An affiliate system is an effective way to expand the reach of your online store and increase sales through collaboration with partners. Affiliate marketing lets online stores leverage the power of external partners to grow their customer base and ensure steady sales growth. This article focuses on the key aspects of this system—from setting commissions to tips on creating mutually beneficial cooperation for all parties involved.
What is an affiliate system and how does it work?
Affiliate marketing enables companies to expand the reach of their products or services through partners who promote their offer for a commission. It’s crucial to understand how the cooperation works and the roles of each participant.
Roles and participants
- Advertiser – the company that offers an affiliate program and sets the cooperation terms.
- Affiliate partner – an individual or organization that promotes the advertiser’s products and earns commissions for conversions.
- Affiliate platform – a tool that connects advertisers and partners, tracks performance, and pays commissions.
Collaboration process
- Registration – the partner joins the affiliate program and receives promotional materials.
- Promotion – the partner shares links and assets on their platform, e.g., a website or social media.
- Tracking – unique links are used to track customer activity and conversions.
- Commission – the partner receives a commission after a successful sale or other action.
Measuring success
It’s important to regularly evaluate campaign performance using analytics tools that measure clicks, conversion rate, and average order value. This helps optimize marketing strategies and increase return on investment.
Advantages and disadvantages of affiliate collaboration
Although affiliate marketing offers many benefits, this model also has drawbacks that should be considered before implementation.
For companies (pros and cons)
- Brand control – working with affiliate partners can lead to a loss of control over brand presentation, which may affect brand image.
- Partner quality – it’s not always easy to find reliable partners who will represent the brand in line with its values and standards.
- Potential fraud – some partners may attempt fraudulent practices, such as generating fake clicks or commissions, which can hurt budgets and trust.
For partners (pros and cons)
- Low commissions – high competition can drive down commissions, reducing earning potential.
- Performance dependency – earnings often depend directly on the partner’s ability to generate sales, which can be risky without adequate support or suitable marketing tools.
- Management complexity – maintaining and optimizing campaigns can be time‑consuming and requires continuous monitoring and adjustments.
Disadvantages of the affiliate system
- Long‑term investment and ROI – while affiliate programs can be effective, initial returns may be lower than expected and require time to build a strong partner network.
- Need for management and monitoring – effective affiliate programs require regular administration and oversight to ensure partner quality and proper system function.
Commissions in an affiliate system and how to set them
Commission is a key element of an affiliate system, and proper setup can significantly influence overall success. Commissions are determined based on predefined models that specify how partners are rewarded for their contribution.
Commission models
There are several basic models for setting commissions, each with specific advantages and disadvantages.
- CPC (Cost per Click) – in this model, the affiliate partner earns a commission for every click on the link, regardless of whether a purchase occurs. This model suits traffic‑boosting campaigns but may have a lower conversion rate because the commission isn’t tied to a completed sale.
- CPA (Cost per Acquisition) – one of the most common and advantageous for advertisers, as commission is paid only for a specific action (e.g., purchase, registration). This ensures advertisers pay only for effective results, but it can be more demanding to manage and optimize.
- CPL (Cost per Lead) – commission is paid for a potential customer’s contact (e.g., email, phone number). This model is often used in sectors such as financial services, training, or B2B.
Recommendations for setting fair commissions
To make the cooperation beneficial for all participants, it’s important to set commissions that reflect the value affiliate partners bring. Consider the following factors when setting commissions.
- Product value and margins – commissions should reflect product margin and be attractive enough for partners.
- Market competition – analyzing competitors and their commission structures provides insight into standard, competitive commissions in the industry.
- Partner motivation – commissions should be motivating enough for partners to invest time and effort in promotion. High commissions can attract quality partners, but they must remain sustainable.
- Quality vs. quantity – balance quality and volume when setting commissions. While higher commissions can attract more partners, overly generous rewards may increase costs without a corresponding return.
Proper commission setup is the foundation for long‑term successful collaboration and mutual benefit between the advertiser and their affiliate partners.
Using an affiliate system in Shoptet
Shoptet, a popular platform for building online stores, offers the option to implement an affiliate system that can significantly increase your online store’s reach and sales. This system enables collaboration with affiliate partners who promote your store’s products in exchange for commissions from completed transactions. Using affiliate marketing on Shoptet can include various strategies, from working with influencers to direct partnerships with bloggers and niche websites.
Setting up an affiliate program in Shoptet is simple and can be tailored to individual stores’ needs. Shoptet makes it easy to define commission models, monitor partner performance, and track campaign effectiveness. Thanks to integration with external tools and platforms for managing affiliate programs, merchants can optimize cooperation and achieve better results with lower marketing costs.