Affiliate payment structures
The term residual income, when used in the context of long-term income, can be replaced by the term, leveraged earnings which might be the most coveted source of income in the sales profession. The most significant difference between the two methods of earnings might be that residual income is earned repeatedly for a single sale by the individual salesperson, whereas leveraged income is earned repeatedly based on the sales of others (recruits/sub-agents).
It is important to understand however, that leveraged income can be earned without residual payments when group leaders, managers, recruiters and other such agents have utilized their leadership skills to hire, train and motivate other people to go out and make sales that are considered “one and done” with no prospects for repeated payments on the sold item; unlike sales of magazine subscriptions, insurance policies or membership dues, which are paid for on an ongoping basis.
But staying on the subject of affiliate marketing and the various programs and payment structures utilized by online merchants, if you are a webmaster in need of additional income; or you are planning to set up a Web-based business but you do not have a product or service to sell, affiliate marketing may be the best solution for your particular situation, since you really wouldn’t need to worry about creating a product because the merchants will provide them.
All you would need to have is a website with interesting content that is related to any product or service you decide to market. By joining a particular affiliate program, or by becoming an independent affiliate representing various merchants, you can start earning money right away thereby meeting the financial demands of your unique situation; but in order to ensure that your earnings from sales can be relied upon to come repeatedly, you will have to align yourself with those merchants that offer residual income, a task that may be easier said than done.
To be a good or super affiliate marketer and make the kind of money you expect to make it is important to understand the nature of affiliate marketing as it relates to the kind of business relationship that established between merchant and affiliate. In affiliate marketing, an affiliate agrees to direct traffic to a merchant’s website or product page, and if that traffic is converted into the visitor taking any kind of action like making a purchase subscribing to a service, the directing (referring) affiliate will be compensated.
Compensation may take the form of either a percentage of any sales made in the form of a commission or a fixed fee predetermined upon the application of the affiliate with the merchant’s affiliate program. Based on this kind of arrangement between affiliate and merchant, both having mutual interests in its success and deriving mutual benefits from it, affiliate marketing has become one of the most popular Web marketing methods today.
Set fee versus residual income
In fact, almost every merchant or retailer site today offers an affiliate program that any one can join; and most retailers would entice people to become affiliates or members of their program by promising great benefits like large commissions, lifetime commissions, click through incomes and various other benefits; but would it be reasonable to think that all these affiliate programs offer the same benefits? Read on to learn how reasonable such a thought might be.
Most affiliate programs would pay affiliates a one-time commission for every sale or lead referred to the merchant’s website by those affiliates; and such one-time commissions are usually large – ranging from 15% to a high of about 60%. Other affiliate programs would pay a fixed fee for every click through or visitor referred to the merchant’s site by any affiliate; and programs like this often pay a smaller amount for every click through – usually not amounting to any more than half a dollar, even in the case when no purchase is made but the visitor becomes a lead.
Residual affiliate programs usually pay only a small percentage of a sale as commission for every sale referred by the affiliate to the merchant’s site. This commission is often in the range of 10% to 20% of sales made; and because of this many people ignore residual affiliate programs and opt rather, for the higher paying one-time commission offered by other affiliate programs. So depending on their financial objectives and individual preferences, marketers make their choices.
Contrasting income modes
However, for a marketer to ignore residual affiliate programs based solely on the fact that fees or commissions are smaller would be to forego a reliable and – over the long term – substantial income stream; because despit the fact that residual affiliate programs pay at a lower rate, merchants offering such programs would generally pay regular and ongoing commissions for a single affiliate initiated sale. That means you, as an affiliate of a affiliate program can get paid on a regular and ongoing basis.
Just to elaborate a little further, suppose there are two online merchants both offering web hosting services on their sites. The first merchant offers a one-time commission type of affiliate program that pays $80 for every single affiliate initiated sale. The second merchant also offers an affiliate program, but it is a residual affiliate program that pays only $10 monthly for every single affiliate initiated sale for every customer that opens a hosting account.
Naturally an affiliate may get attracted to the larger commission of $80 being offered by the first merchant, instead of the smaller amount of $10; but by thinking things over before actually getting involved with one or the other, the affiliate may be able to better understand that the second merchant is offering more of an opportunity to earn a larger amount of money since the $10 will be made on a continuous basis for as long as the customer has the account.
Making the choice
So for the same effort of getting one customer to subscribe to the merchant’s service, you get paid monthly in residual affiliate programs while you only get paid once in a one-time commission type of affiliate programs. That having been said, are residual affiliate programs worth promoting? Definitely yes, because you simply get more money from these types of affiliate programs in the long run; and would residual affiliate programs work best for you? It depends, but with the benefits that residual affiliate programs can provide, it would really be unwise to ignore such programs.