Affiliates are people or companies that use the access they have to people to help both you and them to make money.
In practice it’s a lot harder than it seems though.
Affiliates and you don’t have your goals aligned. You intend to make money off your paying customers, but an affiliates primary motivation to join in a relationship with you is to make money, period.
And this opens the door to some very nasty tactics, many failed companies can attest to how hard it really is to run a successful affiliate program.
For instance, consider the case of a malevolent affiliate that sets up sock puppets to buy your product using their affiliate code, using stolen credit card information. They pocket the commission and long before the charge-backs have started to roll in they’re gone.
A typical strategy for countering this is to use a hold-back period. Also look out for affiliates that are suddenly very successful.
More affiliate problems to watch out for: spammers that will use your corporate ID as the hook to bombard millions of unsuspecting internet users with aggressive emails linked to their affiliate code.
Typically, managing an affiliate program can be lucrative but you need to be very very wary of people that are going to abuse you. If possible limit your initial foray in to affiliate territory to doing business with companies that you know and trust, and only branch out further once you’ve mapped out reasonable parameters for all the key values governing your affiliates. After that anybody that appears to be an outlier is to be treated with the utmost caution.
Still, affiliate programs can be serious money makers and can multiple the marketing effort done on your behalf without a substantial increase in costs, typically rewards are done based on actual performance, so no cure, no pay.