What's the Difference Between a Reseller Program and an Affiliate Program?
Rodney Gray Thursday, May 25, 2017
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Many people ask me what's the difference is between becoming an affiliate or a reseller. To answer that, let's imagine a reseller and an affiliate, both of whom sell the same service for XYZCO. There are significant differences between their agreements.
A reseller establishes a reseller account with XYZCO. He then solicits new customers to sign up with the reseller for services. The reseller may provide the technical support for his customers, and in some cases manages the billing, but the the order is fulfilled by the XYZCO. Many companies offer “white label” solutions to resellers and may even include customer support all of which looks to the customer like the reseller’s own service. In the case of digital products, the reseller gets paid by the customer and then pays XYZCO a wholesale rate to fulfill the order. The reseller pockets the difference on each order. Customers deal with the reseller directly, and resellers set their prices at any level they choose unless stipulated otherwise in the reseller agreement.
An affiliate is strictly an evangelist for a product or service. She refers customers or traffic to XYZCO. Those customers open their own accounts using the affiliate's special affiliate code which lets XYZCO know who referred them. Affiliates are paid a percentage of referred sales. Many affiliate programs pay a one-time commission. Other companies (including some that use free programs to get customers to sign up) pay commissions on all future sales within a fixed period, and perhaps even for life. This can allow the reseller to build a real affiliate business.
There are pros and cons to each and the one that’s right for you will depend upon how much time you would like to invest.
Why is There a Setup Fee?
Some reseller and affiliate programs charge a setup or account fee to get started. In fact, it’s quite common. Reseller programs may offer you a great program, support, and even white-label client support to help your clients on your behalf. This can be a fantastic situation allowing you to operate your own business while having it fully supported by XYZCO. I find that programs offering digital products that are in high demand, backed by a company that offers your clients support on your behalf, are some of the best and most effective programs.
What to Consider When Becoming a Reseller or an Affiliate:
Getting started as a reseller or an affiliate can be very easy and can often be done in just a few minutes. However, I recommend taking some time to research the monetization terms each program you’re considering offers. You need to identify which is right for you. Here are some key factors that can affect your potential profit and success:
1.How long does the software track client visitor cookies? Most affiliate software employs tracking cookies. If you refer someone using a referral tracking link, it will cookie them. If they subsequently purchase within 30/60/90 days and sometimes longer, you get paid. Many customers take quite some time to get comfortable before placing an order so this definitely a very important factor.
2.Many programs will pay you for a customer’s first order but then the terms might change. Ideally, you want to get paid whenever that customer orders, now and in the future.
3.A key factor for your success may include offering something for which you have a real interest or passion.
4.The minimum payment threshold. This is the amount you must generate before a payment will be released to you for your affiliate marketing efforts. These payment thresholds can vary widely. In some cases, failure to reach the threshold within a certain timeframe (120 days, for example) could forfeit your affiliate earnings. Know the terms before joining any program no matter how great it looks at first glance.
5.Are the products profitable and easy to process? Keep an eye out for shockingly high commissions. Yes, pyramid scheme exist on the Internet too. If an affiliate program sounds too good to be true, it warrants closer scrutiny.
6.“Make money” products and MLM. I am sure you know someone involved in one of these product categories. Maybe they are even making some money. My advice is to steer clear. The statistics don't lie. Some of these programs feed on your greed. and in the worst case do not even provide a product that justifies the price.
What's Better? An Affiliate Program or a Reseller Program?
This is a question you need to answer for yourself. Each comes with their own set of pros and cons. With a reseller program, you may build more of a standalone business that you can continue grow over time. However, an affiliate program is easy to get started (for free in many cases) and can be a great part-time business or second income.
Here are some statistics to reflect on while you consider your options:
- Spending on affiliate marketing products approaches $5 Billion in the U.S.
- Affiliate marketing drives a whopping 1% of the country's total GDP in the UK.
- Approximately 15% of all digital media industry revenue comes from affiliate marketing.
- In 2016, over 80% of brands utilized affiliate marketing.
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