Creating an army of affiliates is one of the most powerful strategies to grow your business, but it can also be one of the most complex.

In this detailed guide, we'll explore how to effectively use affiliates to expand your reach, generate more leads, and increase your revenue.

We'll dive into the core concepts and provide actionable steps to build and manage your own affiliate army.

The Power of Affiliates

Affiliates are essentially independent businesses or individuals that promote your products to their audience.

They differ from referrals in that the relationship is more formal and structured, often involving commissions or other incentives.

Affiliates can significantly amplify your marketing efforts by leveraging their established relationships and trust with their audience.

How Affiliates Work

Affiliates operate as lead getters, promoting your products to their audience.

This arrangement benefits both parties: affiliates earn commissions, and you gain customers without direct marketing efforts.

The goal is to create a win-win situation where affiliates can increase their income by promoting high-value products, while you enjoy the leverage and scalability they provide.

Steps to Building an Affiliate Army

1. Find Your Ideal Affiliates

Start by identifying businesses or individuals with a warm audience similar to your target customers.

Create a list of potential affiliates and use warm and cold outreach methods to approach them.

Ask questions like:

  • Who are your customers?
  • What do your ideal customers buy?
  • Who provides those products or services?
  • Where do they hang out typically?
  • What types of businesses do they go to?
  • What kind of jobs do they have?

2. Make Them an Offer

We make the affiliate-offer and advertise it the same way we would any other offer.

We:

  1. Call out our audience
  2. Show our value elements
  3. And then call them to action

Focus your messaging on how partnering with you can provide them with new revenue streams or add value to their existing customers.

Hint: A new way to make money"

Call outs for potential affiliates often include:

  • The affiliate themselves – ATTENTION SPA OWNERS
  • The affiliate’s customers – Do you work with busy professionals who spend all day in meetings?
  • Results they promise – To the heroes who heal the stress of others...
  • Products & services they deliver – If you sell lotions or scented oils this is for you...
  • Our own customers – Do you know anyone who owns a spa?

Now that we can grab a potential affiliate’s attention – let’s make it worth their while.

Make an offer, emphasizing the elements of value:

  • Dream outcome - Make more money from your current customers and get more leads than your current offer‍
  • Max. perceived likelihood of achievement - with a high chance of working since your customers already want the product
  • Min. Effort and sacrifice - without needing to build, deliver, or provide customer support for the product yourself
  • Min. Time delay - so you can start selling it tomorrow

3. Qualify Them

Ensure that your potential affiliates understand and agree to your terms.

Get them to buy and try your products first, ensuring they believe in what they are selling.

This initial purchase also creates some skin in the game for them.

You may even want to make them go through some sort of certification, to make sure they fully understand what they are selling (so they don't overpromise things and dilute your brand).

4. Determine Compensation

First, have a clear understanding of what exactly you want the affiliate to do.

How Much They Get Paid: Maximum allowable cost to acquire a customer (CAC), or 1/3 of your LTGP.

Set up a tiered commission structure to incentivize affiliates:

Let's assume our CAC is $100

  • Tier 1: 25% CAC = $25 Payout - Anyone who agrees to my initial terms.
    • Example: They sign up and buy products or a certification.
  • Tier 2: 50% CAC = $50 Payout - Once they activate.
    • Example: Reaching a key activation milestone (e.g., completing a certification or making a certain number of sales, doing a specific number of posts and outreach).
    • This gives them a nice reward (twice the pay) for activating.
  • Tier 3: 100% CAC = $100 Payout - Once they sustain a certain level of performance."

Pro tip 1: Pay with product when possible. They value it at retail, but it only costs you your cost.

Pro tip 2: Throw competitions with prizes.

5. Launch and Maintain Engagement

Use a "whisper, tease, shout" method to launch your affiliate program.

  • Whisper - Start by creating curiosity. Keep the product itself mysterious and hint at how big of a deal it is. Keep whispers short.
  • Tease - It’s time to start satisfy the curiosity you created. Reveal your product, make the date of the launch public, and start showing the elements of value. Use the What-Who-When Framework from the paid ads chapter.
  • Shout - Finally, make a strong call to action. Give specific actions for the audience to take when the product launches. Now you start pounding the audience with bonuses, scarcity, urgency, and guarantees around being “the first ones.” You shout to get as many people exposed to your offer as you can.

After the initial launch, keep affiliates engaged by providing ongoing support, training, and incentives.

6. Keep Affiliates Advertising

  1. ‍Affiliates Sell Your Core Offer - An affiliate sells (or simply directs his audience to) your core offer directly and adds another source of income without extra work. For some affiliates, this is their entire source of income.
  2. ‍Affiliates Give Away Your Lead Magnet -To ensure continuous promotion, offer affiliates lead magnets or samples to give away to their audience when their audience buys their stuff. When they go to your website to claim the free lead magnet, you upsell your core offer.‍
  3. Affiliates Sell Your Lead Magnet - You can also allow them to sell your lead magnet (which has your branding on it). Whether they give it away for free or charge for it, it makes the affiliate's offer more valuable. This allows them to charge more for their offer and get more leads then they could without it.

Pro Tip 1: White Label Lead Magnets - A cool strategy is to let affiliates use the lead magnets you've already made for your audience, for theirs. Just make sure your affiliates agree with how you give value and understand your call to action (you're getting the leads and the upsell opportunity). You can also co-brand it if you want your brand to be more apparent.

Pro Tip 2: Employees Are Leads Too - Companies that hire a lot of people make great affiliates. This is HUGE for direct to consumer businesses and wildly underused. Example: Every new hire at a company gets a free massage in their new employee packet. Or, you can give free massages to their employees at lunch. It’s free. It’s easy. And lots of companies want to provide more value to their teams. They get free value, you get free leads. And since they’re probably not in the same business as you, there’s no risk of you ‘competing’ with theirs. So employers can be among the easiest affiliates to integrate with.

Cost and Returns

Calculating the cost and returns of an affiliate program involves comparing the cost of acquiring affiliates with the gross profit they generate.

Example: Let’s say we own a widget company that grows with affiliates.

  • It costs us $400 in advertising to get an affiliate. CAC = $400
  • Our average affiliate sells $1000 in widgets per month and stays for 12 months before they fall off.
    • ($1,000 per month) x (12 months) = $12000 total sales
  • The widgets have 75% gross margins. In other words, they cost 25% of retail price to make.
    • ($12,000 total sales) x (25% cost of goods) = $3,000 total cost of goods
    • ($12,000 total sales) - ($3,000 total cost of goods) = $9,000 in gross profit from all the customers the affiliate brings
  • We pay affiliates 40% of the gross profit:
    • ($9,000 gross profit) x (40% payout) = $3,600 to the affiliate as payment.
  • Here’s the gross profit we have left after cost of goods and payouts:
    • ($12,000 total) - ($3,000 costs) - ($3,600 payouts) = $5,400 leftover
  • Let’s find our affiliate LTGP to CAC ratio:
    • ($5,400 gross profit left) / ($400 to get an affiliate) = 13.5 : 1

That's what I call a win. Now keep in mind, if you have an affiliate manager whose sole purpose is to manage affiliates, I'd factor in his payroll as a part of the CAC.

Conclusion

Like referrals, affiliates aren’t an advertising method you can ‘do.’

They’re people who advertise your stuff to benefit you both.

You do the core four to get them, and if you want them to love you, then you treat them like customers.

There are two ways to create a compounding business:

  1. You can find more people that never stop buying your stuff (referrals).
  2. You can find more people who never stop selling it for you (affiliates).

Action Steps

  1. Advertise your affiliate offer: Advertise your affiliate offer until you get ten to twenty affiliates.
  2. Get results with initial affiliates: Get results with those affiliates and use their feedback to work the kinks out of your offer, terms, launches, and integration strategy.
  3. Scale your program: Then, scale like crazy by turning their results into your first batch of affiliate lead magnets.

By following these steps, you'll be well on your way to building a successful affiliate program that drives growth and profitability for your business.