The short version: affiliate marketing is when you pay someone a commission for sending you a sale, and small businesses can use it two ways, either by recruiting affiliates to sell your product or by becoming an affiliate yourself and promoting other people’s. Most small businesses do it badly because they treat it as a side hustle rather than a proper marketing channel, and that’s exactly where the opportunity sits if you’re willing to run it well.
What affiliate marketing is, without the jargon
Someone else promotes your product, sends you a customer, and you pay them a cut when that customer buys. That’s it. No mystery, no algorithm magic, just a commission arrangement dressed up in marketing language.
There are two sides to this, and small business owners nearly always think of only one:
- You as the merchant. You have a product, and you recruit other people (bloggers, YouTubers, email list owners, other small businesses) to sell it for a cut.
- You as the affiliate. You have an audience, however small, and you promote someone else’s product for a commission.
Amazon Associates is the version everyone’s heard of, paying between 1 percent and 10 percent depending on the category, which frankly is stingy and why most people who build proper affiliate income don’t rely on it. Software companies are far more generous. A typical SaaS affiliate programme pays 20 to 30 percent recurring, sometimes for the lifetime of the customer, which is why plenty of solo marketers have built five and six figure incomes purely by recommending tools they use anyway.
My own experience with this, and where it went wrong
When I was building my own audience, I was approached constantly by brands wanting me to promote their product for a commission. Most of these deals were poorly thought through on the brand’s side. One skincare company offered me 10 percent commission and a tracking link that broke on mobile half the time, which meant I was sending them traffic they simply weren’t capturing. I flagged it, they took three weeks to fix it, and by then I’d moved on to promoting something else instead.
That’s the uncomfortable bit nobody likes to say out loud: most affiliate programmes fail not because the product is wrong or the affiliates are lazy, but because the business running the programme hasn’t done the basic admin. Broken links, commission structures nobody can be bothered to understand, payout terms of 90 days when the affiliate needs cash flow now. I’ve watched small businesses launch an affiliate scheme, get five sign-ups, no sales, and conclude “affiliate marketing doesn’t work” when what happened is they built a shed with no door.
The other truth people skip past is this: the vast majority of affiliates in any programme, often 80 percent or more, will send you precisely zero sales. Affiliate marketing follows a brutal Pareto pattern. A tiny handful of affiliates, sometimes as few as three or four, will generate almost all of your revenue. That’s not a failure of the model. That’s just how it works, and if you go in expecting a hundred evenly productive partners you’ll be disappointed and quit before you find your three good ones.
Setting up your own affiliate programme as the merchant
If you’re a small business with a product worth selling, here’s the practical route rather than the theory:
- Pick your platform first. Awin and Impact are used heavily by UK brands, ShareASale and CJ Affiliate are common in the US, and for smaller businesses many people just build directly into their own e-commerce platform. A shop on Shopify, for example, can run affiliate tracking through built-in apps rather than a whole separate network, and I’ve written before about how a well set up Shopify marketing strategy makes affiliate tracking far simpler because everything already sits in one dashboard.
- Set a commission that’s worth someone’s time. Under 10 percent rarely moves anyone unless your average order value is high. For a £40 product, 10 percent is £4, which won’t inspire a blogger to spend an afternoon writing about you. For a £400 course, 10 percent is worth someone’s morning.
- Pay quickly and pay clearly. Net 30 payment terms, a clear dashboard, and no chasing. This single thing will keep good affiliates working with you longer than any bonus scheme.
- Recruit deliberately, not passively. Don’t just open a sign-up form and wait. Email your existing customers, your happiest ones especially, and ask them directly. A customer who already loves your product converts better as an affiliate than a stranger who found your programme on a directory.
- Give them proper assets. Product photos, a swipe email, a short video demo. Affiliates with no time to make their own content will use whatever you hand them, so hand them something good.
One small homeware business I’ve worked with did this well. They had 200 customers on their list, emailed the top 20 by repeat purchase asking if they’d promote for 15 percent commission, and got four takers. Those four brought in more revenue in three months than a public sign-up page had brought in the previous year with 60 registered affiliates.
Becoming an affiliate yourself, as a small business
This side gets ignored constantly and it shouldn’t. If you run a small business with any kind of audience, even a modest email list or a few thousand social followers, you can add affiliate income as a second revenue stream without building a new product.
A marketing consultant recommending tools she uses daily, a bookkeeper recommending accounting software, a wedding planner recommending a venue booking platform, all of these are legitimate affiliate opportunities sitting inside a business that already exists. The trust is already built. You’re not selling to strangers, you’re recommending to people who already believe you.
The mistake small businesses make here is promoting things they don’t use. Audiences smell that instantly, and it damages trust in everything else you say. I only ever promote tools I’ve used with clients, which means fewer affiliate deals overall but a far higher conversion rate on the ones I do run, because when I say something works, people believe it.
Where to put affiliate content
Affiliate links do nothing sitting in a drawer. They need traffic, and different platforms suit different types of affiliate content.
Pinterest is quietly one of the best affiliate traffic sources for physical products and evergreen how-to content, because pins keep working for months rather than dying after 48 hours like a social post. If you’re a small business selling anything visual, building a proper Pinterest marketing strategy alongside your affiliate links compounds over time in a way paid ads never do.
TikTok works differently, it’s fast, personality led, and better for impulse purchases and software demos than long-term evergreen traffic. A short demo video showing a tool in action, with the affiliate link in bio, can outperform a written blog post for conversion speed, and I’ve covered how small businesses are winning with a focused TikTok marketing strategy that leans on exactly this kind of demo content.
Email remains the most underrated affiliate channel of all. A list of 2,000 engaged subscribers will outsell 50,000 Instagram followers most weeks, because email subscribers already opted in to hear from you. If you’re running affiliate promotions through your list, the tagging and segmentation matter, someone who clicked but didn’t buy needs a different follow-up sequence than someone who’s already purchased, and this is where a platform like ActiveCampaign earns its keep. I’ve written in detail about building an ActiveCampaign marketing strategy that nurtures exactly this kind of segmented follow-up, and it applies just as well to affiliate promotions as to your own products.
The numbers small businesses should expect
Set realistic expectations before you start, because most people don’t and then give up too early.
- A brand new affiliate programme with no existing audience usually takes three to six months before it produces meaningful revenue.
- Expect an affiliate conversion rate of somewhere between 1 percent and 5 percent of clicks, depending on the product and the trust the affiliate has built.
- Commission rates of 15 to 30 percent are standard for digital products and software, 5 to 15 percent for physical products, reflecting the tighter margins.
- A well run programme with 10 active, engaged affiliates will outperform one with 500 dormant sign-ups every single time.
Choosing which platform, tracking software, or affiliate network to build all this on trips a lot of small businesses up, because the market is crowded with tools claiming to do the same thing at wildly different prices. If you’re stuck comparing options, I’ve put together guidance on how to choose marketing tools when everything looks the same, which applies directly to picking an affiliate tracking system without wasting a month on demos.
The uncomfortable bit about affiliate marketing that gets glossed over
Here’s what most guides on this topic won’t tell you plainly. Affiliate marketing is not passive income, and any small business owner sold that idea by a course creator is being sold a fantasy. Running a programme takes ongoing recruitment, ongoing relationship management, and ongoing content refreshes because links go dead, prices change, and affiliates lose interest within months if you go quiet on them.
The other uncomfortable truth is that affiliate marketing can quietly cannibalise your own paid advertising if you’re not watching closely. Coupon and cashback sites in particular are notorious for this, someone searches your brand name, lands on a coupon site instead of your own ad, clicks through an affiliate link, and you end up paying a commission on a sale you’d have got anyway through organic search. Big brands lose enormous sums this way every year. Small businesses need to set clear rules, no bidding on your own brand name in search, no promoting on sites that only exist to skim commission off searches you’d have won regardless.
None of this means don’t do it. It means go in with your eyes open, expect the slow build, expect most affiliates to do nothing, and put real effort into the handful who do produce, because they’re the ones who’ll carry the whole channel.
Frequently asked questions
Is affiliate marketing worth it for a small business with a tiny audience?
Yes, but expect it to start small and slow. A business with a few hundred email subscribers can still earn genuine commission by recommending tools it already uses, the trust matters more than the list size, and even modest audiences convert well when the recommendation feels honest rather than sold.
How much commission should I offer affiliates for my own product?
For physical products, 5 to 15 percent is standard given tighter margins. For digital products, courses, and software, 20 to 30 percent is common and often necessary to get anyone to bother promoting you, since digital margins can absorb it comfortably.
Do I need a special platform to run an affiliate programme?
Not necessarily. Many e-commerce platforms have affiliate tracking built into apps or plugins, so a small Shopify store, for example, doesn’t need a separate network to get started, though larger programmes eventually benefit from a dedicated platform like Awin or Impact for tracking and payouts.
Why do most small business affiliate programmes fail?
Usually poor admin rather than a bad product, broken tracking links, slow or confusing payouts, no real assets given to affiliates, and no active recruitment beyond a passive sign-up form. Fix those and most of the failure disappears before you even touch the marketing.
Sources worth reading
- the FTC’s endorsement guides
- the ASA’s advertising codes
Related reading: How Do You Evaluate Tech Reviews Before Trusting Them and How Do You Avoid Common Blogging Mistakes as a Beginner?.
I go much deeper on this in the digital marketing guide.
