The goal of any affiliate marketer should be to build a passive, residual income. Passive income and residual income are often considered one and the same, but there is an ever so slight difference between the two.
Passive income is considered income that is earned after an initial investment (time or money) has been made and active participation in the business or organization is no longer required. Residual income, on the other hand, are continuous payments made to an individual on a specific timetable after an initial sale.
Residual income can be considered passive, but the opposite is never the case. Passive income requires no continued effort or participation, while residual income usually requires some type of continued activity or effort.
As an affiliate marketer, building residual income into an ongoing passive income is the ideal scenario. Unfortunately, not all affiliate programs pay a residual income. The only compensation offered may be an initial commission paid at the time an affiliate makes a sale on behalf of the merchant. This type of compensation can be quite lucrative in its own right, but in my opinion it is a narrow approach to earning income online.
Building wealth (not income) should be the long-term goal, and a passive income stream must be created to do this.
The two things an affiliate should look at when evaluating a program for passive, residual income are:
1) Is there is tiered affiliate structure?
A tiered affiliate program is one in which an affiliate is able to recruit “sub-affiliates” beneath him and receive additional compensation based on the activity of his sub-affiliates. Tiers typically range from 2-5 levels (Example: if a program is a four-tier program that means the affiliate gets paid on 4-levels - the person he directly recruits (his 2nd level), the person his 2nd level sub recruits (his 3rd level), and the person his 3rd level sub recruits (his 4th level).
Tiered affiliate programs offer a powerful potential source of passive income for the affiliate. Affiliates who do a good enough job of recruiting and then trains his sub-affiliates to do the same could have hundreds or even thousands of subs in his downline, earning him money without ever having to sale a thing.
Not all affiliate opportunities are tiered, but affiliates who want to build a passive income understand this is a critical component in meeting that end.
2) Is there a recurring payment from product or service being marketed?
Recurring payments are typically made monthly from one sale. So, if an affiliate markets a product or service in which the purchaser pays each month for that product or service, the affiliate may receive an ongoing percentage of the monthly price. For instance, if an affiliate markets for a merchant that offers SEO services at $50 per month and the affiliate commission is 50%, the affiliate gets $25 a month in recurring monthly payments (for as long as the purchaser is subscribed to the service).
Affiliate programs with recurring payments provide a residual income stream that could potentially keep paying its affiliates well after the initial sale. Not all merchants who sale a product with a monthly fee offer its affiliates recurring residual commissions, so careful examination of the affiliate payment agreement must be done.
The benefits of building a passive, residual income online are clear. Any affiliate marketer who is serious about not just earning income online, but who wants to build wealth from home must create a passive, residual income stream.
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