Why I Built My Own Affiliate System

If you’re an app developer who has released at least one product in your lifetime, you have probably already learned by now that it is rare for something to go viral overnight. You might spend years just waiting for the right niche to find it and love it. Writing an article, in my experience, and having it go viral overnight is far easier to do than releasing a product that everyone feels they need to be using. It is not building the product that is the hard part, but actually marketing it as something everyone needs to be using that remains a lot of work, that most of us don’t usually learn about beforehand.

You could do a Show HN, a Product Hunt release, or you can find at least a dozen websites that are frequented by people interested in learning about new apps and startups, such as the BetaList, StartupLister, LaunchLister and so many more, that all submit to many different types of large media-type websites that report on new technologies. I have signed up for all of these personally and love receiving daily emails so I can check out all of the latest products out there! Most of these websites charge you a fee or make you wait at least a month or two before doing anything with your submission.

From writing articles on my products, explaining what they do, why they are useful, and how to use them, to getting people on board with understanding how your product can be useful and valuable to someone and their business. This takes effort and months of work. When reading IndieHackers, it is clear that the majority of these founders, who rightfully began to start seeing earnings of $100 a month up to $500,000 or more a month did not get to this point overnight, with the exception of maybe a very few lucky ones, who had the email lists and backing of potential clients who were already waiting for the product release. Most give credit more to SEO far more than any did to any type of paid advertising method.

IndieHackers Interview shows $500,000 a month in revenue — something we all dream about.

Writing articles and publishing them on any publication without making it seem like you are “spamming” or “self-promoting” is not always easy. For example, my specialty apps are currently in providing a virtual numbers as service, known as Call Me Private — and Text Me Private, for virtual numbers that do text messaging only. Writing about it and telling people about it could easily come off as me deliberately making efforts to “promote my product”, and in a way to get people to understand my product, I do have to talk about it that way. Talking about it has likely allowed me to acquire a few customers who absolutely love the product, use it to remain anonymous, or run their businesses.

Finding and convincing many others to sign up? Finding them is the hardest part since my product can be compared to finding a needle in a haystack on the Internet. You found out about it in this article simply because I mentioned it, otherwise, you had no clue it even existed. So the promotion of a product is not so easy unless I have the funds to do so. With funds, I could try advertising with Google Adwords or Facebook Ads or even on any of the social media giants. This comes with risks: paying for clicks or impressions is one thing, but actually being able to acquire customers to click, register, and pay for a virtual number, or at least give it a try — well, if we had this formula down, than many marketing businesses that help you specialize in marketing your product would be out of business, and we’d all be in luck!

The Processes of Marketing

In the world of marketing, having the funds will help you accomplish a lot. There is a reason why we know what the McDonalds symbol looks like. There is a reason that we associate the Gerber company with babies. There is a reason we like to buy things so cheap and we know exactly where to go to do just that. Even when it comes to searching the Internet, there is really no question of where to go and how to do it. That didn’t happen overnight and it didn’t happen without a budget to do so. I bet you can identify at least 10 logos on here. Bonus for getting at least 90% of them.

Can you recognize the brand from the logo?

You were not born knowing what these logos meant. If someone showed you a photo of these logos without you ever knowing, than that means they haven’t marketed enough. The fact that all of these companies have spent billions of dollars since their formation to get you to recognize their logo was definitely intentional. You see the logo, you know the brand, you have a certain type of trust with that brand, and you likely wouldn’t even question it.

Most of us, however, are without much of a budget to work with — a lucky few advertise and get funding from investors or angels or even might borrow from their own family or some may even take out a home equity loan as gamble on their business and their home. There are many ways to get funding, but most of us lack the resources and the knowledge to do so — especially convincing others that your product could be worth the investment. For the average guy, the average developer, who wants to do things on his (or her) own — his (or her) resources are definitely limited. What is an app developer to do in order to maximize his (or her) resources of marketing without spending a virtually nonexistent budget?

Create an affiliate program and get those few early customers to sell the service for you. You could hire a marketer, hire a salesperson, hire a technical support person, or just delegate tasks to your employees, if you have them. All of this requires money, time, and interviewing to try and find the right match for you. It requires you have an actual business with employees and likely puts you in the red before you’ve even begun.

Affiliate Payout with $10 pending

With an affiliate program, you are letting your current customers know that if they sell X product, they will get paid X amount based upon each sale of that product. Now being fair with your payout is going to take some brainstorming and calculations. No one is going to really work hard for you if they only make 30 cents per sale. There is no skimping around the system or lying about making sales. A sale is a sale that is programmatically captured when the product gets purchased.

The tally is kept in a database where once user makes X amount of sales, they may claim their payout. The minimum amount for a payout can be set to $0, $5, $10, or even $100, or whatever you set it to be. The lower, the better, as how long do you — or your affiliate — really want to wait for earnings? A no-minimum payout might result in a higher fee to be paid, whereas a higher payout could result in lower fees. Or you could simply not pass on the fees the services charge you to payout. Payouts can be done with Stripe, Paypal, or any other service. If you didn’t want to use any of these and have a great service, you could also provide credits to put towards paying for the actual service itself, though money is always incentive for people to really want to do marketing for your product.

Affiliate Payout

An affiliate program allows you to have employees without having actual employees. No guilt for having to lay them off if there is no business and no pressure for them to make sales or depend on you for their livelihood. They are paid based on commissions from sales of your product. An affiliate program is almost always to be a supplemental income and never a permanent one. This is almost agreed upon universally by everyone up front. Another plus to this is that you never actually have to meet with any of your affiliates face-to-face.

You can pay your “employees” without having to report anything, unless of course, they manage to make above the IRS limit of $600. Most affiliates will rarely get to that point, unless you have massive payouts in which one referred customer might equal to $100 or more per payout, it is unlikely you both will owe the IRS anything. It all depends on your service, really. If your product only costs $25, than obviously you’re only going to pay a percentage of that which would make acquiring $600 over the course of the year not unreasonable, but it would require some work to obtain such an amount.

Affiliate Marketing Connetion

In creating my own affiliate program, I used my language of choice: PHP. A user gives out a link which contains a unique ID specific only to their account. When someone visits through this link, a cookie is set for a week, and when they register, that unique ID from the affiliate is added to the new person’s account as being the referrer link, which is a lifetime connection. This means if the person they referred decides to purchase a virtual number now or a year from now, the affiliate will get paid. The payout is $2 — $5 per virtual number sold if the monthly plan is chosen. This payout is around 70% of the first payment, so I take my own risks in hoping this new customer does not churn after a month.

If the yearly plan is chosen, the payout is slightly higher at $6 — $15 per virtual number since there is less risk, with the affiliate getting paid about 3 months worth of the total payment on top of the heavily discounted product, which is not the fault of my affiliate — its just more incentive for a customer to purchase a yearly plan. The payout for month or year plans is a one-time payment as a thank you for referring the new customer and an additional thank you through the payout itself. The continued benefit to the affiliate, since virtual numbers are almost always used as throwaway numbers, is that once the referred purchases another new number, they will get paid for that number as well.

Payouts are pretty easy to handle, using the Payouts API of Paypal, making the only requirement for the affiliate to have a verified Paypal account. The use of Paypal is to inspire and encourage trust of the Call Me Private and Text Me Private platforms, and payout is usually always instant, encouraging the affiliate to want to sell more for an instant payout to their Paypal account.

When understanding the payments for my affiliate program, I needed to be fair in my payouts. I had to think about what would make me, personally, want to sell a virtual number if I were an affiliate. What would make me want to help a company sell their product vs. what may make someone else sell may be vastly different, but in being fair, I felt I had to give most of the very first sale.

Obviously, I cannot pay more than what is actually made per number, and while I have seen some businesses payout continued monthly payments for referrals, which may make affiliates want to sell even more if they could be generating revenue monthly by getting only a single signup who happens to buy dozens of numbers a year, than it works great for the affiliate, but something like that happening is quite rare. Most companies have stopped doing this type of affiliate system.

It would be like winning a lottery which I cannot deny: I would love to refer a single customer and have them purchase so many virtual numbers that I can live off the income of the payouts. Unfortunately, this method is not very feasible for my company in the long run. I know DreamHost was a company that used to do a monthly payout affiliate program, but have since switched it to a one-time only payment system. The only way to make it feasible for any company would be to payout less than 25% of the total sale every month.

DreamHost Affiliate System for a One-Time Payout

Convincing someone that they are only going to be paid about 25% per sale or lets say, $0.75 each month, is hard to do, despite the fact that they could make a potential $9 a year from a single virtual number purchase, and having 10 people sign up for 10 virtual numbers — would be $108 a year payout if all 10 people held their 10 virtual numbers for the entire year. If someone got lucky and managed to sign up 100 people who all purchased at least 1 virtual number and held on to it for a year could result in $75 a month or $900 a year in revenue. However, a nice lump sum right up front may be just as easily convincing, yielding in $200 of an instant one-time payout, and it is also easier to write for an affiliate system.

How do you convince someone to do all the work of an affiliate and if the referred cancels after the first month, the affiliate would only get $0.75 or $1.25 vs. $2.00 or $5.00 which puts more in the pocket of the affiliate upfront. With this method, the payout is a majority of the first month’s payment for each virtual number. Offering both types of plans might be even more incentive, so you get to choose a one-time higher payout or a recurring lower monthly payout —an option I might consider adding in the future, if the initial affiliate system sees any success.

Building my own affiliate system allows my customers to take their experience of using my virtual number service, write about it, share an affiliate link, and have the opportunity to make some money while doing it. In sharing their experience about the service and convincing people to sign up and actually use the service, they entitle themselves to reap the profits of the very first payment of all virtual numbers purchased by their referral. Setting the minimum payment to $10.00 keeps it low enough, as the affiliate needs only to sell 5 local numbers, or 2 tollfree numbers and provides some incentive to work a little harder to get that payout. Keeping the payout as an even number also helps to calculate everything easily.

There are at least a half dozen affiliate systems anyone can sign up for and incorporate into their own programs, but building your own allows you to eliminate the overhead or charges for paying for an external service each month. This is not to rule them out completely — as writing the script for an affiliate program does require some knowledge of coding. Whether you use your own or go with an external program, affiliate systems are quite popular from people looking to make extra money while working at home, working on the side, or just working casually so they do not have to feel the pressure of a boss or anyone expecting them to sell anything at all.

Summary of how affiliate marketing program works

The incentive: sell for me, get a cut of most of the profit on the very first payment of all numbers purchased. Bonuses and additional incentives can be added later on. Cutting the costs of having to do invoicing, payroll, etc., and having it all completely automated for me makes the affiliate system even easier. Allowing my affiliates to click a button to request a payout and have it all automated, deducted from my own Paypal business account, and paid to their account lets me sleep better at night, not having to worry about paying on the first day or the last day of the month, and the only thing I have to really worry about is ensuring that my specific Paypal business account has the funds to make the payouts.

The benefits of an affiliate program are basically agreeing that you will pay your affiliates for simply spreading the word about your product. Of course, there is a bit more involved: payouts actually happen when money is spent. If no money is spent, than there is no reason to pay the affiliate, though there are some companies out there paying a small percentage even just for the lead. Rather than paying to advertise on social media, you are agreeing to pay someone for selling your product. You cut the costs of them being unsuccessful, whereas if you hired a full-time employee — whether they sell or not — you still have to pay them.

In a way, by sharing the profits with your affiliates, you are telling and showing them that they have value beyond just being a paying customer. This is also a great plus because if you believe in your product, and they believe in your product, than they have the ability to attract more people who think the same way. With an affiliate system, you only pay people for their success in selling your products. Their own success really depends on them because if you have a great product already that would otherwise sell itself, the only thing your affiliates need to do is spread the word.

Why I Built My Own Affiliate System was originally published in Hacker Noon on Medium, where people are continuing the conversation by highlighting and responding to this story.