According to Dotmailer

Referral programs have been found to deliver customers of 25% greater lifetime value than other customers.

So yes, launching your own affiliate program could be a great idea. That’s the good news. The bad news: launching your own in-house affiliate platform can be a challenging task.

First of all, you are going to need a consistent program management plan to run and to maintain your affiliate program, and there are three available options:

• In-house management; the program will be managed entirely by you or by an affiliate manager hired by you. If you can find the right person and you have the needed resources, this is by far the best solution; also, affiliates love being able to talk to the brand directly, and an outsourced agency – no matter how devoted or efficient it is – will always be an “outsider”.

• Outsourced management; the program will be managed entirely by an external agency. Outsourcing the complete management can be a huge time-saver, and sometimes can be even less expensive as you don’t need to worry about salaries, insurances, bonuses, etc; these guys usually will provide you with a skilled and experienced team ready to handle any important issue or detail of your affiliate program.

• Co-management; the program will be managed by you or by one of your employees “using” a network or a given technology partner. In my opinion this is the worst possible choice, because networks usually are paid on performance basis and they will often put affiliates in your program just to maximize their own revenue; this constitutes a clear and significant conflict of interests, that should be avoided at any costs.

Of course, the decision is highly personal and should involve different elements specific to your own situation (time factor, budget considerations, long-term goals, etc). Anyway, no matter what method are you going to use, if you want to make money with an online affiliate program, your affiliate program must be closely managed on five different levels, and each one is critical for your success. In other words, it is in your best interest to know exactly what an affiliate manager should be expected to do, otherwise you won’t be able to craft a successful management plan for your affiliate program.

So, let’s see what are the main responsibilities of an affiliate manager:

1. Recruitment

It’s very straightforward: identifying and recruiting new affiliates is literally crucial for every affiliate program. Without affiliates your affiliate platform simply doesn’t exist. The recruitment is the most important task of an affiliate manager, and represents around 50% of his time.

2. Affiliate activation

Basically, the activation is an automated or manually controlled process where the newly recruited “candidates” are accepted and approved as affiliates.

Sadly, is one of the most often overlooked and misunderstood components of affiliate program management. Why? Because, we are not talking just about a simple approval, but about a much longer and more complex process, that requires a lot of effort from the affiliate manager and has one final goal: to motivate and to convince the new affiliate (or an older inactive affiliate!) to become active by using the available creatives and launching campaigns that would start generating traffic to your website.

3. Policing

The appropriate affiliate behavior is also vital for your platform. Whatever you prohibit in your affiliate program’s TOS, you want your affiliate manager to constantly police affiliates for these behaviors. If your affiliates won’t play by the rules, they will damage your credibility and your business. Simple as that.

4. Communication

Maintaining and nurturing trust-based relationships with your current affiliates is another key component of your management plan. If you want to succeed, you’ll have to motivate and to stimulate your affiliates. You’ll have to keep them “satisfied” and well-informed, and to do that, you are going to need an efficient two-way communication channel and a continuous, never-ending conversation between the affiliate manager and the affiliates.

5. Program optimization

The continuous program optimization is the key of your long-term survival. An efficient and dedicated program manager should provide you with an up to date competitive intelligence that will allow you to identify both threats and opportunities, and to apply new, useful affiliate-centered enhancements to your affiliate program.

Wrapping it up: the above factors are vital for your success; no matter how do you want to marketing an online affiliate program, each level must be thoroughly elaborated in accordance with your goals and policies, and more importantly, strictly respected and efficiently applied by your affiliate manager …

Which brings us to the final, most important “component” of your program management plan: the affiliate manager itself!

Affiliate management is a full time job, one that requires time, knowledge and commitment, and if you don’t have a devoted, efficient affiliate manager, all your efforts could be in vain. If you don’t have a good affiliate manager, you can’t make money with an online affiliate program. You’ll have to focus on two issues: to find the right person or agency, and to define the perfect compensation plan that adequately matches the opportunities existing out there.

While you are trying to find the perfect individual or team to fulfill the above tasks, you should always keep in mind that you are looking for an optimal mix between technology and marketing. The perfect affiliate manager is able to understand and to handle annoying technical issues (HTML, PHP, MySQL databases, APIs, data-feeds, tracking technologies, analytics, etc), but he also has the marketing skills needed to maximize the relationships and to focus on the growth of your affiliate program. Relax, these unicorns actually exist …

Once you have find the right person or firm, you’ll have to focus on motivating your unicorn properly. I am talking about attractive performance bonuses tied either to the paid affiliate commissions, or to the cumulative value of all affiliate-referred orders that occur within a given period of time. Once these performance bonuses are clearly incorporated in the contractual agreement, your affiliate manager will become your most valuable and most efficient “affiliate”, who will be driven by the very same principle: the more you sell, the more you are paid …