Should You Be Promoting Residual Affiliate Programs?

By: Alan Richardson

Looking for a strategy for bringing income to your online business, in addition to your standard products and services? Or perhaps you plan on starting a web-based business without a product to sell. Possible? Yes... by utilizing a well-planned affiliate marketing program. When you integrate smart and efficient affiliate marketing into your web business, the products you sell can actually become your secondary source of income.  Populate your website with products or services related to yours, but sold by someone else - your affiliates - and you may discover why affiliate marketing programs are so popular in the online community.

Affiliate marketing is actually a business relationship established between a merchant and his affiliates.  With affiliate marketing, an affiliate agrees to direct some of its business traffic to a merchant's website.  If that traffic is converted into some kind of action, usually a visitor purchasing a product on the merchant's website becoming a lead for the company, the affiliate who directed the traffic gets compensated.  Compensation may take the form of either a percentage sales commission for the sales generated or a fixed fee predetermined upon the application of the affiliate on the merchant's affiliate program.

Promising mutual benefit for both merchants and the affiliates, affiliate marketing has become one of the most popular online marketing methods for generating profits and web traffic today.  In fact, almost every merchant or retailer site today offers an affiliate program that's open for anyone to join.  Most retailers entice you to become affiliates or members of their program by promising great benefits, such as large commissions, lifetime commissions, click through incomes and a host of other benefits. However, not all affiliate program benefits are created equal.

Most affiliate programs pay you, as an affiliate, a one-time commission for every sale or lead you bring to that merchant's website.  Commissions percentages for such affiliate programs are usually large, ranging from 15% to a high of about 60%.  Other affiliate programs payout a fixed fee for every click through on traffic you send to the merchant's site.  Programs like this often pay a smaller fee for every click through. About 50-cents per click is a maximum payout. However, with the fixed price model, the visitor doesn't need to purchase anything in order for the affiliate to get compensated.

Another type of affiliate program is referred to as a residual income affiliate program.  Residual affiliate programs usually pay a tiny percentage of commission for every sale directed by the affiliate to the merchant's site.  Usually, the range is 10-20%.  Because of this, many people ignore residual affiliate program, opting instead for the higher paying one-time commission affiliate program. Such a decision to ignore the potential of such residual affiliate programs may be penny-wise, but pound foolish.

You see... although residual affiliate programs pay out at a lower rate, the potential for residual affiliate programs to  pay you a regular and ongoing commissions for a single affiliate initiated sale can provide you a superior overall benefit. Let's look at the following example.

Take two online merchants offering web hosting services on their sites.  The first merchant offers a one-time commission of $80 for every visitor you send to their site who purchases their web hosting package. Merchange number two offers a $10 commission for your visitor's signup. But he also pays out 20% of the $50 monthly hosting fee for that customer for every month that customer uses their hosting service. If that customer quits the service within 8 months, then the residual payout is not really advantageous. But if that customer remains a customer for years, then you can see the big advantage to your bottom line.

So, are residual affiliate programs worth promoting?  Most definitely. Like the rabbit and the hare, the slow but steady approach to profitability offered by residual affiliate programs, are likely to reward you as well or better... sometimes much better, than other affiliate methods. 

About The Author Alan Richardson is a well-known internet consultant and publisher with http://www.optimalwebservices.com - a Web resource firm in North Easton, Massachusetts, offering free advice and information for web-based small businesses and entrepreneurs. To read other articles by Alan, click here. To signup for the free 'Optimal Web Services for Small Business' ezine, click here