How Affiliates helped drive $17,000 in additional sales in 19 months

I used to think that affiliates are a waste of time. My beliefs stemmed from 3 assumptions:

1. They are hard to find (= I'm lazy)
2. They are inconsistent (= I'm impatient)
3. They cost me my revenue (= I'm stingy)

There is some grain of truth to all 3 of those statements. But today I know better. Affiliates are one of the most effective marketing instruments at our disposal.

But very often we look at it from the wrong angle.

Hi, I'm fairly new here...

I would have love to share a few more screenshots or at least link to something somewhere, but unfortunately IH is unbelievably restrictive when you're new, like me. Sorry. I can't even add a header image, lol. It's really a shame. I've tried to put as much value into the article as I can, in written form. I even added a table, but IH doesn't support Markdown tables.

I'll spare you the details, but if you want to know about who I am, I made a post in the "Introduction" group yesterday.

But enough about me. Let's look at some stats.

Stats & Facts

Gumroad – Information Products

• Monetisation: Subscription Model/Paid Content
• Niche: Print-on-Demand/Merch
• Timeframe: 19 months
• Number of affiliates: 4 (promoting 2 products)
• Total revenue by affiliates: ~$15,000
• Current MRR contribution: ~$1,500
• "Worst" affiliate: Creator, generated $18
• Best affiliate: YouTuber, generated $13,178
• Most effective channel: YouTube (4-5% conversion)
• Most efficient channel: Email & Facebook Groups (30-35% conversion)
• 90% of affiliate sales come from 1 person
• Affiliates represent ~15% of my MRR now

(IH doesn't support Markdown tables)
Month | Gross Revenue | Via Affiliates | Share
2019-07 | $3,069.25 | $52.25 | 1.70%
2019-08 | $5,142.86 | $15.64 | 0.30%
2019-09 | $6,108.46 | $219.44 | 3.59%
2019-10 | $6,539.63 | $204.17 | 3.12%
2019-11 | $7,022.73 | $285.75 | 4.07%
2019-12 | $6,657.69 | $297.76 | 4.47%
2020-01 | $6,564.12 | $234.13 | 3.57%
2020-02 | $6,081.86 | $289.61 | 4.76%
2020-03 | $6,381.45 | $420.23 | 6.59%
2020-04 | $6,162.40 | $350.35 | 5.69%
2020-05 | $6,443.64 | $337.38 | 5.24%
2020-06 | $7,207.45 | $490.89 | 6.81%
2020-07 | $6,992.08 | $720.34 | 10.30%
2020-08 | $9,055.70 | $1,290.00 | 14.25%
2020-09 | $8,600.13 | $1,318.95 | 15.34%
2020-10 | $8,883.67 | $1,334.28 | 15.02%
2020-11 | $10,525.38 | $1,547.61 | 14.70%
2020-12 | $10,539.48 | $1,666.44 | 15.81%
2021-01 | $10,484.12 | $1,329.10 | 12.68%
2021-02 | $10,479.05 | $1,627.60 | 15.53%

ThreadBasket – Stock Design Service

• Monetisation Model: Subscription Model/Licenses
• Niche: Print-on-Demand/Merch
• Timeframe: 4 months
• Number of affiliates: 6
• Total revenue by affiliates: ~$2,000
• Current MRR contribution: ~$360
• "Worst" affiliates: YouTuber, generated $0
• Best affiliate: Chrome Extension, generated ~$1,400
• Most effective channel: YouTube, Chrome Extension
• Most efficient channel: Email & Facebook Groups (30-35% conversion)
• 70% of affiliate sales come from 1 person

But here's the kicker.

The stats I've just listed completely understate the true value that these affiliates provide. What you see is what can be tracked. But the there are so many other benefits to this.

Relationship Status: It's Complicated

In the online marketing world, there seem to be roughly 3 groups of people when it comes to using affiliates to drive growth.

1. Those who claim it's the holy grail.
2. Those who believe it's a waste of time.
3. The apathetic and/or agnostic.

This article is not intended for the 1st or the 2nd group. Today, I want to address the apathetic/agnostic. Those who are barely using affiliates at all or aren't sure whether it's worth their time.

I don't have all the answers. I also cannot guarantee that this will work for your product. But I can share what I've learned in the past 1.5 years of tinkering with various degrees of affiliates.

Lessons I learned

The Good

• Affiliates are like independent sales reps
  These are people who communicate with their audience all the time. They are showcasing your product. They are answering questions about your product. And they know exactly how to talk to their audience. Trust their gut. They are part of your team.

• Listen to what they say
  Since they are close to their audience, they will be able to tell you A LOT about what people want. Some of our best features were recommendations of affiliates. You don't need to let them dictate what you do. But you should listen.

• They're scalable
  They only make money when you do. So there's literally no immediate impact to your bottom line. If they make a sale, it's a great win-win situation. Consider their share the well-deserved reward for all their work.

• Every affiliate counts
  You might be inclined to only focus your efforts on those with large audiences. But this is shortsighted. Not only is it more difficult to acquire them, but many smaller affiliates also accumulate. And some of them grow over time.

• Pay your best affiliates more
  Don't let greed slow you down. I start all my affiliates at 25% or 30% commission. If someone is clearly a winner, I will gladly pay them more. Especially if it's an audience I don't usually have access to.

The Bad

• Not all are created equal
  Influencers with huge audiences will drive massive traffic. However, they frequently lack engagement. Lower engagement results in less conversions. Big audiences are game changers. But it's important to understand that the metrics will be different.

• Watch out for cannibalisation
  If you've got a fairly big audience yourself, you should focus your efforts on affiliates who have audiences with no or little overlap. The greater the overlap, the more prone you are to cannibalisation from affiliates.

• Finding affiliates is time-consuming
  Searching for use cases, scouring through niches, convincing people and onboarding them requires a lot of up-front time-investment. Some people outsource part of this process via VAs, but many will not feel comfortable with this.

• They lose interest if your product doesn't convert
  This is actually good, because it exposes weaknesses in your own product. If your affiliate doesn't see any return on his invested time, they'll lose interest. They can't improve your offer. That's your job!

The Awesome

• They create social proof
  Purchasing a product online comes with inherent risks. Why should someone buy from you? Affiliates can help build trust. Customers will buy something specifically because their chosen expert has endorsed it.

• They build backlinks for you
  Every public link from an affiliate is a unique backlink to your product. This is especially important when selling on your own domain. But even platforms like Gumroad. Authority is crucial for your Google search rankings.

• They contribute more than you think
  The true ROI of an affiliate is higher than the tracking stats tell you. Sometimes because people search for your product rather than clicking the affiliate link. In other cases their browsers block the tracking cookies. None of that is your fault. It's just how it is.

Where do you find Affiliates?

Chances are you already have a good idea of where your target audience spends their time online. If you don't, then ask yourself the following questions:

• What websites would I visit to learn more about that niche?
• What are the dominant blogs in that niche?
• Which are the most active Facebook Groups/Subreddits in that niche?
• What are the biggest YouTube channels in that niche?
• Who else is offering non-competing products in that niche?

These are just some examples how you could approach this. Obviously the channels will vary depending on your niche, the demographic and their preferred channels.

If you go down this route, the important thing is to not simply send a standardised cold email to them. While this might work with someone who has a really small blog, it won't get you far with the bigger fish. Ideally find someone in your network who can introduce you to them. If that's not an option, then try to engage with them. Do your homework, read up on what they've done and demonstrate an authentic interest in their work. And then, with time, you can make the pitch. I know it sounds time-consuming, but it's worth it.

Another alternative are online databases that help connect creators who have a product with "influencers" who have an audience. A really nice example of such a tailored platform is the relatively new Gumaffiliates created by @Zahil. So, if you sell your products on Gumroad, then this might be a great way to find someone who can help sell your product.

What should I pay my affiliates?

That's really up to you and your prospective affiliate. In the end it comes down to what the affiliates alternatives are and how great your bargaining power is. But ideally, it should be a win-win deal. That doesn't mean that you need to give away 50% of your revenue, but it needs to make sense for the affiliate as well.

I start out all my affiliates at 25%/30%, unless I already know that they are incredibly effective and have a very large audience. But if someone is performing really well, I would not hesitate to increase their cut over time. Especially when I feel that I'm actually benefiting more than the stats show.

Keep your affiliates happy and they will do great things for you.

How should I implement my affiliate program?

Again, if you're using Gumroad to sell your products, then it's unbelievably simple. You can literally set up an affiliate link within seconds and you don't need to worry about anything else.

If you run your own SaaS then you'll have to decide on whether you want to build your own solution (that's what we did) or would rather implement one of the many services which handle this for you.

Benefits of using your own system:

• A lot more customisable
• You save on tons of fees

Benefits of using a service:

• Potentially quicker deployment
• An independent provider may be a trust factor
• You don't need to handle payouts yourself

What's next?

I am definitely going to continue to build my network of affiliates. Since we've got sufficient cashflow, one of my VAs will help me with a lot of the initial research. This is one of the most time-consuming parts. For the smaller type of affiliates I might also ask my VA to do some of the initial outreach.

But when it comes to closing on a deal, that's when you need to show up "in person". The best affiliates want to talk to the person in charge. Show them the respect and do that.

Thank you for reading. I hope you found some of this useful. If you have any questions, feel free ask me anything and I'll do my best to answer.

Like I said, I'm still new here. But I've got a quite a few years under my belt and I've learned a lot along the way. I plan on sharing a lot more of these learnings in the future and have started using my Twitter account a lot more as well. 🙌

Shoutouts go to...

@zahil for creating Gumaffiliates. I wish you all the best for this project.
@alvarotrigo for building FullStats-io, which I used for some of the Gumroad stats in this article.
@Mattes3 Matthias' tool GetTheAudience can be really helpful in identifying potential affiliates in your niche on Twitter.
The Gumroad team for making creator-life easy.