat fee. If you go for this option, you’ll be paying more for a high-caliber endorsement that can drive a lot of sales and exposure.
Commission Structures that Actually Work
Finding the right commission structure is important to balance between attracting high-quality affiliates and sustainable profit margins. The goal is to pay for real value.
Percentage-Based Commissions
The most common and naturally scalable model for most products. Affiliates earn a commission percentage on each sale tracked via their link or coupon code. For most industries, this rate is around 8-10%, but it can vary greatly.
Percentage-based commissions are best for stores with stable margins.
Flat Rate Commissions
Flat rate commissions involve paying a fixed dollar value per sale. While it provides less incentive for most affiliates, it makes budgeting far more predictable on your side.
Performance-Based Models
Performance-based models reward affiliates who drive more success. Under this model, the more you perform, the better your rate becomes. For example: 10% base per sale that goes to 15% after hitting $5k per month.
The main benefit is that you can drive more growth without overpaying your low performers. And while it can be more complex to manage and the results are harder to predict, automation can help with that.
Recurring Commissions for Subscriptions
If you offer a subscription-based service, set up a model where your affiliates earn a % for every billing cycle traced to them.
These models can be riskier because they struggle with high churn, but if your service offers a clear value, you can combine that with long-term promoters and aim to compound your revenue as they grow to become brand ambassadors.
How to Avoid Overpaying or Underpaying Partners
Start by knowing your margins. Every payout to an affiliate should leave some room for product costs, fulfillment, overhead, platform fees, and profit. If your commissions start eating into margins, you’ll struggle to grow.
To protect your bottom line, we recommend you limit commissions to 30-40% of net profit margin. But adjust your rates based on different scenarios to reward acquisition, such as better rates for new customers.
You can combine these methods with the performance-based affiliate model we talked about earlier to avoid paying the same for all your affiliates regardless of performance, but the key is to tier smartly.
Lastly, always track everything. Your numbers will tell you everything about how to adjust your model if you understand what they mean, so keep an eye on your metrics.
Using Affiliate Management and Tracking Software
Your tracking accuracy decides whether affiliates trust your program. If you can’t ensure they’ll get paid fairly, you’ll give them cold feet. Recent years have seen a rise in AI-driven fraud that tries to sneakily swap affiliate tag cookies to steal commission, and affiliates are aware of it.
Key features matter here, so look for accurate tracking and attribution, fraud prevention, and clear reporting that breaks down commissions by metrics. That way, you can see how each partner and channel performs and adjust your strategy and spot out any oddities.
Your software should also integrate into your existing workspace, that is, your Shopify store, analytics, marketing, email management, and other tools you use for your brand.
Common Affiliate Program Mistakes to Avoid
Launching Without Structure
Launching without a clear program structure is one of the biggest killers of an otherwise solid strategy. Your business will suffer if you’re caught off guard. Affiliates also need clear rules around your commission and payment models so they can trust you.
Focus on how you onboard your partners and define your brand style guidelines early. If you skip this step, you risk having each partner promote you differently, which can make your company seem inconsistent.
Weak Tracking and Attribution
Weak tracking breaks trust quickly as it cuts into the livelihoods of your partners, especially after the recent cookie-swapping scandals in which bad-faith actors were found to poach referral attribution cookies.
The affiliate marketing industry is now slowly moving towards cookieless tracking with stricter privacy rules, and we recommend you join the trend.
Ignoring Affiliate Relationships
Affiliates are your partners, and you need to establish positive relationships with them if you want to make money together.
Keep them updated with your program and be ready to communicate with them if either of you faces issues.
Recap & Final Words
How to start an affiliate program isn’t about flipping a switch and waiting for the results. You need a blend of clear goals, a solid strategy, reliable tracking, fair commissions, partner outreach and support, and clear analytics to turn it into a steady growth channel with the potential to compound over time.
Remember, strong programs succeed because they treat affiliates as valuable partners, not just traffic sources like referral marketing. Establish a good working relationship with your partners, and they will bring you the organic traffic you need.
If you’re serious about launching an affiliate program for your business, you’ll need to get the setup right from the start. A well-thought-out strategy saves time and money while putting your brand on a solid path.
At Vivian Agency, we can help you build a program that fits your business growth goals while connecting you with our large network of partners – it’s what we do best! For more information, you can contact us or book a call directly with our team.
