This topic just came up over at my forum so I thought I would copy this tip here for any merchants that are considering launching an affiliate program.

I don't work with or consult for brand new sites with brand new affiliate programs. The last thing I want to do is set up affiliates to be the guinea pig for new uptested sites. One thing I always tell merchants to do if they have a fairly new site - BEFORE they launch an affiliate program is conversion testing with PPC.

Pretend you are an affiliate for your own site. Set up a small Adwords budget. Pick the best KW you can, track your spend against how much you would earn if you were being paid the same commish you are planning to offer affiliates. Are you in the red or the black? What can you do to tweak your site to improve conversions? If you as the merchant - knowing everything you know about your site and products - can't make a profit, then no affiliate will be able to either. I'm not saying that all affiliate will use PPC to promote you, many won't. But PPC is the fastest way for you to get very targeted traffic to be able to test, measure and tweak your conversions.

This exercise will not only help your conversions but help you understand what affiliates go through and will ultimately make your entire program much stronger. Since recruiting strong affiliates and maintaining a strong reputation in the industry will be critical to your affiliate program's success - the last thing you want to do is burn good affiliates and your rep with bad conversions. Your goal should be 2% although the higher the better and in some markets 1% is adequate to start. Test, tweak and optimize before you even think about launching an affiliate program.

Linda