These days it’s really not enough to just have a single source of income. You may think your current 9-5 job is going to be there for the long haul, but with all of the recent layoffs, it’s certainly made me glad to know I have multiple sources of income.
The difficulty lies in knowing where to invest the very little amount of time after work for the highest return. When you factor in the family and relaxation time, there is a very slim sliver of time left to build a side income.
After searching for years I’ve finally settled on Affiliate income for my secondary income. In this article, I’ll go over the ins and outs of this business model so you can see if it fits your style.
What exactly is Affiliate Marketing?
Affiliate marketing is what I would like to call a middleman play. In simple terms, it’s a referral system where you get paid for the referral of someone to a product or service.
And before you go off thinking this is some sort of network marketing thing, think again. In fact, you already do this subconsciously.
Think about it. In the past year, how many restaurants, movies, events, and software did you share with your colleagues and friends? You do it so passively, it doesn’t feel like a referral anymore, you’re just recommending it.
Affiliate marketing is no different. You are simply recommending a specific product or program to those who can benefit. So in a way, you are just matchmaking, but with the upside of getting paid.
This model has become a popular way for businesses to drive sales and reach new customers. It is a low-risk, high-reward marketing strategy that allows merchants to expand their reach without investing in expensive advertising campaigns.
How Does Affiliate Marketing Work?
Let’s take a closer look at how it actually works.
You may be wondering how on earth, companies can even track these types of activities. Typically the way it works is you’ll find a product you personally use, like, and want to promote. Then you’ll check if they have an affiliate program (hint: most large brands do).
After you sign up for their affiliate program, most affiliates will have a way to log into a dashboard tracking system where you can track and generate affiliate links
This system will track the clicks, leads, or sales generated through your unique affiliate link. When a customer clicks on an affiliate link and makes a purchase, the merchant(brand) pays you (the affiliate) a commission for the sale.
For example, affiliate marketing networks (such as Amazon Associates, ShareASale, and Commission Junction) act as intermediaries between merchants and affiliates. These networks provide tracking and reporting tools, handle payments, and provide support for both parties.
The best part – any serious brand will make it abundantly clear they are on your side. They want to help you make the sale because if you do well, they get a new customer. It’s a win-win.
Benefits of Affiliate Marketing
Besides the obvious upside of making some cold hard (digital) cash, there are loads of other benefits to affiliate marketing.
Low barrier of entry
Honestly, the bar is so low, it is practically on the floor. These days with the power of the internet, you can get started literally in the next hour.
Don’t believe me? just send me your email and I’ll send you a video where I go from no website to a fully designed website and an affiliate offer signed up.
Most affiliates will start off by blogging and these days to start a blog, you just need some web hosting and a domain name.
It would be very difficult to find an easier business to start with such a low cost with high upside potential.
No inventory or shipping required
When you sign up to be any affiliate program, you are simply referring website traffic to the merchant. But what about physical products you may be asking?
Yes, even for physical products, you still don’t have to worry about inventory or shipping. This is because all of the inventory is still going to be managed by the merchant.
You refer the visitor to the merchant website where the unique tracking link will give you credit when a purchase is made.
Flexible work schedule
You may already have a flexible work schedule if you’re working from home, but nothing beats a flexible schedule and working from home.
This is made possible with affiliate marketing. There is no set time that you have to be online or selling. It is not a job after all. Instead, you’ll need to be disciplined and set your own hours.
Passive income potential
Now, this word gets thrown around a lot. Depending on how you set up the business model, there is what I would call, low maintenance potential.
Let me explain.
When you create a blog and write articles (like the one you’re reading right now!) it stays forever on the internet. If you understand the basics of SEO, this article could be read by thousands of readers for years to come.
As long as the blog is still up, a percentage of the visiting traffic will purchase something that you recommend.
The longer you stay in the program and run your business, the more it grows.
Diversify your income stream
As I mentioned at the top of the article. You could just stay comfortable in your day job, but with as little as an hour a day, you can start building small affiliate income and diversity your income streams.
Once you build a following, through email lists for example, then you can take more time to listen to your audience and see how you can further assist them on their business paths to further diversify your own income streams.
No customer service required
This is probably one of the best benefits of being an affiliate marketer. When you recommend products, especially complex products you don’t actually have to worry about the customer service side of things instead the customer service is still handled by the merchant. This is good because they are in a better position to give qualified service to their own customers. You may have intimate knowledge as a customer yourself but because you didn’t create the product, you’ll never be as detailed as the company that made it.
Access the global market of brands and customers
There was a time when you could not discover a new brand unless you physically traveled to that country and happen to see it at the market. These days, you can now find brands with a quick Google search.
On top of that, you can promote products and services to more than just your local city. With a few clicks, your digital ads can reach a global audience
When you own your own company, product development can take months or years depending on the industry you are working within.
With affiliate marketing, “scaling” is as simple as researching a new product, buying and then testing the product.
Assuming it’s a good fit for your brand, you can simply add it to your collection of products or resources that you refer.
On any given day you can add 3-5 new products to your line of offerings without having to personally create a new offering on your own. So as an affiliate marketer, this makes breaking into a new niche easy.
Learn skills companies need now
This is probably one of my favorite benefits. Being an affiliate requires mostly product research at the beginning and then marketing on the back end.
Along the way, affiliate marketers will grow their business faster when they develop skills in areas such as SEO, content creation, and social media marketing. As your experience grows, you can add these skillsets right to your Linkedin profile or resume.
After having learned SEO for 4-5 months, I was able to apply for and land jobs as an SEO strategist.
It’s a simple and legitimate way to gain work experience while you grow your business.
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Downsides of Affiliate Marketing
It’s true, affiliate marketing is no walk in the park. Though the barrier of entry is low, it does come with certain challenges which I discuss next.
Dependence on merchant
One of the primary challenges with affiliate marketing is you are fully dependent on the merchant to which you are referring. If Nike decides they want to discontinue one of its lines of shoes, you are at their mercy and must follow suit. The product has to exist for you to be able to sell it after all.
Similarly, you have no control of the quality control. This point isn’t as much of an issue because of course, the merchant will want the best quality for their own products. In fact, if you do find a merchant who does not care about the quality, you should maybe consider dropping their product and not refer them anymore.
Deliverability is not in your control
Getting the sale is just one part of the customer success equation. If the merchant doesn’t fulfill on their duties or provides poor customer service, you as the affiliate won’t have much control to change the outcome.
This is why it’s important to select reputable affiliate programs and distributors. Again, research is key here. Look for merchants with proven track records, check for reviews, and read what real-world people say about them on Reddit.
One way to combat these challenges is to diversify your affiliate products. You never want a single merchant to be the majority of your cash flow in any business. This is asset management 101.
Commissions can be low
All affiliate programs set their own rates and terms and therefore your commission is going to have a large range.
On average most affiliates will give 5% to 30% commissions. A lot of this is determined by how much margin they can afford to create based on their products.
For example for software companies, the margins are typically higher because they don’t incur the overhead of a physical office and software can scale a lot easier than say a Starbucks Coffee shop.
While this may seem like an early drawback, remember, you never had to create the product from scratch as the merchants did, so you can’t demand more than 50% of the commission. The best way to plan against this downside is to shop around.
Even affiliate merchants themselves have to compete with highly sought-after marketers. Later in your affiliate journey, you can have leveraging power if you can command a lot of traffic to your website.
Another option is to simply affiliate for high ticket offers. These commission percentages will be lower, but the price points are often 10 times a typical piece of software.