There are several ways you can set up your Associate Program or compensate your associates.

The first is basically a click-through program... whereby anyone who clicks-through on the link is paid a referral or click through fee. It is pretty simple, if an associate displays your banner, text link, or button and someone clicks through that link, you pay your associate a small fee (usually between $0.05 to $1.00 depending on your product and your margins).

The second method is a pay-per lead program. The associate is paid for each "lead" they send you. The associate can post a form at his site for you, and for anyone who fills out the form and submits it, you pay a referral fee to the associate for that lead. Or your associates display a banner, text link or button to your site and if someone clicks through they are presented with a form they can fill out. That form can be anything… a request for more information about a product, a request for a quote, or do something like downloading a trial version of a software program. Regardless of what the visitor is asked to do... your associates are paid for each lead they send you (or each time a form is submitted).

The third method is a revenue sharing program. This is by far the most popular type of Associate Program. Basically you are offering your associates a portion of the profits on everything that is sold.

This is the way I recommend you do an Associate Program. With this kind of program...

you are guaranteed to make money because you only pay for sales which are generated.

For example, if you set up a click through program you could potentially bring in 50,000 visitors... and even with that level of traffic, you are not guaranteed any sales! You could be paying out tons of money in click throughs but if you don't have a good visitor to sale conversion you could end up not making any money in sales.

It is also possible that someone can "cheat" with a click-through or pay-per lead program as they could have software that automatically clicks through the link generating them a referral fee when no real human being has actually visited your site.

If instead, you set up a revenue sharing program... you are guaranteed a profit because you are only paying associates when your product is sold. So in the example above, if you brought in the same 50,000 visitors and didn't make any sales... it would mean you had a very serious problem with your sales copy or your website... but at least you are not in the hole thousand of dollars that you owe associates for the visitors they have sent you… and you have no money to pay them!

When it comes right down to the "nitty-gritty", the only real drawback of having Associate Programs for your product is the cost of installing the software to keep track of all your associates, traffic, and sales generated. There are a few other expenses… but they are mostly minor costs (i.e. taking care of your associates by helping them make sales, answering their questions via email, and sending your associates their checks in a timely manner).

To give you a perfect example, we receive over a hundred emails a day... A DAY!… just from associates having questions like:

• "Is something wrong? I can't get my banner to work!"
• "I didn't get my package with the tracking code."
• "I lost my password."
• "Please change my email address."
• "Please change the address you send my checks to."
• "I didn't get my check last month, what happened?"

… and so on.

Some are valid questions and some are people asking dumb questions. I am sorry to say "dumb" here, but it is the truth. We have actually had people who join our associate program, don't put up a banner or link to us in anyway, then email us a month later asking where their referral check is? They have not linked to us, they have not sent us any visitors/prospects, they have not generated any sales… why do they think they are getting a check next month? You will be surprised… so be prepared to answer very reasonable questions and some obscure ones… there are all kinds of people out there.

As you get bigger and bigger you may find that you get more and more emails... but by that point you are making enough money to justify dealing with these extra questions and you can hire someone to take care of them (for example we have an employee just taking care of this because we have thousands of associates).

OK... it's time to get set up.

There are three ways of setting up how you keep track of associates and sales. The first is setting up "mirror" pages, the second is hiring an Associate Program service, and the third is to purchase your own associate managing software. We will go through all the pros and cons of each in detail.

Method #1

The first method is to set up a "mirror page"... or even a mirror site.

Basically you set up a separate page... or a separate site, for each associate. This is a VERY time consuming way of doing things, but there is almost no cost involved other than your time. Here's how it works...

Using marketingtips.com as an example. You'd set up a page for your 1st associate called http://www.marketingtips.com/info1.html. Then, as you got more associates you'd add pages... i.e. www.marketingtips.com/info2.html and .../info3.html .../info4.html and so on.

These would all be identical pages. The only difference between.../info1.html .../info2.html .../info3.html etc. is that it has a different tracking number. You actually hard code in the associates tracking number (i.e. info5.html would have the tracking number or associate number of "5") so that when you get an order, a hidden code in the order form prints the code. This allows you to manually track and give your associate credit for the sale.

Now this does work and is great for doing a joint venture or two with a few people… however it has MANY drawbacks.

First of all you can only sell one product. So if you have one sales letter which sells one product, doing it this can work initially… but having multiple products at your website or having multiple pages will cause you nothing but havoc.

But say I get 100 associates (and it's pretty easy to get 100 associates… in fact it's very easy to get 100+ associates in a matter of 30 days)... now if I want to change something like the price, or I have found a better way to sell my product so I want to change the sales copy, or I want to add in a graphic, or whatever; I have to go to every single webpage and change them all manually, all 100+ of them. It's a HUGE job!

Trust me, I used to do it this way back in 1995 when associate/affiliate software was not available. Updating the pages ate up days of my time.

There is also the fact that you can't offer any of your associates real time statistics. They can't tell how much they've earned until the end of the month when you "manually" calculate it (which can take you a couple of days if you have 100+ associates). They don't even know how many visitors they are getting or how many sales they are generating... they have no way of tracking it on this type of system. And on top of all that, they have to have 100% trust in me that I'm not ripping them off because I am the only one who has the "true" visitor and sales numbers… they have no idea if they are selling the numbers as I report it to them. It's a pretty primitive way of doing it. It was a very old way of doing Associate Programs and you can "shoot yourself in the foot" because most people will not sign up with you if they don't feel comfortable that you are reporting to them in real-time, all the time, about how they are doing with sales. Heck some of the Associate Program directories (which I will mention later) won't even list your site on their list if you do not have real time tracking software.

Now the other problem could occur if you had a site selling four products, and wanted people to roam around your site, read articles and all that kind of stuff; but still tracking the associates visitors and sales. It's almost impossible to set up a reliable system using this method. There would be no way to track your visitors or associates from webpage to webpage. The only way to do this is to set up a whole separate individual site for every associate within your main website (a VERY big job!).

It would take HUGE amounts of room on your web server and there is no way you could manage it. And if you ever wanted to change one small thing it would literally take you weeks to complete. It's totally unrealistic!

In our case, with thousands of associates, this would be an impossible amount of work!

Ok, I know I have stated a lot of negative things about this method… so you may be asking, "What is the benefit to this method?" The answer, unfortunately, is only one benefit… it is really cheap for those who have no money and lots of time on their hands… as setting up takes only your time and knowledge of HTML. But remember, you may do more damage than good as many associates will not join because they can't see their stats or have no confidence in you. Also you will get a low rating from many associate related directories as you will look like a "basement operation". But I guess having this system is better than having no system.

Method #2

Let's move on to #2, hiring an Associate Program service.

You can hire a service such as Safe-Audit or ClickTrade. They handle all the details as far as tracking your associates, tracking the sales, handling the money and basically charge you a healthy percentage of each sale (sometimes up to 30% of the money you are paying out to your associates) to organize all this and keep track of it. For example there is ClickTrade (mentioned above)... they don't have a high set-up fee but charge you 30% as your payment to take care of all the tracking, reporting, handling of money and so on.

This is a very large chunk of your profit!

It may make sense at first as there are no set-up costs, but realize that if you do your Associate Program right, you can be paying out thousands of dollars in referral fees very quickly. This can translate into hundreds and usually thousands of dollars in fees you have to pay them… each month. I am not trying to talk you out of it, I am just saying that you want to look at the big picture. If you plan to stay small, they may be for you, but if you start with them and grow, it is extremely difficult to "dump" them and move on to a more cost-effective way of managing your associates. To a certain extent, you are married to them, so be aware of that.

There are a few companies (i.e. LinkShare) which don't charge you such a large percentage for each sale but do charge you a couple thousand dollars to get established... and then take a smaller percentage of your sales as their "management fee".

The companies mentioned above are great for people who don't know any better and see it as a more cost effective method compared to the $10,000+ associate software that is available on the market. But to be blunt, there are ways to get the same functionality for a fraction of the cost (for under $700) as I mentioned before… if you know where to look and what to look for. We will discuss the differences between the software out there in the next few sections of this site.

Let's move on to #3, purchasing your own associate/affiliate software.

Method #3

Purchasing your own associate/affiliate software

As far as purchasing your own software goes... some of the Associate Program software packages I've seen selling for under $700 are very hoaky. They don't have the proper tracking mechanisms and aren't flexible enough to handle a variety of situations. What I mean by that is that they may:

• Not track and display stats to their associates in real-time.
• Or don't work with shopping carts.
• Or they're not 100% reliable to track "all" orders.
• Or they don't have any means of tracking off-line orders.
• Or they won't track visitors who come back and buy at a later date and don't give the associate credit for that sale.

Generally speaking, almost everything I have seen (about 20 different pieces of software which sell for under $1000) is mostly garbage! There are a few exceptions to the rule, but even those pieces have their problems (i.e. a few charge a set up fee of $500 and then a $1.00 per associate you sign up - which can be thousands of dollars as you sign up associates… or software that only tracks certain types of orders, etc.).

The good stuff that I've seen sells for $5000 and even $7000 and more. And some of them are pretty slick. However they are not cheap... and represent a significant investment for most small businesses!

Don't worry, later I have a solution to the problem so you don't have to spend this kind of money.

Many of you are aware that we designed and developed our own software from scratch when we started up our Associate Programs many years ago... basically because there wasn't any software out there that did what we wanted and how we wanted... we really didn't have a choice!

To make a long story short, we have spent several hundreds of thousands in dollars and resources to develop our software (it has been costly) and we have put in features from a "marketing" point of view, not a "programmers" point of view. We have seen the need to get software out there that has the same features and functionality as the $5000+ software, but at a reasonable price tag which most small business owners can afford.

We have modified our software and made it "generic" so it will work with nearly any product or service our clients have (not just our products anymore). We've hacked through all the pros and cons, the problems we encountered, and done the "learning curve" for you. We've developed this associate/affiliate software which we call AssocTRAC. We are making it avialable at a special price of $677, but only for a limited time.

Click here if you want to know more about the AssocTRAC software, what it does, and how it works.

In my opinion this is extremely underpriced for what we are giving... but we wanted to make a fantastic program available to our customers at a reasonable price.

We're actually quite excited about it, as it will be the first time this quality of software has been available at such a drastically low price (as I mentioned we have spent hundreds of thousands of dollars developing this software to make it a VERY powerful marketing tool). In order to give all our customers the best service we can, our AssocTRAC software will be sold on a first-come, first-served basis!

Associate Programs are a powerful and really cost effective way to market your products. In fact, I can't think of a better way to market your products or services with such a low risk! It is absolutely fantastic.

Do you want to know how much impact it can have on your business?

I am aware of two clients who started up a reseller program… and then had to shut it down because they got so many orders!

They had to suspend marketing because they were so far behind getting the orders fulfilled and keeping up with customer service requirements. So it is a very, very, very powerful way of marketing!

And I know where they are coming from… I talk from experience too. You must have noticed how I have been apologizing for the last 6 months consistently on how we have not been getting newsletters out on time and delays on other things. This was because of our phenomenal growth (we couldn't keep up with everything because of the number of orders coming in, the amount of customer service needed due to this huge increase in orders, and the time taken to hire and train new people to take care this growth). These are "good" problems to have, if you know what I mean!

ABOUT THE AUTHOR: Derek Gehl specializes in teaching real people how to start profitable Internet businesses that make $100,000 to $2.5 Million (or more) per year. To get instant access to all his most profitable marketing campaigns, strategies, tools, and resources that he's used to grow $25 into over $60 Million in online sales, visit: http://www.marketingtips.com/t.cgi/892189

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