How We Decided Not to Focus on Affiliate Revenue
Growing a business these days means you’ll be using at least a handful of tools and platforms. To encourage current users to share these tools, affiliate programs from brands have become very generous. Often for subscriptions, they pay a percentage of that customer’s value to the affiliate partner, either in perpetuity or for several years.
Recommending helpful tools via affiliate relationships is often how creators with a large audience are able to grow their revenue year-over-year. It is one of the ways to eventually build towards the ever-elusive “passive income.”
I’ve been an affiliate of many of the tools we use to run the business, but until now, have never shared links publicly. An affiliate revenue stream just didn’t feel right for this business. It wasn’t until recently that I unpacked why that was and made the decision about what to do with all the affiliate links.
We decided to collect affiliate revenue, but with very clear boundaries so that the efforts don’t affect the rest of the business. Half the affiliate money will be used for scholarships to BACB, and half will be donated.
Below are the reasons why I’ve chosen this path. Regardless of whether this is a particular decision you’re focused on, I hope these reflections give you ideas on how to approach decisions in general.
Here’s why we’ve decided to not count our affiliate income as business revenue.
It’s impossible to stay fully unbiased if you’re being incentivized not to.
A couple of weeks ago a big tech company reached out and offered to send me a free subscription to their tool. They said if I liked it, they’d love me to recommend it in this newsletter.
I said, sure. It was tool I had been wanting to try anyway.
As soon as I accepted, I got an email that was much more strongly worded. It still didn’t legally require me to write about the tool, but it made clear that by accepting the free subscription, I was making a commitment. What felt like “yay, free stuff” at first, didn’t feel so free after the second email. It didn’t feel right to me, so I decided not to take it.
When people offer to pay you to promote their thing, it’s very hard to stay unbiased.
I could have just taken the free subscription and did what I wanted with it. But I knew why I was gifted the subscription and just knowing that would bias my decision on whether to write about it.
My primary job is to help clients find the best solutions for them. I’m already biased when it comes to the people, tools and companies I like, we all are. But being biased because you prefer something, is different than being biased because you’re being paid by that brand. It would affect the support I provide.
Right now, I don’t feel like I could be at my best if affiliate revenue became a part of the equation.
- What areas of your business are accidentally biasing you towards an outcome you don’t want?
- What type of income, perks, discounts, or other advantages do you take advantage of? Is the real cost of it worth it?
Anything that doesn’t align with the core business is a distraction.
Our core business is selling a course and community. Adding ads and sponsored content, at the surface, seems to be totally separate from that business and in theory, we should be able to do both. But in subtle ways, the two revenue streams conflict.
As I mentioned, community leaders pay me to prioritize their unique needs. I see my job as a coach and teacher to listen and recommend the best paths I know that will align with what they want. That includes the right tools. If I’m incentivized to promote certain tools or brands, my ability is compromised, and therefore I’m lowering the value of my core offer.
Any time we are considering adding another revenue stream to a business, it’s worth deeply considering what it means for the part that’s already working. For example, if you’re adding a cheaper membership, will that affect the sales of your high-end coaching program? If you’re looking to become a paid keynote speaker, how will travel and prep time affect how you can show up for your current business? If it affects it in a positive way, great! If not, it’s worth reconsidering.
If you’re thinking of adding another part to your business, consider these questions:
- Does it align?
- If it doesn’t directly align, is the potential upside worth it?
- Is it a distraction?
- Does it make me feel weird?
Never forget why the company exists.
Two of the beliefs that underlie this organization are:
- Connection is essential and it’s a practice that we’re rusty on as a species, and
- Social media tech giants have done more to disconnect than to connect us.
I believe those that bring people together in smaller, private groups that actually help people connect, should be lifted up as an alternative to the online spaces that seem like they would help with connection, but often make us feel lonely and disconnected.
Social networks don’t help us feel connected because that’s not their priority. Since they primarily make money from advertising, they prioritize brands’ visibility needs and try to make us feel however would push us to buy more. That’s often a feeling of FOMO, comparison, and not being good enough.
To me, with community businesses, we have an opportunity to build a different model. One that is more transparent, more human and less advertising-dependent.
So given our why for this business, it doesn’t make sense to rely on ads, affiliate revenue and other sponsorships as a core part of how we make money. I see that as replicating a system we’re trying to move away from, which compromises what we’re here to do in the first place.
This doesn’t mean this is the right choice for every community business. There are cases where an affiliate strategy, ad space, sponsorships, and other partners can bring great value to community members. For example, if a community has a job board and invites companies to sponsor in exchange for access to members who are looking for work. A win-win is possible!
In our case, at this moment in time, leaning towards affiliate revenue would not align well with our vision for the future.
When you’re evaluating a new opportunity, even if it sounds super aligned, evaluate it against your values, vision and member growth journey. If it doesn’t align, it’s worth reconsidering.
Here are some big questions to reflect on:
- What is your vision of the world that your community is coming together to create?
- What are your community values? How do they work in practice?
- What’s a hypothetical business move that seems totally fine in some cases, but would deeply conflict with your vision and values?
The idea of this piece (I hope!) is not to pressure you to take any specific action by replicating the decisions we made. Instead, I hope the principles behind them help with whatever decisions you happen to be currently mulling over.
With all that being said, from now on we will start using affiliate links when we mention tools in this newsletter. I want to recommend the tools we use, and it seems silly to throw away the affiliate revenue, especially over time. What we decided is to collect affiliate income, but use it for something else.
In our case, any affiliate revenue we collect will be split 50/50.
Half of the affiliate revenue we will donate to a nonprofit. We’ll pick organizations with similar missions: to use online connection as a way to address loneliness and disconnection in our society. We’re especially interested in organizations that work with the elderly and with marginalized communities.
Our first affiliate revenue payments will go to SAGE, a national nonprofit providing advocacy and services for LGBT elders. During the pandemic, they launched a new program called SAGEConnect, which invites younger and older adults in the LGBT community (and allies) to talk as peers via weekly phone or video calls.
The other half will go to funding scholarships for the BACB community. We have both a needs-based scholarship and a scholarship for those underrepresented in entrepreneurship. The affiliate revenue will help us in continuing to make the community accessible to more community business leaders.
It’s not a perfect system. Technically, we still get half of the affiliate money that comes in because of the scholarships. For now, this solution feels like a good balance between our values, the world we want to see, and the business’ goals.
We’re committing to this plan for 2023. We’ll evaluate it again next year and report back if anything changes. In the meantime, if you’re going to sign up for any of the tools and services on the list, we hope you’ll consider using our links!
Here are some of the tools we recommend:
- Community → Circle
- Email → Convertkit →
- Payments → Thrivecart →
- Member Management & ops → Burb https://app.burb.co/authentication/register/?lmref=iqQZhA
- Operations and project management → Notion https://notion.grsm.io/fprxehuoxzwd
- Quick videos → Loom
- Course assessment → MySnapshot
https://mysnapshot.co/ (let Charlotte know we sent you!)
- Forms → Tally
- Community → Heartbeat
In the coming months, I’ll write about how and why we use or recommend each of these!