Frequently, I’m asked if I’d like to partner with our client and accept a percentage of the profits in exchange for a discount on the project. I always consider each situation individually but one thing generally convinces me to decline the offer. I will generally give the proposal serious consideration IF I have complete control over the sales process. For instance, if we develop a website that sells a product on the site without client intervention, that’s appealing. On the other hand, if we develop a site that requires customers to call in order to purchase, I usually decline. I wonder, what happens if the customer has a rude employee who answers the phone and loses the sale? I could have done everything in my power to deliver the potential customer to the vendor, only to lose the sale and my potential income.
Why do you tell you this? Because affiliate programs are very similar. If you sell a product on your site, you have complete control over your income. If you deliver clicks to someone else’s shopping cart, you lose control over the most critical point in any sale. The smallest details can ruin the sale at that point. If you choose to go with the affiliate route, be sure that you know the conversion rate of your partner’s site. If they have not tested their site and done everything in their ability to increase their conversion rates, your income will suffer, despite the fact that you may be delivering lots of website traffic to their site.
If you sell products through your site and have them drop-shipped, you control everything. Plus, I’ve seen some affiliates who are dishonest and don’t accurately calculate your commissions. You have no way of knowing how much you’re owed. You can only tell how many clicks you delivered to your affiliate partner. I’ve seen affiliate sites that never earn a penny, despite delivering traffic to their partners. Unless you have complete faith in their bookkeeping and ethics, you won’t know if you are supposed to receive a paycheck or not. That makes business planning and cash-flow projections difficult.
I hope that helps.