Brands often treat launching an affiliate program as a software decision – pick a tool, switch it on, wait for sales. But the tool is the last 10%. First, you need to know what you can afford to pay, which products to push, who you recruit, and on what terms.

In this guide, we'll cover the whole process of starting an affiliate program. You'll learn how to tell if affiliate marketing fits your business and how to launch a successful affiliate program in seven steps.

Is an affiliate program right for your business?

An affiliate program is one of the lowest-risk ways to grow your brand. But that doesn’t mean it’s right for everyone. Before you build this kind of program, it's worth checking whether your margins, products, and audience set you up to win. Here's how to tell.

Signs an affiliate program is a good fit

Consider an affiliate program if:

• Creators often post about your brand unprompted, DM you about partnership opportunities, or comment on your posts. If your brand naturally attracts creators, you've already solved a key part of the recruitment puzzle.
  
  
• Your product is easy to show, not just talk about. Visual products that a creator can demo, style, or capture a before-and-after with give affiliates stronger content to work with. It's not a dealbreaker if yours isn't (plenty of programs run on testimonials and storytelling), but it lowers the effort for every affiliate you recruit.
  
  
• Customers often repurchase your products. When buyers come back on their own, creators' efforts keep paying off well beyond the first sale. That means you can offer a healthy commission and still profit over the customer's lifetime.
  
  
• You have enough margin after commissions, gifting, and discounts. An affiliate program costs you commission on every sale plus the products you gift and replenish. And you’ll also need to factor in discounts for each affiliate. Brands with margins that comfortably cover all three make money starting with the first sale.

When affiliate marketing isn't a good fit

Affiliate marketing won't work for every brand. Hold off if:

• Your margins can't absorb commission, gifting, and discounts. Marketers often budget for one and forget about the others. The true cost per affiliate is recurring and includes more than commissions alone.
  
  
• Your average order value is too low. Creators tend to prioritize offers that pay more for the same effort. Bundles or higher-value products can increase the average order value (AOV) enough to make your program competitive.
  
  
• Your sales cycles are long and complex. Attribution windows often expire before B2B or high-consideration buyers convert, making affiliate commissions hard to track. Brands that make this work often extend windows and pay for qualified leads, which takes dedicated people and budget.
  
  
• You don't have bandwidth. Affiliates are partners, not a channel to set and forget. If no one on your team can answer their questions, send products, and pay on time, you'll find it difficult to retain affiliates. A dormant program can cost you valuable creator goodwill.

How to start an affiliate program in 7 steps

If the signs point to a good fit, here's how to go from zero to a working program in seven straightforward steps.

Step 1: Set program goals and choose products to promote

Before you build anything, get clear on what you want the program to achieve. Your affiliate marketing goals will determine how you set commission rules, which creators you partner with, and how you judge success.

For instance, if rising ad costs have pushed you toward affiliate marketing, you might opt to optimize for new customers and judge the program on customer acquisition cost (CAC). If your customers tend to repurchase, you might target total revenue or lifetime value instead.

Your affiliate goals should align with your organization’s priorities. So, if revenue is your main objective, you might set a goal to drive $15,000 in affiliate revenue in the next two quarters at a CAC below $40. Or if expanding your customer base is your main objective, your goal might be to acquire 200 new customers via 10 active affiliates by the end of Q2.

Decide which products to promote based on marketability and margin. Every product has to account for affiliate marketing costs, so your hero product won't automatically be your top affiliate product.

You're looking for products that check three boxes:

• Enough margin to absorb the commission and the discount. There's no magic number that works for everyone. Just do the math to make sure your product margins can accommodate affiliate costs.
• High conversion rate. Which products convert best based on your website benchmarks? Affiliate traffic tends to behave like warm referral traffic, so make the most of the clicks your creators send.
• Natural fit in creator content. Products that provide a visible result, compelling demo, or before-and-after sequence give creators something to build content around.

Step 2: Choose your affiliate commission structure and rates

Creators check your commission before almost anything else, so it's a key factor in who decides to partner with you. Set it too low, and strong creators will opt out. But set it too high, and every sale will erode your margin.

You have three structures to choose from:

Percentage of sale ties the payout to order value, so creators earn more when they drive bigger carts. This is the default for a reason: It aligns their incentive with your revenue.

ILIA's affiliate program pays a flat 10% rate for each sale.

Flat rate pays a fixed amount per sale. It keeps your CAC predictable. This makes it a good fit when order values swing widely or when you want to target new customers.

ButcherBox’s affiliate program pays $20 per new subscription.

Tiered raises the commission rate as creators hit volume milestones. It lets you launch at a modest base rate while still competing for top performers. And it gives your best affiliates a reason to keep pushing.

OSEA’s affiliate program has revenue-based tiers that range from 16% to 20% commission.

So, which structure should you pick? Start with your average order value (AOV).

• If your AOV is consistent, a percentage of sale is the simplest choice and scales cleanly with each cart.
• If order values swing widely or if you mostly care about acquiring new customers rather than maximizing each order, a flat rate keeps your payouts predictable and your CAC easy to forecast.
• Tiered makes the most sense once you have enough affiliate volume to reward, when you want to launch conservatively but still hold onto top performers as they scale.

Whichever structure you choose, the rate itself comes down to margin math. Your commission has to consider what a customer is worth and what you're willing to spend to acquire them. Work out your average profit per order, then decide how much of that you can hand to a creator while still coming out ahead.

It’s helpful to check your current CAC. Say you’re paying $25 to acquire a customer through ads. In that case, a commission below that works, since you only pay it on a confirmed sale. The goal is a number high enough to attract the creators you want but low enough that every sale still makes you money.

For a more detailed comparison of commission models and rates, see our article on how to build an affiliate program.

Step 3: Define your affiliate program terms and FTC rules

Your program terms serve as the contract between you and your affiliates. Write them before you recruit anyone. 

Here’s a quick summary:

• Start with your attribution window, which determines how long after a click or code use an affiliate earns credit for a sale. For example, a 30-day window is common for ecommerce brands. And use last-click attribution to keep things simple when a customer interacts with more than one affiliate.
  
  
• Set a payout threshold and a hold period. For instance, a threshold of $25 or $50 (depending on your AOV) saves you from processing an endless stream of small payments. And a hold period of 30 to 60 days lets returns clear before commissions go out.
  
  
• Pair that with a clawback clause for returns and refunds. If a customer returns the product, the commission on that sale also gets returned. And with a sufficient hold period, the commission doesn't get paid at all.
  
  
• Establish brand and ad rules to define where affiliates can (and can't) promote you. Common rules include no bidding on your branded keywords in pay-per-click (PPC) ads, no product claims your own marketing wouldn't make, and no posting codes on coupon sites – which is a problem for 47.6% of marketers, according to our survey.
  
  

• Don't forget to cover FTC disclosure. Affiliates are legally required to disclose that they earn commission from your links or codes with a visible "#ad" or "paid partnership" label rather than one buried in hashtags. Put the requirement in your terms, and check for it when you review affiliate content.

Step 4: Decide how you'll manage the program day to day 

There are three main ways to run an affiliate marketing program. The option you choose affects how much work the program takes and which affiliates you'll attract.

• In-house programs require you to manage spreadsheets, discount codes, and payouts manually. You can combine this with an affiliate management tool to simplify discovery, tracking, payments, and communication.
  
  
• Affiliate networks give you access to an existing pool of affiliates and handle tracking and payments. In exchange, they charge setup fees, monthly fees, and often a percentage of every affiliate sale.
  
  
• Affiliate agencies manage the program on your brand’s behalf, handling everything from recruitment and tracking to compliance and optimization. They charge a retainer or a percentage of affiliate-driven revenue.

Traditional affiliate networks weren't built for creator partnerships, which require thorough vetting (beyond audience fit), ongoing communication, and content tracking. And agency partnerships increase costs while preventing direct relationships with creators.

An affiliate platform like Modash handles the creator workflow end to end, from vetting and communication to sales tracking and payouts to connecting directly to your Shopify store. Since it supports affiliate, gifting, and paid campaigns, you can use one tool as your partnerships expand.

Step 5: Find and vet affiliates for your program

There's a good chance you'll find your first affiliates in your customer list, social mentions, or email subscribers. Customers who post about your products, creators who tag you, and subscribers who open every email are all warm candidates. Look for people with a regular posting habit and followers who resemble your ideal customer.

Existing influencer partners are another great but often overlooked source. According to our survey, nearly half (49.2%) of marketers said they're constantly searching for new affiliates. That’s a missed opportunity right there.

Start by finding creators who already love your brand. You can find them in tagged posts, comments, or you can keep it simple and use Modash. All you have to do is enter your username and it’ll surface creators who already follow your brand – helping you find warm prospects.

To grow your program further, proactively look for brand fit creators. Modash’s discovery filters narrow 380M+ profiles by niche, location, audience demographics, and engagement – so you find affiliates who match your customer profile.

If you also want to recruit affiliates with a specific content style, you can use Modash’s AI creator search to describe what you’re looking for in natural language or simply upload a visual reference. Finding storyfit influencers has never been simpler. 

But whether you find creators in your following lists or using Modash, vet them thoroughly before inviting them to your affiliate program. Follower counts are easy to inflate, and purchased engagement sends you traffic that will never convert. Modash can help you check:

• Engagement rates against account size
• Audience demographics and interests
• Previously sponsored posts
• Follower growth rate
• …and a lot more 

Step 6: Onboard affiliates with tracking links, codes, and UTMs

Onboarding is your chance to get affiliates off to a strong start – and it matters more than most brands think. In our survey, 60% of marketers said keeping affiliates active was their biggest challenge, and over a third said fewer than 20% of their affiliates are active at all.

The pattern behind those numbers is almost always the same: affiliates go silent when the program is friction-heavy or forgettable. Good onboarding heads both off. Here are three moves to help you ensure your affiliates get a smooth onboarding:

• Give each affiliate their tracking setup. As soon as you accept a creator, assign them their own discount code and UTM-tagged link. Use a consistent format – the creator's handle plus your standard discount – since a recognizable code is easier for them to say on camera and remember. This is the plumbing that makes everything else measurable, so it comes first.
  
  Doing it by hand means creating a code in Shopify, building the UTM parameters, and logging it all in a spreadsheet for every creator. A better solution is to use Modash – it auto-assigns codes and UTMs through Shopify so that setup isn't a barrier to getting someone live. 

• Send each affiliate a welcome kit with everything they need. Give creators what they need to create: the product to test and film with, brand guidelines, disclosure requirements (from step three), and a couple of examples of affiliate content that performed well. The less guesswork a creator has at the start, the sooner they post – and the more likely that first post actually lands.
  
  
• Keep the communication lines open. Comms is where most programs lose their creator partners. Our research shows over two-thirds (68.1%) of marketers only communicate with affiliates monthly, quarterly, or yearly – and infrequent contact is exactly how affiliates drift out of your program.
  
  Regular check-ins give creators fresh talking points, catch problems before they stall a partnership, and make people feel like partners rather than a payout line. If staying in touch across a growing roster is the hard part, Modash lets you manage outreach from a connected inbox and automate follow-ups and check-ins so you aren’t scrambling to find creator emails with their history in a messy inbox.

Learn more: How to Set Up New Affiliates So They Actually Start Posting

Step 7: Track affiliate performance and pay commissions

Once affiliates start posting about your brand, you'll want to measure their performance. This data helps you decide which affiliate should get a rate increase, which products to prioritize, and where to spend recruiting efforts.

Creator-level data tells you which partners drive sales and engagement, while campaign-level data tells you whether the program as a whole is meeting ROI goals. Modash tracks performance at both levels automatically, so you can easily use it to make decisions.

With the right affiliate platform, tracking is easier, notes Melissa Sorby:

While no attribution model is ever perfect, having a platform integrated with Shopify (or whichever ecommerce platform you use) gives you confidence in the data and allows you to track performance at both creator and content level.

Melissa Sorby Senior Influencer Marketing Manager

You must also collect affiliate content because:

• Post analytics indicate what messaging and formats give the best results
• They can be repurposed for ads/whitelisted content (after acquiring usage rights)

With Modash, there's no need to do this manually. The platform automatically collects content from tracked creators, including Instagram Stories, without creators having to submit screenshots. Either have affiliates add your campaign hashtag to their posts or use Modash’s Event Mode to capture all content posted during the campaign period.

Then, you’re ready to pay affiliates. Before you sign that cheque, make sure to process returns and refunds, removing any relevant affiliate commission from the balance sheet.

You don’t have to calculate all this manually. Connect Modash to your Shopify store to automate creator payments. Once connected, affiliate payouts will require paying just one invoice per month (to Modash). 

And Modash takes no cut of your affiliate revenue – platform fees apply to creator payouts only (free for $10k/year, then just 5% on affiliate commission, not revenue). 

Plus, creators get their own portal to track earnings and payment status, which spares you the check-in emails.

How much does it cost to start an affiliate program?

Affiliate marketing has no upfront media spend, but it isn't free to operate. Budget for these costs:

• Commission payouts: Your biggest variable cost, which scales with success and bonuses
• Discount codes: A markdown on every referred order, paid in addition to the commission
• Software or platform fees: A monthly or annual subscription
• Network transaction fees: Setup fees, monthly minimums, and often a percentage of each sale
• Payment processing fees: Cross-border payout and currency conversion charges that add up with international affiliates
• Gifted product: The first shipment plus replenishment, since active affiliates need new products to feature
• Flat or upfront creator fees: Base payments some creators ask for on top of commission
• Labor: An employee, contractor, or chunk of your own week spent recruiting, onboarding, and managing

Before committing to an affiliate management tool, check how it calculates fees. A percentage of order value and a percentage of creator payouts sound interchangeable, but they result in different invoices. One platform charges based on what your affiliates sell, and the other charges based on what you pay them.

Launch your affiliate program

An affiliate program pays off when you treat it as an ongoing channel for building creator relationships. The brands that get results recruit steadily, keep affiliates stocked and informed, and pay on time.

The right tooling makes that sustainable for a small team. Try Modash free for 14 days to find creators who already love your brand and run your entire affiliate program from one convenient dashboard.

Frequently asked questions about how to start an affiliate program

What is a good commission rate for an affiliate program?

A good rate depends on your gross margin after the affiliate's discount code. Rates from 5–25% are the norm for ecommerce brands. Say your product sells at $80 with a 60% gross margin, leaving $48 per order. A 15% commission ($12) and a 10% code ($8) still leave $28, so that rate would be sustainable. Launch below your ceiling so you have room to raise rates for top performers later.

Should I run my affiliate program in-house, through a network, or on a platform?

In-house works for a handful of affiliates, but the manual work increases with every partner you add. Networks bring an existing affiliate pool, though they were built for coupon sites and often take a cut of your sales. For creator-led programs, a platform like Modash gives you full control with discovery, tracking, and payouts in one place.

Do I need a lot of affiliates to start?

No. A pilot with up to 10 affiliates and a single product is enough to test whether the economics work. Small programs are also easier to manage well, and treating early affiliates well matters more than recruiting at scale.

How do I track affiliate sales on Shopify?

Assign each affiliate a unique discount code and a UTM-tagged link. Platforms with a native Shopify integration, like Modash, automatically attribute revenue to each creator.

Do affiliates need to disclose their partnership under FTC rules?

Yes. Affiliates must clearly disclose that they earn commission from your links or codes, with a visible label like "#ad" rather than one buried in hashtags. The FTC can hold your brand responsible for missing disclosures, so put the requirement in your program terms and check for it when reviewing content.

How do returns and refunds affect affiliate commissions?

When a referred order is returned, the commission on it should be reversed. Include a clawback clause in your terms and set a commission hold period of 30 to 60 days so many returns happen before you've paid anything out.

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