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You may be thinking to yourself... "I need to have an affiliate program for my course or coaching program."
I used to think the same thing, and even created one!
And let me tell you, it was one of the biggest mistakes I EVER made in my business!!
I'm going to break down what happened when I launched an affiliate program and go over why you should or should NOT have an affiliate program for your offer, course, or coaching program!
In this video, I am going to cover:
- The full financial breakdown of what happened when I launched an affiliate program for my online program
- What really happens when your affiliates start getting customers into your funnel and where they actually come from
- AND... the one and ONLY time it makes sense to run an affiliate program!!
In today's video, I'm going to go over why you should or should not have an affiliate program for your offer, your online course, or your coaching program. And don't forget to subscribe as I release new videos like this each and every week.
Hi everybody. My name is Dan Henry and I'm the author of the wall street journal, a bestselling book, digital millionaire secrets, how I built an eight-figure business, selling my knowledge online. And today let's talk about affiliate programs. You may be thinking I need an affiliate program for my company or my online course, or my software or a mastermind or coaching program, et cetera, et cetera, et cetera. And you may be thinking that in the same way, I was thinking that years ago, when I saw, you know, big companies like click funnels you know, in other companies like that, having affiliate programs and thinking, well, they're doing it, I need to do it right. And that's, that's how I viewed it. And so I implemented an affiliate program for an online course that I had, and honestly, it was one of the worst mistakes I've ever made.
And so what I'm going to go over today in this video is why I believe it was a mistake. Why I shut it down, why I currently don't have one, and why you may want to consider not having one or while you actually might want to consider having one, because it really depends on your overall business strategy. And so let's hop over to the whiteboard and I'm going to go ahead and dive right in. So let me quickly map out for you. What happened when I had an online or an affiliate program for my online course, this is exactly how it went down. So here's my funnel, right? So let's just draw this out inside of here is my funnel. This is where my webinar, my emails, and all that jazz you know, takes place. And the point of this funnel is to take traffic from the web.
So let's just say over here, traffic and, and anything I put under this line here is traffic. And, you know, for instance, Facebook ads, okay. Let's just say Facebook ads. So I'll circle that traffic and co and convert the funnel, converts that traffic into sales. I mean, that's pretty easy concept to understand, right? So I had Facebook ads running and I was spending thousands and thousands and thousands of dollars on Facebook ads every month to a funnel. And I was producing revenue. I also had youtube ads running and why I say used to I'm referring to it in the past tense because this particular course I don't sell anymore. And I don't have an affiliate programming. Right. That's why I say I used to have something different now. So here are YouTube ads. Boom. Okay. And then there are my own organic efforts, you know, perhaps
You know, or I'll just say organic. I mean, there was various things I did on Facebook and again, more you know, more effort from me, just me, not anybody else, me in the organic and my company doing these three things to send traffic to the funnel. And this would be like podcast interviews or what have you. And this sends traffic to the funnel, turns it into money. Now, in theory, what I fought would happen when I had affiliates, okay, affiliates, here are the affiliates. I thought the same thing would happen. I would spend money on Facebook ads. I get new people, new cold traffic into the funnel, make money. I spend money on YouTube ads. I get new people into my funnel. I make money. I go and do podcast interviews. I get new people in the funnel. I make money. So I thought the same thing, what happened?
Cause I was, I was young and I was dumb. And I thought that I would, Oh, Hey guys, go out here and get new traffic to go to the funnel and make money. But that's not what happened. And the reason I thought this was a good idea was because if it costs me, let's say this, let's say this product was a $1,000. I'll put one K here. Well, let's just say for a moment that it costs, you know, I don't know, $600 or $500 to acquire a customer. You might think, well, Dan, if you give 40% to your affiliates, you always know that it's going to cost you $400 per acquisition. You always know, no matter what that, if an affiliate gets you a new customer and you pay 40%, that's $400 per customer, right? Whereas here this one month, it might be a $301 month.
It might be 600. You don't know and blah, blah, blah, blah, blah. And so the here's the thing is that sounds great. In theory, that sounds like honestly, a six figure entrepreneur who just got his feet wet into building a business, goes out and writes a blog post and says, isn't it easy. All you gotta do. You want to know how much money you're paying for, for an acquisition? Just use affiliates because that way my Bubba and they map it out, but that's not how this happens. Okay. What ends up happening? And what ended up happening to me is this is I would spend money on Facebook ads to acquire a customer. I spend money on YouTube ads to acquire a customer. I'd spend time on organic, to acquire costumer, not we did an audit. We went back and we did an audit. 90%, 90% of our affiliates did not bring in new customers.
These were not new customers. What they were doing was they were going to the people that I had already acquired through organic. They were going to the people that I already acquired through YouTube. And they were going to the people that I already acquired through Facebook and simply saying, Hey, use my link. Here's a bonus, blah, blah, blah. And they would go in here. And then now, even though I already spent money on these things to acquire this customer because they use that link. Now, if let's say my cost on Facebook ads was let's just say my cost was say $500 to acquire a customer for a one K offer. Right? Well now, because they used the link, I now got to pay another $400
To the affiliate, which equals fricking $900, 900 bucks. Or in some cases, if this went over, I'd be negative on a core sale. And only five to 10% actually brought new customers. But of that five per you know, five to 10% of affiliates that brought brand new customers, the refund rate was three to five times higher, three to five times higher on refunds. So it just, when I actually did the math, it just didn't make any sense. Having affiliates was costing me money. It was bleeding the profit from my company because the affiliates were not going out and bring me new customers, which is the entire concept, right? They were going out and they were simply sharing their links with people that I already spent money to acquire. And so I was just giving people money for free. It was insane. So what I did was I came back and I said, screw this.
And I said, people are going to be angry, but look, this is business and y'all, ain't holding up your end of the bargain anyway. So I got rid of the affiliates. I shut down the affiliate program. I paid everybody what they were owed and I was done. And you know what happened? Our costs here remain the same. We completely got rid of this, which increased our, or sorry, decreased decrease our cost per customer and our ROI. Our return on investment, our profit went up and our sales did not go down. We made the same exact amount of money each and every month, the same amount of gross sales, but we didn't have to pay the 40% to affiliates. And on top of that, in order to manage these affiliates, I had to pay like a full time staff member to constantly field guys. When you have an affiliate program, here's what happens.
90% of your affiliates will re will refer either no sales or very little sales, but they'll fill up your support box with 10,000 questions. Hey, I referred person and, and you know I didn't see the commission come through yet. And I sent this email at 9:00 AM, but I didn't get a response yet. And it's 5:00 PM. So I'm going to send it another support too. And it just goes, it's insane. Like the amount of money I pay paid to staff to deal with affiliates was an organized them and answer their questions was insane. It was just nuts. And so I cut it out and I got rid of it. Now you might say, well, Dan, you mentioned at the beginning of this video that we still might want to consider an affiliate program. W in what case would we do that? Well, let me show you to me.
The logical answer here is this. If you're you're spending and if you're actively scaling and spending money on your own advertisements and your own efforts, having an affiliate program can bleed you dry. But if you don't want to spend any money on this, if you don't want to do this as your primary source of traffic, and instead you put your efforts into training affiliates to bring in new customers, and this is your primary method, then the idea that 40% you, you know, you, you know, your cost per acquisition is, is always going to be, you know, 40%. Then that makes a lot more sense because this is your primary source of traffic. This is your primary thing. That makes a lot more sense. So if I started a company where, for instance, I was selling, let's just say that this was a different book. Let's say this was some sort of like, I dunno, journal or something.
And I knew that because it was like a, maybe a $30 product. I didn't want to spend tons and tons of money on Facebook ads. Instead, I wanted to teach my customers to help share the planner and make a, a commission off of it. I may or may not elect to do that, but here's the thing. You have to understand the amount of work, effort and skill it comes. It comes down to, to make an affiliate program work, to manage an affiliate program. And it train affiliates to promote to me is far more work than just getting good at Facebook or YouTube ads personally. Okay. So this really comes down to a decision on what you're selling and what you're willing to do and what you're willing to manage. And look, if you're good at training people on how to sell stuff organically, and you think that you can make more money by making this, your primary source of traffic, then go ahead and do it.
Okay. But having equal effort into all these, the affiliates are gonna bleed you dry. That's just the way it goes. And that's what I experienced. I have in the past thought about potentially creating an affiliate program just for my book. And we do have some upsells in my book funnel and giving affiliates a percentage of that, but not giving them a percentage of anything we sell on the backend, because again, that just will bleed me dry. And, you know, I just don't want to do that. So to me, when I an affiliate program, I look at what is my main source of traffic? What do I want to deal with? What am I, what can my staff handle? And should I make that the primary source of cold traffic? And you can always, like, for instance, let's say I created an affiliate program for this book, and that was the primary source of traffic for this book. I went out and taught people how to sell more of this book. And I gave them say half, or even 70%, whatever. I would still retarget on Facebook and YouTube. Sure. But I would probably make this, the number one source. So that right there is just some things to consider. Here's the thing, if you're brand new, if you're a startup and you are just beginning, I would not recommend an affiliate program because even if you were an existing seven-figure company, I would still caution it. And I would still
Talk about with you
Let's really consider things. I actually did a podcast episode on the Dan Henry show with Dave Woodward, who is the, who started and grew the affiliate program for ClickFunnels. You probably want to go check out that podcast episode, because we talk about this very thing that I'm talking about in this YouTube channel or in this YouTube video, I'll leave a link to that podcast episode below where you can check it out. And don't forget to subscribe to my podcast as well, because it's great podcasts. And I released a lot of cool stuff. So if you want to go check out that podcast episode, you can, you can get a little bit more in-depth on Dave's opinion. And he does concur with this, but that podcast episode, we really opened it up and go more in-depth. So these are just some things to consider.
If you're a startup, I wouldn't do it. I would focus on getting your systems tight before you take on such a massive undertaking as an affiliate program. And if you're a seven or eight-figure entrepreneur, well, then you probably can answer your own question when it comes to the logistics of this. By the way, if you'd like to learn more about how to grow an educational offer an online course or coaching program, grab a copy of my book, digital millionaire secrets. It is absolutely free. The book is free. Just pay for shipping. I'll leave a link below where you can get a copy and if you've already read it, and you'd like to learn more about how my company can work with you and you can work with my company to build your offer. I'll leave a link where you can book a call and talk to us and see if it's a good fit to work together. So just to recap, I'll leave you a link to get the book. I'll leave you a link to book a call in case you want to check into working with us, and I'll leave a link to check out that episode. Dave Woodward, where we talk more about this whole affiliate jazz that said be sure to subscribe to the channel as I release these videos each and every week. I'll see you. The next one.