Get FREE Training Workshop from John Crestani
John Crestani has been recognized by Forbes, Business Insider, Entepreneur.com, and dozens of other publications for his success online. More importantly, he’s helped thousands of everyday people from around the world create success for themselves as well.
What is revenue-sharing in affiliate marketing?
Revenue-sharing in affiliate marketing refers to a model where affiliates earn a percentage of the revenue generated by the sales or actions they help drive. This model is typically used for long-term or ongoing affiliate partnerships where the affiliate receives a share of the revenue from customers they refer for as long as the customer continues to make purchases or use the service.
How Revenue-Sharing Works:
- Affiliate Referral: The affiliate promotes a product, service, or business, and refers customers through their affiliate link.
- Ongoing Revenue: If the customer continues to make purchases or uses a subscription service over time, the affiliate earns a percentage of the revenue generated from that customer, often for the lifetime of the customer (known as lifetime commissions).
- Payment Structure: The affiliate receives a commission based on a fixed percentage of the revenue from each transaction or a recurring payment from subscriptions, memberships, etc.
Key Features of Revenue-Sharing:
- Long-term Earnings: Revenue-sharing allows affiliates to earn recurring income as long as the referred customer continues to generate revenue for the business (e.g., through repeat purchases or subscription renewals).
- Percentage-Based: The affiliate is paid a percentage of the revenue from the referred customer, which can vary based on the product, business, or agreement.
- Scalability: This model can be highly scalable for affiliates since they can continue to earn money from the same customers over time, especially in subscription-based or SaaS (Software as a Service) businesses.
Example of Revenue-Sharing:
- A common example is in subscription-based services (e.g., SaaS products, online memberships, or streaming services). If an affiliate refers a customer to a service and that customer subscribes, the affiliate may earn a percentage of the subscription fee each month as long as the customer remains subscribed.
Example: An affiliate promotes a web hosting service. The customer signs up and pays $100 per month for hosting. If the affiliate’s agreement is a 20% revenue share, they earn $20 per month as long as the customer continues to pay for the service.
Advantages of Revenue-Sharing for Affiliates:
- Recurring Income: Affiliates can earn money passively over time from customers they referred years ago, especially if the product/service is subscription-based.
- Incentive to Promote Quality: Since affiliates can earn from recurring transactions, they may be more inclined to promote products/services that lead to long-term customer satisfaction and loyalty.
- Scalable Earnings: As affiliates refer more customers and the customers continue to make purchases or renew subscriptions, their potential earnings grow over time.
Challenges of Revenue-Sharing:
- Delayed Earnings: It can take time for the affiliate to see significant earnings, as revenue-sharing usually builds over the long term.
- Customer Retention: The affiliate’s earnings depend on the customer’s continued use of the product or service, which means that if customers stop subscribing or making purchases, the affiliate’s income will drop.
In summary, revenue-sharing in affiliate marketing can provide affiliates with long-term, recurring income by giving them a percentage of the revenue generated by the customers they refer, often for the lifetime of the customer. This model is particularly common in subscription-based products and services.
