Editor’s Note: A key problem with affiliate marketing is that many products are high priced bullshit. Diet pills that don’t work. Dating sites full of fake profiles. “Foreign currency trading scams” banned by the SEC. Garbage Sweepstakes. I’ve got an ethical issue with pushing this junk. But what if there was one you can be proud of?
Well, there is – Software As A Service. There are dozens of small technology companies out there trying to help small business owners operate more efficiently. Their software solves legitimate business problems – you’re selling them a tool they can use to earn more money. In many cases, you are simply using what you learned in your regular corporate job to explain how to adapt the technology to their operation.
The commissions are usually excellent. And you can earn residuals for a long time. Best of all, this sounds great in your next job interview: “So, what have you done to stay current on your field since your layoff?”…. “Well, Bob, I’ve put together a B2B marketing campaign around <hot software trend>, put together a few tutorials walking through to how implement <popular software package>, and signed up a dozen accounts!”
Why sell SaaS – Software As A Service?
Most of us are familar with the process of buying a software application. We pay a couple hundred bucks and download it to our computer. Every once in a while, we need to update it. And this works pretty well for a lot of standard software programs. The sort of stuff worth between $20 and $500.
But what if a software maker knows the program is potentially worth thousands of dollars? For example, lets consider the field of search engine optimization. As we shared in our analysis of how to make more as a writer there is a big lift in your earnings as a blogger once you master search engine optimization and copy-writing. Our math (from actual websites) points to this being around $100 per hour of incremental value from knowing good SEO practices. So assume I have a couple of software packages that will let me absolutely nail my SEO (spoiler: I do). Suppose I spent… 500 hours a year writing content. What is the value of these packages to me?
Doing the math… 500 hours, $100 per hour… assume we can attribute half of my extra earnings to having a proper set of SEO tools… That’s $25,000 per year of incremental value. From a few software packages. Yes, this is a real – probably conservative – estimate of the impact of good SEO tools on my earnings.
So while there’s no way I’m going to write a $25,000 check, they can clearly make more than $200! This stuff pays for itself by helping me write better articles. So how does the software company milk more money out of me? By hosting the software themselves, doing regular data updates, and making me pay monthly.
I use three pieces of SEO software to tweak the articles for this site. That adds up to spending $500 a month. And somewhere, an affiliate gets 25% of that $500… every month. (not to mention a raise every time I upgrade service plans)
All for writing a single article a decade ago. Can you see the potential here?
How To Sell Software Affiliate Programs
One of my favorite parts about this kind of affiliate marketing is that many SaaS companies include free trials to their service. This can be a week or two, sometimes even a month-long trial. It is so much easier to get a prospect to sign up for a free trial than it is to outright sell a product. By offering the free trial, they get a chance to try out the software, and once their free trial is up and they purchase, you earn your commission.
The other major benefit of SaaS is that many of the affiliate programs involve paying you a recurring commission every month that subscribing customer remains a customer. That means for your initial efforts involving each customer, you can be receiving commissions for years without any additional work. The goal here is to keep your monthly cash flow high, and your customer churn low.
The recurring monthly model works great in tandem with the free trial. People who try the product and decide to stay with it after their trial period has ended, are more likely to stick with the program longer. One-time affiliate commissions have their place, but if they have to pay before they even try it, they might cancel after deciding it’s not for them. If they cancel within a certain time frame, you don’t get a commission. Of course, this time frame will vary depending on the specific affiliate program you use.
Why You Should Focus On Recurring Monthly Revenue
Ideally, you’ll want a mix of both recurring monthly commissions and those big one-time commissions for higher priced products in your sales funnel. However, when it comes to SaaS, you should definitely promote something with a recurring monthly revenue as your primary focus.
By promoting something with a recurring monthly promotion, it helps secure your monthly income needs and simplifies the numbers to reach your income goals. If you have a goal to make $8,000 per month and the SaaS you sell pays you an $80 commission per customer per month, you know you need to have a consistent 100 customers. Over time, you’ll know how long your average customer will stick with the SaaS you promoted. Knowing this number, you’ll know how many new monthly customers you need to stay at your income goal. If 10% of your affiliate customers tend to drop out every month, then once you’re already at your 100 customer goal, you only need to add 10 additional customers from month to month to stay at your $8,000 per month income.
SaaS tends to have a long lifetime for customers if you’re targeting the right leads and taking additional steps to help them succeed within the platform. If you manage to target the right leads and help them so they continue using the platform, the total average income you get from those customers will far exceed the amount you would have earned from a large one-time affiliate commission.
Step 1 – The Product – A Few SaaS affiliate programs
While there are tons of amazing SaaS affiliate programs to choose depending on your niche, the goals of your audience, or your personal product preferences, I want to highlight a handful of great affiliate programs to try:
ClickFunnels – One of my favorite affiliate programs. Not only do they have a high recurring monthly commission, but if your lead upgrades their service or buys any of the additional features through ClickFunnels, you automatically get commissions on all of those additional purchases. They also have a fun program where they will make the monthly payments on your dream car once you’ve sent enough customers. Shopify – This is a great service to promote if your audience is interested in e-commerce and selling physical products. There are very few good alternatives in this space and they offer a free trial, so it can be pretty easy to sell to the right audience. BlueHost – Just about anyone who needs to make money online needs website hosting. If you’re targeting people who are just starting, BlueHost has a great affiliate program in this space. ConvertKit – For many businesses, they will need email automation software. What’s nice about ConvertKit is that they have some amazing resources to help their affiliates get high conversions in the sales process.
Are there any monthly SaaS products you are already using? Chances are they have an affiliate program. If you’re using it, you clearly already believe in the product, therefore selling it will be easier for you.
Avoid any SaaS that involves a dying trend. This is software that automates a traffic-generating process that isn’t working anymore due to a platform’s search algorithm changes, or it can be some kind of SaaS that doesn’t have mobile as a strong priority.
Step 2 – The Audience – Traffic 101
So now that we have a few ideas about what to sell, we need to find an audience. Digital marketers generally refer to this as your “traffic source”. We’re going to break this into two pieces:
- Attracting Your Initial Set of Prospects
- Engaging and “Warming Them Up” Over Time
Learning how to generate good traffic is at the core of your business and likely your biggest operating expense, in terms of time and effort. You’re going to need to invest some time (and potentially money) learning the nuances of how to work a particular traffic source and how your target audience behaves on it. You’ve got a couple of options.
First up, organic search traffic from Google. You create content, post it on a website, and…. Profit! (with apologies to South Park). There is a fairly large body of knowledge around how to optimize your content to rank highly in Google’s search results, a discipline known as search engine optimization. The good news: if you manage to get your website ranked on Google, you’re going to get a ton of highly qualified traffic (if you pick the right search terms to target) absolutely free. The bad news: It generally will take a long time. And doesn’t always work (just being honest).
The kicker: if you’re willing to do the writing yourself, you can get started in this business without investing much cash. This is particularly useful if you’re in a situation where you have plenty of time and not much money (unemployed? side gig?). Looking forward, you will learn scaling past a certain point is a challenge since you will need to learn how to recruit and manage a writing team. You’ve got some runway, however: a good lone wolf writer with decent SEO and copywriting skills can generate a couple hundred thousand dollars a year of value based on the data we’ve seen.
And then there is paid traffic, where you buy advertising on someone else’s website. This is a potentially huge space. It includes:
- Google AdWords: Ads on Google Search. High Cost, High Lead Quality
- Facebook: Huge potential audience. Can recruit people into groups.
- Native Advertising: “Related Content” at the bottom of a webpage; low cost, low quality
- Everything Else: Any other display ad on the internet
Each of which has a vast set of possibilities equivalent in size and scope to what is available through SEO.
The downside: you’re going to be writing some checks to buy traffic and – worse – a lot of your tests are going to fail. Don’t move into paid traffic unless you’ve got a nice bankroll ($10,000? $25,000?) and are willing to endure a pounding while you learn the business. Keep your bets small, scrape through your data. This is the price of learning the business and the market. The incentive: once you figure this out, you can scale up promotion of any offer in the market hard and fast by writing some checks. Within a few weeks. Executed correctly, this is the stuff empires are built from.
Three other pieces of basic wisdom:
- Recognize your limits as a beginner (and be patient)
- Focus on One – and Only One – Traffic Source
- Within A Traffic Source, Narrow Things Further
Traffic is a “winner take most” game in most niches. The most effective player in an ad market or SEO niche will earn the highest return from that space. Be aware you are not…. that master marketer (yet). You’re going to need to pay your dues, write articles / launch campaigns, and work to climb the learning curve. The narrower your focus, the more quickly you will build expertise (since all your practice is in the same space) and faster you will build an audience.
You’re definitely going to need a website to host your articles and marketing copy – check out our guide to setting up a niche blog. For various reasons, we don’t recommend using free sites: there is a long term risk of losing your site (from policy and platform changes) and you lose the opportunity to easily sell the website and traffic to an investor at some point. The good news is a basic blog is relatively inexpensive.
Step 3 – Warming Them Up!
Whether you are using SEO tactics to generate leads or paid advertising, never send cold traffic directly to an affiliate offer. I see this all of the time and it breaks my heart how much money these affiliates are leaving on the table. Despite what you see, you don’t want your affiliate link on your website in the middle of an article that a random person found in a Google search. And you certainly don’t want to spend your hard-earned money to throw all those precious leads directly to an affiliate offer.
The most cost-effect way to use your traffic is to capture those leads to your own audience and then warm that traffic by building trust, educating them, and pre-sellling your affiliate offer. This is usually done by getting your leads to sign up to your email list. If you don’t already know, the easiest way to get someone to sign up to your email list is to offer them a great incentive, similar to how you will when promoting your affiliate offer.
Let’s look at some common marketing numbers.
Cold traffic doesn’t convert well. If you use paid advertising to send leads directly to an affiliate offer, you might get lucky if you convert .3% of those leads into actual customers. So if you got 1000 clicks and managed to get them for only 25 cents per click, that’s $250 spent to get only 3 customers. If the affiliate payout is $50 per month per customer, or $150 total, it will take two months before you recoup your investment and start making a profit. That’s if they even stay customers for two months. Cold traffic also tends to not stick with the SaaS as long as warm traffic.
If you first capture these leads and opt them into your email list, you will make so much more money. With a good free incentive to get someone to opt-in your email list, it’s not very difficult to get a 50% conversion rate. So with that same $250 ad spend you’ve generated 1000 clicks and half, or 500, are now on your email list. You then have your autoresponder sequence with regular helpful emails that show you are an expert whose advice and recommendations they can trust. You then start pre-selling the SaaS, talking about the problem the tool solves, and why they need that solution. You then hit them with the offer for your irresistible incentive when they purchase through your affiliate link. By doing this, you greatly increase your conversions. It is common for me to see conversion rates of 3% when properly warming up traffic this way. That’s 15 recurring commissions of $50 each, or a total of $750 in commission every month.
By warming up the traffic first, you not only recouped your investment quickly and make a great profit, but those warmed-up customers are way more likely to stay customers for much longer, increasing the lifetime value of each lead that you have generated.
While there is no direct ad spend investment when it comes to SEO traffic generating, the return on your effort still has the same effect.
Lastly, when they are on your email list, you can continue to promote them more offers within the same niche. Not only that, you are building massive trust with them and priming them if you ever decide to sell you own product to them. Not only will they trust you, but you will know exactly what kind of stuff they are interested in buying based on what affiliate offers you’ve had the most success with.
Step 4 – Convert! (Landing Pages and Copy)
Whether you are sending traffic to a landing page with an opt-in form or sending your warm traffic to a pre-selling page that promotes your bonus incentive with an affiliate link, there are some crucial strategies to help your conversions.
The most basic of these, is to have zero exit links. Your landing page needs to have only two options, either the lead takes the action you want them to take, or they must click the back button in their browser.
For email opt-ins, leave the landing pages slightly mysterious. You want them to be intrigued without giving anything away. The classic “this one little secret to…” and other similar techniques work great for email opt-in rates.
For pre-sell pages where you push your promotion hard and talk about your big bonus incentive, promote your incentive as if you’re selling a high-priced paid product. You need to show the immense value of the free incentive. Would you charge $2,000 for the course you are giving away? Say so.
Whether talking about your incentives, or the SaaS you are promoting, focus on the benefits, not the features. You want to paint a picture of the results they can expect.
Talk about them, not about you! It’s crazy how many affiliate salesman I see constantly talking about themselves in their promotions. It’s all about your audience, their needs, their problems, and the solution to those problems.
We’ve got a longer article about copy writing which is a critical skill for your success.
The Secret Weapon – Incentives
This is how affiliates become the top affiliates for any SaaS company. What you do is you offer an irresistible free incentive to anyone who purchases or signs up for a free trial through your affiliate link. Once they have ordered, you simply have them email you with their order number so you can confirm their purchase and send them their awesome free bonus.
There are a lot of great incentives you can give out depending on your niche and their specific goals. The bigger and better your incentive, the higher your affiliate conversions will be.
One great incentive is to just put together some free training in a course for them that will help their chances of success with that specific platform. If you’re promoting something like ClickFunnels, Shopify, or another related SaaS, you can offer an exclusive free theme template or set of templates that you have already proven their extreme effectiveness. If you are selling an email auto-responder SaaS, you can give them a free swipe file of all your best copy-writing scripts and a guide on implementing them within their auto-responder sequence.
Whatever irresistible incentive you create, make sure it is something that they can’t get any other way other than buying through your affiliate link. It shouldn’t be something you sell elsewhere on your website. Exclusivity is what helps improve those conversions. Exclusivity is crucial to maximizing your income.
Getting Started (Editor’s Note)
So that’s a quick tour of the building blocks of the business. You’re going to need to build each of these layers to get started, but you should focus your scaling and optimization efforts one layer at a time. So put up a basic website and conversion funnel – then focus on building up your primary traffic source. Once you have a steady stream of prospects hitting your sites, work on optimizing your landing pages and email funnel. After that’s working well, you can start testing advanced incentives and cross-sell opportunities.
This is not a low effort business. Building a good organic site will take you about 200+ hours of work and probably 12 months to build serious traffic and activity. The market value of your time is $10,000 – $20,000. Paid traffic requires a similar investment, in the form of advertising budget. If you are new to digital marketing, expect a learning curve over the next several years as you master each element of the skillset. SEO is your lowest risk option for getting started, since it involves spare time instead of ad budget.
One final comment: One Niche, One Traffic Source. Jealously guard your focus, so you accelerate up the learning curve as quickly as possible. The two leading failure modes for new entrants in this business: Scatter and Exhaustion. You scatter your focus across a bunch of traffic sources and offers… and run out of energy and patience. At which point – you’re done.
That being said, there’s a ton of runway here. I’ve built my entire network of websites with a single traffic source: organic search engine optimization. As of this writing, I’m eight years into this effort. While I’ve definitely climbed up the learning curve in SEO, I’m still learning new things each year. By the way, I’d qualify all of this with: for three niches. Which represent maybe…10% of the potential content and traffic types available on Google? You’ve easily got at least a decade of potential growth before you run out of room.
Interested in exploring this a bit further? We recommend checking out a couple of our other articles:
- Our Guide to Copywriting
- Our Guide To Building A Website
- Advanced Copy-writing: Nailing The Landing Page
Going deeper, we have a few guides on more advanced traffic conversion topics. Use these for inspiration.
Finally, if you are interested in using SEO as a traffic source, we recommend reading our article about making money as a freelance writer. This covers how to create content efficiently.