This is part 2 in my series, "Tiny steps to success - How to make an extra $33,000 a year".

To increase your affiliate income, it's usually easier and quicker to improve an existing site than to start again, research and build a new one. Many affiliates fail in a niche because they give up too soon.

I'm hoping that most of you reading this series don't have to start a new site. You may already own more sites than you can comfortably manage, anyway. Don't rush to start a new site unless you really have to.

Perhaps you're overlooking the big potential of a site you already own.

On the other hand, you don't want to waste time trying to turn a $300 a month site into a $3,000 a month site if the niche you've chosen is too difficult or doesn't have strong potential.

Being an affiliate isn't just a matter of finding good products to promote and promoting them. You need to think strategically.

Before I get into that, here's a quick reminder about the purpose of this series of articles. It's to show you why it's so important that you do something EVERY day to improve your business. When you do, you unleash the enormous power of incremental progress - continuous improvement.

Imagine if you can increase your affiliate revenue by just 25 cents today, by another 25 cents tomorrow, 25 cents the next day, and so on... At the end of 12 months, you'll be earning at the rate of an EXTRA $33,000 a year. (See the figures in Part 1, Tiny steps to success. As requested, there's a printer friendly version.)

An extra $33,000 could pay off debts, add an office to your house, pay for a honeymoon (or a second honeymoon), or give you the confidence to go to your boss and say, "I quit." Doing that feels so GOOD!

Picture yourself with an extra $33,000. Picture yourself spending it on something that will change your life in a big way. It's important that you SEE yourself spending (or investing) the extra money you're going to earn. This will help give you strong motivation and help you form your new daily habit.

Have you started the habit yet?

Are you just reading this stuff, or have you actually begun to form a new life-changing habit? To form your new habit, do something to improve your business every single day. It doesn't matter how tiny this thing is, just do SOMETHING to get you into the habit of constantly improving your business. Forming the habit is what is important, because you're building a solid foundation that will help create wealth for you for many years to come.

One way to track your progress is to place a calendar on the wall in front of your desk and every day as soon as you've done something to improve your business, put a large red tick on the calendar. You'll get a wonderful feeling of satisfaction as you check off each day of the year and see yourself making better progress than you've ever made before in your life.

But you don't want to waste time on a niche that doesn't have much potential.

Analyze your affiliate niche

Here are 19 tips to help you analyze your affiliate niche and decide whether your site has high earning potential.

You need to be able to answer "Yes" to some of the following questions. In an ideal world, you'd say "Yes" to all of them, but for most of us, life just isn't like that.

19 questions to ask yourself...

1. Are you promoting products that people are desperately keen to buy?

Obvious examples are:

• Acne creams
• Weight-loss cures
• Matchmaking services
• "How to make money" books.
• Collectibles. Hobbyists and collectors are very often passionate buyers, too.

Many of these affiliate niches are intensely competitive, so if you're considering one of them, you may need to look for a sub-niche within the niche.

People desperately want all sorts of other things, too. For example...

• Childless couples often desperately want tips on how to conceive.
• Parents of three boys may desperately want a girl.
• A jobless person desperately wants a job or information on how to get a job.
• People with health problems, such as bad breath or alopecia, desperately want a cure.
• Stressed folk want to de-stress.
• Unfit people want to get fit.
• Golfers want to improve their putting.
• Tennis players want to improve their serve.
• Squabbling couples want to know how to avoid a divorce.
• Parents of a problem child desperately want helpful information.
• Parents want their children to do well at school.
• Young teenagers are often desperate to own the latest video game or gadget that "all" their friends have.
• Plain girls want to be pretty.
• Pretty girls want to be beautiful.
• Smokers want to quit.
• An unsuccessful salesman desperately wants to learn how to sell.
• An unmotivated person wants to become motivated.
• Millions of shy people desperately want to learn "How to Win Friends and Influence People".
• Messy people want to learn how to control clutter.
• Fashion-conscious folk desperately want the latest designer handbags or shoes.
• In a recession, over-committed house owners may desperately want information on how to sell their house for a fair price, or tips on how to avoid foreclosure.
• Easily embarrassed lovers want to buy condoms online.
• People in jobs they hate desperately want to learn new skills.
• People in debt want to learn how to get out of it.

When your visitors are desperate, it's easier to sell them a product that solves their problem or satisfies their urgent need.

Keep your radar switched on for markets in which buyers are really, really, keen to buy. Keep this in the back of your mind when you're reading newspapers, magazines, advertisements, visiting websites, watching a movie or talking to friends. There are good ideas all around you.

2. Is your site targeting "buying" keywords? Someone searching for "acne cream" or product names such as "XYZ perfume" or "XYZ digital camera review" is most probably in a buying mood.

You want your visitors to be in a buying mood, not merely seeking information. It's useful to attract information seekers - you may be able to win their trust and turn them into buyers. However, make sure you target keywords that attract buyers, too.

Use Google Analytics - or the tool you normally use - and look at the keywords your visitors are using to find your site. Is there any buying going on? There should be.

3. Do you have a passion for the niche you've chosen? When the going gets tough and problems occur, will you still be passionate enough about the topic to persist with it?

REALLY IMPORTANT NOTE: Cynical affiliates will tell you, "Go where the money is." That's OK for some but maybe not for you. Some affiliates are quite content researching obscure niches and writing reviews of grandfather clocks or gourmet salt. If you're doing the writing and website building yourself, you need to know yourself. Know your strengths and weaknesses.

Some affiliates can go to sites like Yahoo Shopping, Shopping.com and eBay to get ideas and then create dozens or hundreds of small affiliate sites. These may be review sites, targeting buying keywords. If you're planning to do something similar, you really DO need to figure out whether you have the appropriate mindset for that sort of work.

You may be more comfortable owning two or three large sites. As search engines get smarter, I think the future is more likely to belong to affiliates who create large high quality sites.

4. Do you have in-depth knowledge of your chosen niche? A "Yes" here would nice. If you haven't, all is not lost. Read on...

5. Can you hire people who have in-depth knowledge?

6. Can you find and interview people who have in-depth knowledge?

7. Is it a growing niche, not a short-term fad? Do a search in Google Trends to see how your chosen niche is developing. If it's a fast growing niche, perhaps you can get in early and ride the wave.

8. Could your site fit naturally into a nice little cluster of closely related sites, carefully cross-promoted? I'm NOT talking about spammy link farm arrangements, but good large sites containing compelling content, occasionally linking to each other, only when such links are relevant. I own a cluster of sites in closely related niches. This technique works well for me.

9. Have you identified good affiliate products you feel comfortable promoting? To find affiliate programs, try a search in the AssociatePrograms.com affiliate directory. Try a search in Google for "affiliate program" +keyword.

10. Could you write an original, useful 20-page report or an ebook on this topic and sell it to supplement your site's revenue? This would create a handy additional revenue stream. Could you create a product in this niche and have other affiliates promoting it for you? Perhaps it's time for you to switch to the other side of the affiliate fence and take advantage of the leverage you get by having your own affiliates.

11. Could you write an autoresponder series about this topic? Would that be a natural fit? It's not just a matter of accumulating interesting content - it's about creating compelling content that your visitors will be eager to read.

12. Is your niche the right size - not too small, not too competitive?

Here's a quick test. It will give you a quick overview of your niche, or the niche you're considering.

Go to the free Google keyword tool.

Choose "All Countries".
Type in your main keyword (or key phrase), for example, "New Zealand".
Check the "Use synonyms" box.
Click "Get keyword ideas".

Although you would normally choose "Match Type:Exact", do NOT do that this time. Select Match Type:Broad. This shows you average monthly searches for ALL searches that include your keyword. As a very rough guide, somewhere around 100,000 searches a month is a handy sized niche. If it's much smaller, it won't have heaps of potential. If it's considerably larger, it may be too competitive.

When I did this Broad search for "acne" it came up with over 4 million searches. "Skin care" was over 6 million. "Acne treatments" produced 110,000 searches.

NOTE: This is a very ROUGH guide. I've just tested the main keywords for a few affiliate sites I own. The average monthly "Broad" searches varied from 200,000 to over 30 million. Use numbers as a guide. Don't be a slave to them.

13. Does your niche have useful related keywords?

You want not just one good keyword but a bunch of good keywords that relate to your topic. An easy free way to find related keywords is to use the Google keyword tool, do a "Match Type:Exact" search, and then scroll down to the "Additional keywords to consider".

For example, in the "acne" niche, "pimples" is a related keyword.

Don't stop there.

Use the keyword tool to do a search for "pimples". You'll find more related keywords, such as "zits" and various "zits" phrases. If you keep exploring, doing a search for "blackhead", you'll find that thousands also search for phrases including "black head" (two words). And so on...

Your niche may be broader than you think.

Another example: A "stop smoking" search leads you to "hypnosis smoking" and "hynotherapy".

14. Are you targeting keyword sweet spots?

Let's say you're interested in the "gifts" niche. Use the free Google keyword tool to see the demand. Be sure to select "All Countries" and "Match Type:Exact" so you'll be able to see how many people are searching for the exact word or phrase.

About 37 million people a month use Google to search for either "gift" or "gifts" so there's a strong chance that those keywords will be incredibly competitive. You need to hunt for sweet spots where the demand is fairly strong but competition is weaker.

For example, a few thousand people a month search for "25th wedding anniversary gifts" and if you do a search in Google for that phrase you may find that you have a good chance of outranking the top 10 sites, with a bit of work.

One good way of finding profitable sweet spots where there's good demand but not too much supply is to use the advanced brainstorming tools in Site Build It. If you haven't seen SBI lately, you'll be surprised how advanced the tools are now. Brainstorm It spiders a lot of different sources and collects a vast array of keywords and returns them, with additional useful data. It also filters out the junk and gives you what it calls "Real Supply", which is much more meaningful than simply doing a search in Google to see how many pages are found. Site Build It is a whole suite of tools for researching, building and marketing a niche site. You can learn more about the advanced brainstorming tools here.

Another handy option for researching keyword sweet spots is the "WordRank" tool in Wordze. It enables you to test how easy or difficult it will be to get a top 10 ranking for a particular keyword. This tool is moderately priced and very simple to use.

15. Does your niche have good AdSense potential? Are there plenty of advertisers paying at least 50 cents per click?

You can find out by going to the free Google keyword tool. Choose "All Countries". Do a keyword search, for example, "acne". Select Match Type:Exact. Under "Choose columns to display:" select "Show Estimated Avg. CPC" (Show estimated average cost per click. At the same time, you can see the average number of searches for each keyword. Google also gives you an indication of "Advertiser Competition". Doing this search gives you an idea of what advertisers are paying per click on AdWords. As an AdSense publisher, you'll earn a percentage of whatever advertisers pay.

Acne sufferers are desperate for a cure, so advertisers are willing to pay several dollars per click for keywords such as "acne treatments", "acne products" and "skin treatments".

16. Have you analyzed your competitors? Be realistic. Can you beat them?

Your real competitors aren't the thousands of pages which Google reports when you do a search. Your real competitors are the top 10 in the search results. If you do searches in Google (with quotes) and find that your top 10 competitors for each of your main keywords all have a PageRank of 5 or more, then you most probably need to look for a less competitive niche, or a sub-niche of your chosen topic.

How strong is the content on your competitors' sites. Can you do better? Can you add your own facts and add your own personality to create more compelling content?

17. Do the affiliate products in your niche pay lifetime commissions or residual commissions? For example, some web hosts and membership sites pay monthly or annual residual commissions for as long as the buyer stays a customer. You get paid over and over again. That's a VERY nice bonus.

You can find lifetime commission programs and residual income programs reviewed at LifetimeCommissions.com.

18. In a recession, are you promoting essential products? In tough times, consumers cut back on non-essentials such as foreign vacations, eating out, entertainment, new clothing and new automobiles. They search for discounts and coupons and may search for cheaper credit cards and loans.

If you're promoting luxuries, don't be too pessimistic. Even in a recession, SOME people always have money to spend on luxuries.

19. Does your chosen affiliate niche involve your Primary Aim? This is an important question that you may have overlooked. Your Primary Aim involves passion, but it's more than that.
 
In "The E Myth Revisited", Michael E. Gerber says you must ask yourself these questions...

"What do I value most? What kind of life do I want? What do I want my life to look like, to feel like? Who do I wish to be? Your Primary Aim is the answer to all those questions."

Some writers suggest that one way to discover your Primary Aim is imagine your funeral and think about what you would want people to be saying about you at your funeral.

Your Primary Aim gives you purpose. It gives you energy.

If you really believe in what you're doing, you'll throw your heart and soul into it and your enthusiasm will rub off on others. You're less likely to allow setbacks to discourage you, and more likely to be eager to get up each day and go to work on your affiliate business.

If you choose a niche you're not passionate about, you'll need strong self-discipline.

Some affiliates are successful simply chasing the money. Others need a different goal. If you choose a niche that is right for YOU, one that matches your skills, interests and temperament, you're much more likely to succeed.

How many times did you answer "Yes"?

If you've chosen a niche with powerful potential, you'll be able to answer "Yes" to most of the questions above. 

Useful resources

Here's an article I wrote: Where to get ideas for a niche website. If you're looking for ideas for a new affiliate site, don't just skim the article. Take your time. When you choose a niche, you may end up working on it for the next decade or more, so it's worth spending lots of time on this. The 19 questions above will help you find the affiliate niche that is right for you.

Wordze's "WordRank" tool enables you to test how easy or difficult it will be to get a top 10 ranking for a particular keyword. It's also very simple to use.

An excellent source of advice on how to choose a niche comes from someone who is in a unique position on the Internet. Through his Site Build Suite of tools, Ken Evoy can analyze tens of thousands of niche content websites - from the INSIDE.

No one else on the Internet is in such a position. Ken loves crunching numbers. He loves analyzing data and figuring out why some website owners succeed and others fail. For Ken's advice on how to choose the right niche, see the SBI Video Action Guide - Day 2: Develop Your Best Site Concept.

Next article...

In the next article in the "Tiny Steps to Success" series, I'll discuss the vital importance of compelling content and describe ways to create it.