Business model: Affiliate

I occasionally blog about different business models so that people who are looking to start a business or extend their businesses are aware of their options.

THE AFFILIATE BUSINESS MODEL

In the affiliate business model, the business owner identifies a niche and establishes relationships with other businesses that serve that niche. Then the business owner refers prospective buyers to the other business and receives compensation for any purchases made.

It’s a good business to start because there is low overhead — you don’t need to own any inventory yourself. All you need to do is brand yourself well in a well-chosen niche and profit every time someone buys. And, it’s also a good “add-on” business because it can easily plug into an existing business model to provide an additional revenue stream.

Here are some tips to help you:

  • There are a lot of people serving some niches (like internet marketing or the business opportunities niches) while other niches are terribly underserved. I think you’ll be more successful serving the underserved niches.
  • Some affiliate success stories result from high-trafficked blogs but I think the very best type of affiliates are delivered through email. Email marketing, when done right, still works well.
  • Build rapport, trust, and credibility with your market by providing free information and lots of value. A free report or some software is a good start but I’m also a firm believer in continuing to offer value long after that initial value was provided early in the relationship.
  • This is very much a relationship-driving business. You need to build relationships with your list of buyers (even though they are not buying from you) and you need to build relationships with your vendors. (I run several affiliate brands and one of them took a huge hit early on when the relationship between me and the vendor soured. It was my fault: I didn’t maintain the relationship and a few misunderstandings between us melted down the relationship.

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