How to Start an Affiliate Program for Local, Small Business

Learn how to create a successful affiliate program for your small local business with our step-by-step guide. Drive growth and boost sales today!
Image of author Nick Cotter

By Nick Cotter
Updated Jan 10, 2024

How to Start an Affiliate Program for Local, Small Business
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If you’re an entrepreneur or small business owner looking for ways to promote your products or services, affiliate marketing may be a good option. Affiliate marketing can work with almost any type of product; however, there are some caveats regarding this type of marketing channel. One of the best ways to learn about the ins and outs of affiliate programs is to start one yourself! The following guide will cover everything from choosing an affiliate software or network (or both!) to onboarding new affiliates into your program.


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What are Affiliate Programs?

Affiliate programs are an excellent way for small businesses to market their products and services. Affiliate programs are a win-win for both the company and the affiliate. The business gets more customers without having to invest in paid advertising or pay for traffic generation. In contrast, affiliates get paid when they send traffic to one of your offers or sales pages, converting that traffic into paid sales.

For example, if you have an affiliate marketing program where anyone can sign up as an affiliate and then promote your products by placing links on their website or blog, you’re going to get more orders from people that clicked on those links than if you had spent money directly advertising with Google Ads or Facebook ads.

Example Accounting Firm Small Business Owner:

Suppose you own an accounting firm and would like to generate more clients for your business. In that case, you may think of starting an affiliate program and trying to attract local bloggers within your area to help promote your services to their readers. If those bloggers decide to promote your services and some of their audience convert into clients, you'll then pay them a commission or a "bounty."

This is a great way to generate more leads and clients for your business while increasing brand awareness. You just need someone with experience running affiliate programs that can help set up the initial campaigns, create landing pages for each blogger, choose which keywords each blogger should target within their posts/articles, then measure results.

So, Is Affiliate Marketing Good for Small Businesses?

In short, yes. It can be a great way to generate leads and clients for your business while increasing brand awareness. However, setting up an affiliate program takes time, so you should only consider doing this if you have the resources (staff or outsourced) available.

If you’re wondering whether or not affiliate marketing is right for your business, then you should ask yourself these questions:

  • Do I have the time to set up an affiliate program?
  • Am I willing to put in the effort to attract and manage affiliates?
  • Can my business benefit from more leads or clients?
  • Can I afford to pay them an affiliate a commission?

We find many small business owners first start a referral program before jumping into affiliate marketing, and this is because it’s much easier to get started and requires less maintenance. If you find that a referral program isn’t generating enough leads or sales, you can consider upgrading to an affiliate program.

7 Steps to Start an Affiliate Program for Your Small Business:

1. Ensure You Have a Positive Business Reputation.

A good reputation is critical to your success as an affiliate. Customers are likely to trust you and purchase products from your site because they feel safe knowing that other people have done so in the past. If you have a good reputation, more people will likely sign up for your affiliate program because they know the traffic they send to you will convert into customers.

To build a positive business reputation:

  • Find out what kind of reputation you currently have by surveying customers and competitors or conducting an online search of recent reviews about yourself or company. Do this regularly and make changes if necessary!
  • Ask for feedback from others (in person/via email). This can help identify areas where improvements need to be made—and provide opportunities for positive reinforcement!

2. Hire an Outside Affiliate Agency or Consultant (if needed).

Suppose you don't have the time to build an affiliate program and manage it effectively, consider hiring an outside affiliate agency or consultant. If you don't have the skills necessary to do this, then hire someone else who does. This will help you avoid the mistakes of new affiliate marketers and give you access to experienced professionals who can assist with your efforts.

Finally, suppose your budget doesn't allow for either of those options. In that case, many free resources are available online that can help you start and maintain an affiliate marketing program on a shoestring budget. However, you should know that free resources are rarely as good as paid ones, and you'll need to do a lot of research and testing before finding the right tools for your needs.

3. Decide Between Affiliate Software or an Affiliate Network.

There are two types of affiliate programs, and they work differently.

Affiliate Networks.

An affiliate network is a company that manages the relationship between merchants and affiliates. They take care of the payment processing, tracking of sales, reporting, and other tasks involved in running an affiliate program. The merchant doesn't do anything but provide information about their products or services to be advertised by affiliates.

The main benefit of using an affiliate network is that it's easier for the merchant: they don't have to deal with any administrative details themselves (and may not even want to). This can also be attractive because it allows merchants' products/services to be more widely promoted than would otherwise happen if there were no intermediary (like if each vendor had their website).

The downside is that this usually means giving up some control over how your product gets promoted; you'll often find yourself needing approval from the network before being able to change any aspect of how your campaign works online (including pricing or commission structure).

Affiliate Software.

Affiliate software is a generic term for any type of program that helps merchants manage their affiliate relationships. This can include everything from essential tracking/reporting tools to more advanced systems that allow you to track sales and conversions, collect commissions, and more. The downside to using affiliate software is that it's often more challenging to integrate with your website or other business tools (like email marketing). You also need to manage all of the accounting and tax information for your affiliate partners, which can be quite a hassle if you don't have a streamlined process set up.

4. Set Realistic KPIs for the Affiliate Channel.

You've decided to start an affiliate program and have started researching what that entails.

Before you get too far into developing your affiliate strategy, it’s important to take some time upfront to think about what your key performance indicators (KPIs) will be.

What are KPIs?

A KPI is a metric used by marketers to measure performance. It can be anything from sales revenue, leads generated through a marketing campaign, or even customer satisfaction with a product or service. The most important thing is that you set clear goals for each KPI before creating an affiliate program so that everyone knows what they're working toward when they promote your company's products and services.

5. Decide How You’ll Pay Your Affiliate Partners’ Commission.

The next step is to decide how you'll pay your affiliate partners. Below are a few different ways you can think about setting up your affiliate commission models.

Upfront payments: You can pay a set commission for each sale that an affiliate generates. This is the most common model because it's easy to manage and control, but it's not always the best option.

For example, if you're promoting a product that costs $10 and pays out $1 per sale (a 10% commission), it could take 100 sales before an affiliate starts to make any significant money.

Revenue sharing: You share revenue from sales with your affiliates after they've occurred rather than paying them upfront in exchange for bringing in new customers or leads. This can be more lucrative for both parties because no money changes hands until someone buys something; however, it also means there's no guarantee that affiliates will see any income depending on how much money is made from sales—and some buyers may not buy anything at all!

In addition to this risk factor, some merchants don't have access to their financial data and cannot accurately calculate profit share amounts—which means even if they offer tracking tools like it wouldn’t be worth using!

CPC/CPL Affiliate Payouts: The other option is to offer payment based on CPC or CPL (Cost Per Click or Cost Per Lead). For CPC, affiliates will only make money when they drive traffic to the merchant's website and get a user to click on an ad. For CPL, affiliates will be paid out for the leads they drive to your business.

6. Draft Your Affiliate Marketing Terms and Conditions.

Before you press "live" on your small business affiliate program, you need to draft together your affiliate marketing terms and conditions. This document outlines how your affiliate program works, how you will pay affiliates, and what they can/cannot do. Make sure that you've thought through all of these things before drafting up your terms and conditions!

The good news is that plenty of free legal templates are available online. You can use these to start your affiliate marketing terms and conditions. Once you have your terms drafted, you'll want to get them reviewed by a lawyer or two before publishing them! We strongly advise working directly with a lawyer when drafting any formal legal agreements.

7. Build out Your Affiliate Recruitment Strategy.

Before reaching out to prospective affiliate partners for your small business, you'll want first to ensure you identify your target audience. For example, if you have a fashion store, it's crucial to figure out who your ideal customer is and where they hang out online. Are they more likely to be on Facebook or Instagram? Do they prefer reading blog posts or watching YouTube videos?

Now that you know where your customers "hang out" online, you can now begin the prospecting phase of affiliate recruitment.

The prospecting stage of affiliate recruitment is when you reach out to potential affiliates and get them on board with your program. This can be done through email outreach, social media marketing, or any other method you choose. You can also use this stage to do a bit of research on your potential affiliates. You should know what sites they run, how many followers or subscribers they have, and how much traffic those websites receive each month. If you’re selling fashion-related products, it might be helpful to know if the affiliate has experience in the industry.

8. Onboard Your Recruited Affiliate Partners.

Now that you've recruited your affiliate partners, it's time to onboard them. This can be done in several ways: You can send them an email that outlines the terms of your affiliate program, including how much you'll pay them for each sale they make. You can also give them access to your website's private area where all this information is stored. This will allow them to see what products are available for sale and how much they can earn by promoting those items.

You'll also want to make sure they are all set up on your affiliate platform, and you can grab their tracking links and start earning commissions.

This process should be easy and straightforward if you're working with a third-party affiliate network. If not, though, it's important to make sure that your affiliates have all of the information they need to get started right away.

9. Meet and Discuss Promotion Strategies with Affiliate Partners.

Once you’ve identified and onboarded your top affiliate partners, it’s time to meet with them. This will be an opportunity for you and your partner to discuss promotion strategies. Your goal is to develop the best way for them to promote your brand, products, or services that meet both of your needs.

You should have already talked about what type of promotions you want from them (e.g., email newsletters, social media posts) and how often they should conduct their promotions (e.g., weekly). Now it’s time to lay out guidelines on how they will promote these campaigns: which platforms they will use and what language they should use when writing their copy or creating a graphic image for Facebook ads or Instagram posts.

10. Optimize Your Small Business Affiliate Program.

This process will take time, so don’t expect it to be a one-time event. Instead, it should be an ongoing process where you constantly monitor and evaluate how your program is performing. With this in mind, here are some areas that you should focus on:

  • Improving customer retention rates (through better content and more personalized offers)
  • Improving conversion rates (through better CTAs and copy)
  • Testing and experimenting with different types of content

Wrapping up Affiliate Programs for Small Businesses.

Hopefully, you can see that affiliate marketing is a great way to build a new revenue stream for your small business and start making money from the work of others. As long as you have a good product or service that people want, then it doesn’t matter how big or small your company is! Starting an affiliate program might seem daunting at first, but once you break it down into these simple steps, things start falling into place before long. Just remember: don’t be afraid of failure—there are always lessons to learn from mistakes made along the way.

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Nick Cotter

Nick Cotter

Founder & CEO

With over 7 years navigating the intricate realms of marketing, and specifically B2B partner marketing, Nick has forged collaborations with top-tier tech brands, prominent agencies, and some of the industry's foremost B2B publishers and content creators. His deep immersion in both marketing landscapes showcases a trajectory of expertise and innovation. Identifying a significant void in specialized resources, he founded Growann.The aspiration? Deliver unparalleled insights and guidance, carving out a dedicated space where the broader marketing and B2B partner marketing communities can flourish.