Question : How do I set up a referral or affiliate Program?

I have an online store where I sell intangible items and downloads (not adult) II would like to set up an affiliate or referral program to reward people who refer me new customers.   Is there a service that you recommend?   How does these services work?  Is it with a cookie that tracks new customers?  Or do you give each of your referral partners a code that the customer uses at checkout?

I dont have a lot of volume right now so looking for something easy and relatively inexpensive to setup and maintain.  

Answer : How do I set up a referral or affiliate Program?

It's a cookie.

I've used this software in the past and it works well: http://www.idevdirect.com/

If what you are selling is information products, check out clickbank.com