There are several different ways in which you can earn money from affiliate programs. The most common is the simple sales commission. The merchant offers to pay you, say, 25%, 40% or 50% of the total selling price every time you make a sale. Or in a two-tier program, you also get paid when one of the people you sold to also makes a sale.

Other programs pay by leads. These are often companies who sell financial products such as loans, mortgages or insurance. You get paid a fixed fee when the prospect fills in an application or a form requesting further information. Others pay you a fixed fee for every click-through to their site that comes via your affiliate link. Although these two types of program may pay smaller sums of money, the advantage is that the customer does not actually have to purchase anything before you get paid.

The problem with all these types of program is that after all the trouble you have taken to get people to your site, you only get one payment from them or perhaps two in the case of two-tier programs. What you really want is to make the most of each and every customer who comes to your site. The best way to do this is through residual commissions.

Residual income affiliate programs pay you repeatedly for a sale you make only once. Sounds good doesn't it?

For example, you may be using your site to promote an auto-responder service. When somebody comes to your site and decides to buy the service, the initial commission may be low – say $10. But as long as that customer continues to subscribe to the service, you will collect a portion of the monthly fees – maybe a further $10 per month for you. Compare this with a $50 product that you are selling at 70% commission. A commission of 70% sounds good but it will be a one-off payment of $35. If your auto-responder purchaser remains a customer for a year, you will collect $120 plus your initial $10 – and that is only one customer.

One good way to collect residual commission is through membership sites. These are growing in popularity. You refer someone to the site and if they subscribe they will pay a monthly fee of, say $29.99, of which a percentage goes to you.

The thing to remember about products that pay residual commissions is that they are usually a service rather than a physical product. Customers will only continue to subscribe as long as they are satisfied with the service. If they unsubscribe very quickly, you are no better off and have wasted all that time and effort. What is more, if they subscribed through you and then found it unsatisfactory, your standing as a seller may be damaged.

This means you need to be careful what you promote as an affiliate. It is very easy to sign up to affiliate programs but if you aren't familiar with what you are selling, it could cause you problems in the long run. You need to familiarize yourself with the product or service and, ideally, use it yourself, so that you can genuinely recommend it to the customers. Join the membership site yourself and your recommendation will ring true.

If you operate wisely, residual commissions can bring you in a very healthy income.