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  1. #1
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    Exclamation Is it okay to pay less if we have lower prices?
    Hi all

    I was hoping you would be able to help me. My company have launched our own affiliate program in the UK but our main drawback is that we sell TV's at the lowest prices and thus can only pay 1% commision on tvs but 4% on all accesories etc.

    We are currently looking at signing up with an affiliate network but I would like to hear from affiliates directly so as to make informed decisions.

    Your feedback would be appreciated.

  2. #2
    Moderator MichaelColey's Avatar
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    I seldom work with merchants who have such a substandard commission. I've found that most merchants who use the "way have to pay less because our prices are so much better" line of reasoning often have prices that aren't really that much better. Often, that's coupled with poor customer service and poor conversions, making it even worse. There are exceptions, but I'll focus my efforts on merchants who have the best balance between commissions and prices.
    Michael Coley
    Amazing-Bargains.com
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  3. #3
    Antisocial Media Expert ProWebAddict's Avatar
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    Quote Originally Posted by 1stAV
    Your feedback would be appreciated.
    Affiliates want to be paid a reasonable amount for their work. I think sometimes merchants think that all we do is slap up links so we should be thankful for any little pittance. Not saying you think that, but some people do.

    I do understand that certain markets tend to pay lower commissions but 1% isn't worth my time or my space; and it's really insulting considering the amount of time and effort I put into promotions.

    By the way, please take the time to read this thread .

  4. #4
    Moderator MichaelColey's Avatar
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    Moderator Note: I've move and renamed the thread.
    Michael Coley
    Amazing-Bargains.com
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    "Education is the most powerful weapon which you can use to change the world." Nelson Mandela

  5. #5
    Visual Artist & ABW Ambassador lostdeviant's Avatar
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    It is hard enough to be motivated by the normal home electronics commissions. I'd never bother with a 1% commission for a television. It would be a huge waste of time.

  6. #6
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    Thank you for the feedback.

    I certainly understand that you work very hard and it will be hard to be motivated by 1% and I did not mean to insult anybody.The main problem is that we only take 2% on our bottom line on TV's as we are currently consistantly 10% cheaper than our nearest competitors with free delivery, and have been going for eight years and an avg customer rating of 92%(Froogle)(Kelkoo).

    Sorry if im wasting your time but is their another way perhaps to make it more attractive for the affiliates or is the only other option to make a mirror site and just push our prices up by 3% and then pay 4% to the affiliates.

    Thank you for your time and all feedback is very much appreciated.

  7. #7
    Outsourced Program Manager John Jupp's Avatar
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    Do NOT under ANY circumstances produce a mirror site with higher prices to pay for affiliates driving traffic. It is HIGHLY frowned upon and will generate a lot of bad feeling both with customers AND your affiliates.

    If you wish to generate additional traffic and sales via the affiliate channel then you need to look at your entire marketing plan and factor whether you need separate product commissions rates and what you can realistically achieve from the affiliate channel, to determine whether you can negotiate a better supplier deal to compensate for the additional volume of sales.

    Judging from what you have posted in this thread, I would suggest you do not have a fully factored business plan in place to reflect on the aspirations you have for the affiliate marketing channel and I would question whether you are ready to launch such a scheme, without further preparation and planning.
    Flambi Media Limited - USA/UK/EU Affiliate Management Expertise

  8. #8
    Outsourced Program Manager John Jupp's Avatar
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    I also note that your site is geared to offering a franchise operation to various geographic locations.

    Any franchise operation connected via your website in the UK (or anywhere else) which allows cross migration of customers again shall fall foul of affiliate ire if you fail to incorporate an affiliate referral via these sites.

    Notable firms which have failed to ensure franchised sites pay commission despite incorporating referral links to them include La Senza.

    Many affiliate sites attract global traffic. If you refer customers to the say Indian or Chinese franchised sites, then the affiliate referring a customer to the US or UK site who is then redirected to the appropriate site should still be paid. What made the La Senza situation so annoying was that the franchised sites paid the parent site for such referrals but that these referrals were not passed on to affiliates.
    Flambi Media Limited - USA/UK/EU Affiliate Management Expertise

  9. #9
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    I only mentioned the mirror site because it was a suggestion made by a affiliate marketing company and it seemed strange to me thus I posted it here to ask for your opinions.

    On the marketing strategy I know we are not fully ready to launch with a proper affiliate site(the one currently on site is not being advertised at all, it was set up for AV installers that wanted to buy through us but use our live banner feeds on their websites) and that is precisely the reason why I am asking people such as yourselves who know the market for advice.

    The franchising is something that I am not involved with and I will most certainly pass what you said on to the relevant person.

  10. #10
    Super Cool Affiliate Manager IanBookMan's Avatar
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    im not an affiliate but a merchant with $0.02

    my motto is pay the affiliates as much as you can cause thats money you would never made without them- but i was also an affiliate before i became a merchant so i may be biased. I tip great casue i was once a waiter as well.
    look to the future also, if you do make more sales - say and barely break even - then maybe your suppliers can cut you a discount and start making money there.

  11. #11
    Affiliate Manager zooma230's Avatar
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    I recommend that you get a copy of Geno's first book, "A Practical Guide to Affiliate Marketing." This is a great resource for anyone new to affiliate marketing. It contains many tips for setting up an affiliate program and you will find answers to many FAQs.
    [B]Jeff DeBo[/B] | Sr. Marketing Manager - Affiliate
    [URL=http://www.connectcommerce.com/secure/partner_app_alt.html?ccmid=K217424]ProFlowers[/URL] | [URL=http://www.connectcommerce.com/secure/partner_app_alt.html?ccmid=K302833]Personal Creations[/URL] | [URL=http://www.connectcommerce.com/secure/partner_app_alt.html?ccmid=K21765]RedEnvelope[/URL] | [URL=http://www.connectcommerce.com/secure/partner_app_alt.html?ccmid=K220460]Cherry Moon Farms[/URL] | [URL=http://www.connectcommerce.com/secure/partner_app_alt.html?ccmid=K220455]Shari's Berries[/URL]

    P: (858) 909-4203 | E: jdebo(at)providecommerce(dot)com

  12. #12
    ABW Veteran Student Heyder's Avatar
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    I think you could tack on a $20.00 handling charge and pay that to your affiliates. This would get you to the 5% range on a $500.00 TV sale. Just a ponder

  13. #13
    Moderator MichaelColey's Avatar
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    Do you not pay any other marketing or advertising expenses? I have a hard time seeing how any of your other marketing channels can be profitable with just 1% to work with.
    Michael Coley
    Amazing-Bargains.com
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  14. #14
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    Quote Originally Posted by MichaelColey
    Do you not pay any other marketing or advertising expenses? I have a hard time seeing how any of your other marketing channels can be profitable with just 1% to work with.
    The 1% is only applicable on the tv's and some of the surround sound systems.Obviously we would be dead in the water if we only had a 1% margin on all our products.Please bear in mind that most of the time people will not only buy the TV's but all the attachments and furniture that comes with it and thus we are able to only take the 2% on some of our products so we are cheaper on the price comparison sites.

    With regards to the delivery charge I will look into that.Thank you.

  15. #15
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    Quote Originally Posted by 1stAV
    I only mentioned the mirror site because it was a suggestion made by a affiliate marketing company and it seemed strange to me thus I posted it here to ask for your opinions.
    I would stay far away from that company.
    Deborah Carney
    TeamLoxly.com BookGoodies.com ABCsPlus.com

  16. #16
    Moderator MichaelColey's Avatar
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    Quote Originally Posted by 1stAV
    The 1% is only applicable on the tv's and some of the surround sound systems.Obviously we would be dead in the water if we only had a 1% margin on all our products.Please bear in mind that most of the time people will not only buy the TV's but all the attachments and furniture that comes with it and thus we are able to only take the 2% on some of our products so we are cheaper on the price comparison sites.
    I guess you just need to weigh things out. Do you make enough on those extremely low-margin TVs to offset the affiliate revenue that you would miss out on by paying such low commissions? Many affiliates won't even consider you if you pay such low commissions.
    Michael Coley
    Amazing-Bargains.com
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    "Education is the most powerful weapon which you can use to change the world." Nelson Mandela

  17. #17
    Affiliate Manager Alan Hamilton's Avatar
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    1% is nowhere close to sufficient if you want to put together an affiliate program that attracts productive affiliates, which is what you need.

    Something you want to keep in mind...

    You have mentioned several times that you can pay higher on accessories / ancillary items and that most (I believe you said everyone) orders accessories / furniture etc along with the sets / surround systems. It initially appears that your company feels / hopes that this will justify and/or offset the 1% commish for the TV sale.

    Turn that around now...

    You only get accessory sales IF you get TV / Sound system sales. If you want to market through the affiliate channel, you have to have productive affiliates driving traffic to your site. You will not get affiliate traffic to your site if you only pay 1% - no one will bother with it - hence the higher commission on accessory sales is a non factor. You have to put wood in the fireplace before it returns heat...

    Possible food for thought...

    If your margins on ancillary items are better than the margins on TV's, and your 8 year history confirms a high % of added accessory sales, your employer can offer a higher commission on the TV sale knowing that the accessory margins will justify it. This shows affiliates that the company management has their head in the right place too.

    From the consumers point of view having the cheapest price may be a perceived benefit (provided other considerations are in line). But from a sales persons point of view, a poor commission on the lead items = no affiliate interest.

    Hope this helps you out. The boys at the top need to re-think how they reward those who drive sales so a visit back to the drawing board may be a good idea.
    Join the Spicy Aprons Affiliate program on ShareASale Visit us on Facebook www.facebook.com/spicyaprons Follow us on Twitter @Spicyaprons

  18. #18
    ABW Veteran Mr. Sal's Avatar
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    The 1% is only applicable on the tv's and some of the surround sound systems.
    At 1%...

    A $1000.00 plasma TV sale, would be just $10.00 to the affiliate...

    Now, in order to get that customer to your site and ready to buy a $1000.00 plasma TV, you must be good at SEO, or may have to wait a long time in order to show up on the SE's so that customer can even know about your site.

    And, if you decide to do PPC to promote those plasma TV's, then how much would you have to pay for every click, in order to get that first customer that is ready to buy a $1000.00 plasma TV from your link?

    $10.00 - ?? = commission!

  19. #19
    ABW Veteran Mr. Sal's Avatar
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    Possible food for thought...

    If your margins on ancillary items are better than the margins on TV's, and your 8 year history confirms a high % of added accessory sales, your employer can offer a higher commission on the TV sale knowing that the accessory margins will justify it. This shows affiliates that the company management has their head in the right place too.
    Or like they used to say out there on the old marketing world!

    Sell those TV's as a lose leader, and then make it up on the accessories and miscellaneous stuff that goes along with those TV sales.

    "Batteries Not Included" - Do that old line rings a bell?

  20. #20
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    I was just wondering how many people actually commit to buying a high ticket item like a plasma TV on line? I would think that most would do research online for said product, but would want to go and buy from the local guy, unless prices were that much different.

  21. #21
    ABW Ambassador Daniel M. Clark's Avatar
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    It's more common than you think, and getting even moreso.
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  22. #22
    Antisocial Media Expert ProWebAddict's Avatar
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    Quote Originally Posted by eljefe3
    I was just wondering how many people actually commit to buying a high ticket item like a plasma TV on line? I would think that most would do research online for said product, but would want to go and buy from the local guy, unless prices were that much different.
    I just got a sale for a $3,000 set (and I don't even promote TV's) so it happens.

  23. #23
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    Thank you for everyones input.Really appreciated.

    Thanks to your posts I reckon I have finally made my MD to see the light when it comes to affiliate marketing.And will hopefully get better rates out of him.

    Cheers

  24. #24
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    Once again I would like to thank everyone for their response and information.

    We have increased our commission levels to the same as our closest competitor and are now sourcing an affiliate company.We will look at recovering our costs on the accessories.

  25. #25
    Outsourced Program Manager John Jupp's Avatar
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    Excellent news. I'll have to count myself out for APM/OPM services as my books are effectively full for the present, having taken on a load from a UK/US Agency and an independent multinational.

    Hope you find the right one for your multinational emphasis.
    Flambi Media Limited - USA/UK/EU Affiliate Management Expertise

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