So, you have heard good things about associate programs (also known as affiliate programs) -- those programs that reward other Web sites for sending you customers -- and you want to set one up foryour site to help drive traffic and increase sales. Here are some important issues to keepin mind.

What Type of Commission/Bounty to Pay?
Commission rates vary greatly. Some programs pay cash. Others pay in store credits. Some pay on gross sales, others on net. Some pay per "lead" or "application." Some pay a flat amount, others a percentage. Others use a slidingscale or a hybrid.

Here is a sampling of what some current programs pay: 5%-15%
Barnes &Noble 7% on books
Bacchus Cellars 10% credit

This is still a wide-open arena, so you can be creative as you structure your program.What kind of associate program makes sense for your business?

Formal Agreements
You'll want to create a formal agreement for your program. Things to consider as youdraw up your agreement:

  • How often to pay
  • Minimum payments
  • Excluded sites -- sex oriented, illegal, etc.
  • How amounts are calculated
  • Returns and credits
  • Term and termination
  • Governing law
  • Requirements to join
  • Exclusivity requirements

Check out these agreements for more ideas:

Setting Up Your Program
Setting up an associate program can take many forms. You can:

  • develop your own software
  • use cookies
  • use associate codes
  • set up individual pages for each associate
  • use a packaged software solution
  • use a service bureau
  • use your shopping cart software
  • use a combination of the solutions above

This article, from AssociatePrograms, goes into more detail on many of the options listed above. No matter how youdecide to administer your program, you will want to have in place a mechanism for trackingparticipation and rewarding those who send you new business.

Tracking Commissions
One area on which you are sure to get lots of feedback from your associates is yourcommission reporting. They prefer an accurate, real-time page with good history reportingcapabilities. Few programs currently provide good reporting systems, so you willstand out if you can devise a good reporting procedure.

Check out'ssample tracking report. Certainly not a visual masterpiece!

Bottom Line
Associate programs have done very well for many sites. Like everything inlife, how much you put into your effort will probably dictate the outcome.

We recommend that you visit some sites and see what feels good to you in terms offormat, structure, and business model. Use the best ideas within the resource budgetyou have.

A well-thought-out program could add hundreds of sales to your site every month.

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