What is affiliate marketing? Examples & how to get started

As a digital entrepreneur, you know how important sales are. You can have the best digital product in the world but if it’s not selling, your business is in trouble.

Affiliate marketing is a strategy to consider to increase your sales. Let’s look at what it is and how you can get started with affiliate marketing. 

What is affiliate marketing?

Affiliate marketing is when you sell somebody else’s product online for a commission. For example, an entrepreneur or an established company may have a product or a catalog of products, either digital or physical. They let others promote and sell those products, paying them a commission every time they sell something.

As Pat Flynn says in his series on affiliate marketing: “Affiliate marketing is the process of earning a commission by promoting another person’s (or company’s) product.”

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Examples of affiliate marketing

For example, you want to get your feet wet as an online product creator. But instead of investing time creating a product that somebody might not buy, you try your hand selling somebody else’s product. 

That could be a course on Kajabi or selling Kajabi itself through the Kajabi Partner Program. It could be any digital product that’s sold online that has an affiliate program.

Affiliate marketing has a long history in the non-digital space, too. Insurance companies such as Farmer’s, AllState and State Farm sell their insurance policies through independent insurance representatives or brokers. 

These representatives are not employees of the insurance companies. They have set themselves up as businesses for the purpose of selling insurance on behalf of Farmer’s, AllState, or State Farm.

Whenever they sell an insurance policy to a friend or family member, they get a commission from the insurance company.

Affiliate marketing is similar, the difference being that sales take place online. And there’s no limit to the number of products you can sell as an affiliate. 

What kind of products can be sold on an affiliate marketing basis?

Whatever can be sold online can be turned into an affiliate product.

• You can set yourself up as an Amazon affiliate and sell whatever Amazon sells, then gain a percentage of the sale. Make sure to check out programs such as the Amazon tax exemption to benefit from the platform as much as you can.
• You can sell internet software or other internet services, such as Kajabi, hosting services, marketing automation software, or any number of software products or technology services.
• You can sell dietary supplements and vitamins.
• You can sell physical products.
• You can even sell insurance if you choose!

The list is endless. The idea is to find affiliate products that align with your business, so you can start generating income while you’re developing your own digital product.

Let’s get into weeds to explore how you, as a digital entrepreneur, can take advantage of affiliate marketing. We’ll talk about the components, the players, the technology, and how you can make money as an affiliate. We’ll also explore how you can use affiliates to increase sales and distribution of your own product.

The affiliate marketing players

There are four parties involved in an affiliate marketing relationship: the merchant, the affiliate, the consumer, and the affiliate network.

The merchant

The merchant is the person or company that has a product for sale. To increase sales of their products, they recruit affiliates to promote and sell them. The merchant then pays its affiliates a commission whenever somebody they refer buys their product.

The affiliate

The affiliate is a person or entity that decides to sell a merchant’s product to their own audience for a commission. They sign up for the affiliate program and then sell the product to their audience. 

The affiliate uses a personalized link provided to them by the merchant that identifies them as the source of the new customer. This link ensures that they get credit for the sale and earn a commission.

The consumer

The consumer is the person who ultimately purchases the product. They learn about the product through the affiliate. They click the affiliate’s link when they’re ready to buy. But ultimately the consumer buys the product from the merchant.

The network

The affiliate network is a platform, like Clickbank or the Amazon Affiliates Program. It provides affiliates a catalog of products to sell. 

When you sign up as an affiliate, the merchant asks you to sign up through their network. And if you’re looking for affiliate products to promote, you can join a network and browse their product listings. In either case, you’ll need to be approved by the merchant before you can begin selling.

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Examples of affiliate marketing

Let’s see a few examples of affiliate marketing in action.

Amy Porterfield

Let’s go directly to the Kajabi family. Amy Porterfield is an online consultant, entrepreneur, and course provider. She’s built a massive following of 250,000 subscribers through her podcast and blog.

Amy teaches entrepreneurs how to leverage their knowledge to build online courses and earn money as a digital entrepreneur. But Amy doesn’t only teaches people how to create courses. As a Kajabi affiliate she sells the platform that enables entrepreneurs to host and deliver their courses. 

Pat Flynn

Flynn has built an empire of entrepreneurs that listen to his podcast. Not only do they buy his courses, they buy the tools he promotes on an affiliate basis. 

Copyblogger

Brian Clark, founder of Copyblogger, built a multimillion-dollar business by attracting hundreds and thousands of subscribers and selling various digital products. This includes everything from courses to premium WordPress templates to SaaS software. 

Most of what Copyblogger has sold are original products created in-house or through partnerships. But they’re also an affiliate for marketing tools that they use regularly. They promote these affiliate products with the same effort they promote their own products.

Michelle Lewis

Michelle, another Kajabi affiliate, “helps CEOs become celebrities in their niche through Hollywood strategies.” Through her courses, videos and podcast she leverages her insider information of Hollywood (as a former actor) to teach what she knows. She also sells Kajabi, Asana, Social Bee, and other tools as an affiliate to help her clients carry out the strategies she teaches.

Graham Cochrane

Graham, an audio-engineer turned audio-engineering teacher, has leveraged Kajabi to share his knowledge with other audio engineers. He is also a Kajabi affiliate and teaches others how to create courses, so they can teach what they know.

How to get started with affiliate marketing as the affiliate

The first step is to identify companies that have affiliate marketing programs and sign up for them. Then, you start selling those products to your audience. 

Affiliate marketing isn’t about selling at all costs, though. It’s about offering solutions that your audience can benefit from. With this in mind, you need to avoid scammy, unethical affiliate marketing practices.

The hallmarks of bad affiliate marketing are: 

• Cheesy, poorly designed websites.
• Lots of affiliate links but no valuable content.
• Online ads that take you to websites that look like phishing schemes.
• People promoting products they’ve never used before.
• Product-centric content that’s just one big pitch-fest.
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Check out this video with Kajabi Hero and affiliate Ant Hodges where he shares his tips for success with affiliate marketing:

How to succeed with affiliate marketing

The dream of online entrepreneurship has been stoked by successful online gurus like Gary V., Brendan Burchard, Amy Porterfield, Pat Flynn, Andrew Warner, Brian Clark, Joe Pulizzi, and others. 

What makes these figures stand apart? They’ve built thriving online businesses by creating and delivering quality content on a regular basis. They attract loyal audiences that depend on that content for their careers, hobbies, or family lives. They’re essentially online media companies. 

The key is to think like an online media company. As a digital entrepreneur it’s easy:

• The cost of reaching a defined audience with content is near zero. 
• You don’t need to do massive mailouts or print jobs.
• You only need to serve your audience by offering products you know and trust.

As Joe Pulizzi says in an article for the Content Marketing Institute: “The new media business model and the new marketing business model are exactly the same.”

Here are five steps for succeeding at affiliate marketing:

1. Build a minimum viable audience.
2. Find out what your audience needs.
3. Find products that fulfill those needs.
4. Set up an affiliate relationship with the merchant.
5. Use a soft-sell approach to promote those products to your audience.

1. Build a minimum viable audience

What is a minimum viable audience? You have this when:

• You’re receiving enough feedback from comments, emails, social networks, and social media news sites to adapt and evolve your content to better serve the audience.
• You’re growing your audience organically thanks to word-of-mouth, email forwards, and social media sharing by existing audience members, and earned media.
• You’re gaining enough insight into what the audience needs to solve their problems or satisfy their desires beyond the free education you’re providing.

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How to build your minimum viable audience 

You can build your minimum viable audience by:

1. Identifying a target audience you’d like to serve.
2. Creating content that adds daily utility value to their lives (in their career, their hobbies, or in their family life).
3. Encouraging them to subscribe to your content, either your email newsletter, podcast or YouTube channel. Or all of the above.

The key to building a loyal audience is generating trust and authority. Then identify what your audience needs and give it to them.

Do you create content to help beauty salon owners improve how they run their business? Give them all the tips and advice they need to build a thriving salon business.

Do you write content for cyclists training for races? Provide them with tips to increase leg strength. Teach them how to choose the right bike. Tive them valuable race-day strategies.

Do you create YouTube videos to help up-and-coming software developers get freelance gigs? Give them as much information as they need to improve their career. Help them find sweet development gigs that pay a lot while helping them build their resumes. 

2. Find out what your audience needs

Once you build your minimum viable audience you’ve essentially built yourself a feedback loop. Through comments on your website or social media posts, responses to your email newsletter, statistics on which content gets the most clicks, and other types of feedback, you understand what your audience is likely to buy.

The audience feedback loop is what enabled Brian Clark to have a successful launch every time he released a new product to the Copyblogger audience. It’s also the subject of Joe Pulizzi’s book Content Inc., which is due for re-release in April with updated content.

3. Find products that fulfill those needs

Once you know what problems, desires, frustrations, and dreams your audience has, you’re ready to find good affiliate products. You’re looking for products that can solve their problems, fulfill their desires, resolve their frustrations. 

Start with products you use on a regular basis. Then, join affiliate networks to find other opportunities.

4. Set up affiliate relationships with merchants

Many merchants offer affiliate programs on their website. Once you sign up and get approved as an authorized affiliate, they will provide you with special product links you can use that attribute sales to you. You can use these links to promote their products on your own website.

For example, through the Kajabi Partner Program you can sign up online using your Kajabi login. You’ll earn a 30 percent commission for any sale that can be tracked back to you through your affiliate link. Just make sure that your website and whatever website you're promoting use SSL encryption so all of your information stays safe online.

5. Use the soft sell to promote these products to your audience

Pat Flynn uses the term, soft pitch pipeline to describe affiliate marketing. The pipeline starts with a solid relationship with your audience. The best affiliate products will fit your audience’s needs and solve the problems you discovered in Section 2 above.

But don’t promote products just to sell something. To continue generating trust with your audience, they must see that you’ve successfully tried the product yourself. As Flynn said:

“I only recommend products that I’m very familiar with. Preferably, these are products I’ve used before and that have helped me achieve something. If I’m not confident in the product and I don’t feel it will help people, I will not promote it….I never directly tell anyone to buy a product. I always recommend products based on my experience and in the context of what I’ve done or what I’m doing with it.”

Always avoid a hard pitch. Steer clear of anything that will make your audience feel uncomfortable. Talk about your experience using the product, what it did for you, and why you love it. Then give them your affiliate link so they can buy the product.

Offer a bonus

This is a good way to ensure they buy from your link instead of going directly to the merchant. Give your audience something extra they wouldn’t get if they bought from anyone else.  

Let’s say you create content for animal lovers about non-pharmaceutical treatment for our little furry friends. If you’re an Amazon affiliate, you could promote books on alternative pet medicine.  Send them to Amazon with your affiliate link. Then offer your audience a bonus or two with proof of purchase.

Here are some bonuses that work well:

• An hour of free consulting
• Access to a free course (hosted on Kajabi, of course)
• A unique resource that only you provide

How to find products to sell

Don’t look for products just to sell products. Focus on building your minimum viable audience. 

You need to discover your audience’s needs, wants, problems and desires. Then, and only then, should you look for a product.

After you’ve identified your audience’s needs, where can you find the right product? There are several affiliate networks to choose from.

Blogging Wizard has reviewed 11 affiliate networks. Let’s look at a few of them here: 

1. Amazon Associates

Amazon Associates is a great source of physical products. Since they sell just about anything in the world, as an affiliate, the world is your oyster.

Amazon’s average commission rate is between 1 percent and 10 percent, but it does have its peculiarities. Despite being the biggest name in commerce, the universal cookie they use to identify your affiliate links and credit you for certain sales only lasts 24 hours.

2. CJ Affiliate (formerly known as Commission Junction)

As of this writing, CJ has 3,000 affiliated merchants, making it one of the largest affiliate networks. You get access to physical as well as digital products from sources such as Lowes, Overstock, Office Depot, Priceline, GoPro, IHG (Hotels), and Grammarly, to name a few.

3. Clickbank

ClickBank is another one of the better-known affiliate networks. It has both physical and digital products. However, it tends to aggregate smaller providers and favors digital over physical products. The good news is that commissions are pretty high for most merchants. The generous refund policy, however, means you might lose commissions after the fact.

4. Rakuten Marketing

Rakuten Marketing is another source of physical products from big names such as Walmart, Best Buy, Macy’s, and Papa Johns. (Gotta love those pizza affiliates!)

Software products as affiliate marketing products

Another source of affiliate products are the apps we use everyday as digital entrepreneurs. From course software (like Kajabi) to accounting apps, anything that is available to digital entrepreneurs is probably also available to sell as an affiliate product.

Kajabi has one of the more generous affiliate programs in the industry, with a 30 percent payout for sales through affiliate links. Some of the most successful and popular internet marketers sell Kajabi on an affiliate basis, including Amy Porterfield, Michelle Lewis, and Robert Thomas Jr. You can sign up for the Kajabi Partner Program here. 

There are dozens and hundreds of software products out there, too numerous to mention here, and many of them have affiliate marketing programs.

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How to get started with affiliate marketing as a merchant

We’ve explored how to make money as an affiliate marketer, selling other people’s products on a commission-basis. But what if you have your own digital products: courses, eBooks, consulting? How can you leverage affiliate marketing to expand your market and sell more?

Here’s why you should seriously consider setting up an affiliate marketing program for your products:

• You avoid paying up front for advertising. If you’re not happy paying Google and Facebook for ads before you get your first customer, then creating an affiliate program is great for you. You won’t have to fork out any money until an affiliate partner sells your product. That’s performance marketing in a nutshell.
  
  
• You expand into other niches. Suppose you sell your product to Christian moms, but you want to extend your market to Muslim moms and Buddhist moms. You could forge partnerships with Muslim or Buddhist mommy bloggers and have them sell your products to their audience.
  
  
• You can avoid the “big three.” You may not want to rely exclusively on Facebook, Google, or Amazon to promote your product. Working with affiliates enables you to sell into new markets through a network of small and medium businesses like yours.
• Low-cost way to sell more. Related to number 1 above, if your marketing budget is small or non-existent, signing up affiliates to sell your product is a great way to grow while keeping your marketing overhead low.
  
  
• Leverage larger audiences than your own. One of the ways Jeff Walker was able to supercharge his Product Launch Formula was to partner with affiliates with much larger audiences than his own. This is a smart strategy if you’re just starting out. In fact, when you’re fairly new to the market, you need the third-party validation of people who have already attracted a large audience.

How much should you pay your affiliates?

You can pay your affiliate a flat rate or a percentage of each sale they help you make. Most affiliates offer a percentage, because it’s the easiest way to ensure they stay profitable. But flat rate commissions work well too, if you know your numbers.

When figuring out how much to pay, you need to offer a commission that will attract good affiliates. But it shouldn’t be so much that it cuts into your profits.

So you need to know your numbers. You need to know: 

• Your average customer lifetime value 
• Your average cost of acquiring a customer. This would include your affiliate commissions.
• Your customer churn rate. What percentage of customers do you retain in a 12-month period? 
• The the revenue each customer brings in.

Well below your customer lifetime value

Your affiliate commission should be well below your CLV. It’s only one of your acquisition costs. It’s likely you also have advertising costs, referral fees, and discounts. 

All of these acquisition costs, added together, should be less than your CLV. Otherwise, your business won’t turn a profit.

High enough to attract affiliates

If your affiliate commission is attractive, your affiliates will work harder to sell your products. When you profit, they do too. 

Here’s a product on Clickbank that offers an attractive commission. 

Affiliates earn a flat $125 per sale, with a percent commission on upsells. The conversion rate is 11 percent, which means approximately one out of every ten referrals will buy. The seller even tells us what type of people convert the best. 

That makes it easy for affiliates to know if this is a good fit for their business. If it is, they know how much traffic to send to this landing page to achieve their financial goals.

Now compare that to this Clickbank product:

This commission is 50 percent of the initial sale and 50 percent of each month’s membership fee for each sale the affiliate sends their way. Assuming the merchant retains each customer for three months, the affiliate gets $178 per sale. 

Affiliate commissions typically range from five and 30 percent. Anything above 25 percent will be attractive to affiliate marketers. But don’t go that high if it will cut into your profits. 

If most of your sales are about the same amount of money, you can avoid confusion by offering a flat-fee commission. Do the math yourself: Calculate a percentage of your course or coaching program. Make that your flat-rate commission.

Then work hard to optimize your landing page, so your affiliates are happy with their earnings. As long as they earn money from their marketing efforts, they’ll continue to sell your products.

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Using affiliate marketing to sell your Kajabi products 

Kajabi makes it easy to have affiliates sell your online courses or digital products. This feature is included with the Pro and Growth plans.

To enable affiliates to sell your Kajabi products, you will enable Affiliate commission for your Offers. You can generate Share Links to redirect to any URL, Landing Page or Checkout Page. 

Your affiliates can then use those Share Links to promote your products or services. You can determine what commission they get with easy successful sale your affiliates drive. 

It’s a win-win-win: you generate more revenue, your affiliates get a commission and more people get exposed to your valuable knowledge products you’re offering. 

You can try Kajabi free today and see if affiliate marketing is the right tactic for your business.