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May 6th, 2008, 09:24 AM #1Advice regarding affiliate payout?
We are starting an inhouse affiliate program and I am trying to determine an appropriate payout for affiliates that drive us traffic.
We are basically in the diet/weight loss industry (niche is diabetes) and one of the big players in our industry pays a flat $10.00 per sign-up.
I was thinking we should do the same. Our product price ranges from $29.00 to $49.00 to $99.00 (3 different plans).
Does $10.00 sound like enough incentive for affiliates to do business with us?
May 6th, 2008, 12:07 PM #2
Find ways to be better than your competitors and not be just like them. The commission if good but it's not the only thing prospective affiliates will look at.
The big question is "Why should an affiliate join your program?". If your competitors are paying $10 and you come along offering $10, why should anyone join you? If affiliates are working with your competitors, and gettting the same commission, why should they also work with you? If you can pay $15, don't pay $10 because your competitors are paying that. Also, don't start out paying the max you can pay. Nobody will complain if you later increase the commission but most will complain if you try to lower it.
Don't get me wrong, I'm not saying it's all about the money. Create a better program-commission, cookies, support, tools, conversion rate etc.
May 6th, 2008, 01:20 PM #3
How about a 30% commission? That would be $8.70, $14.70, or $29.70 depending on which plan the consumers choose. Seems more fair all the way around.
May 6th, 2008, 01:29 PM #4
What's the lifetime value of a customer? If you know that, then you can come up with compensation schemes that make sense and are competitive. What's your gross profit after expenses? How much expense will the program add to this? You need these numbers to back out what you can afford.
Assuming you can afford to do this, then you need to look at the landscape to see where you fit in and what makes you different. If you can't pay a flat fee per sign-up, but instead pay a percentage where affiliates will earn more over time, tell them. If you can use the lifetime value numbers to determine that you can pay a higher flat fee, then you can use that.
Have you joined the other program to see what they do right and what they do wrong?Brad Waller | VP, Business and Affiliate Development
May 6th, 2008, 04:32 PM #5
Be very careful compensating based on lifetime value, however. Many types of affiliates (particularly incentive sizes) produce customers with considerably lower lifetime value. It's best to directly align compensation with your own profit to avoid these types of situations, although that can be difficult with a continuity/subscription type service.
May 6th, 2008, 11:49 PM #6
Greg, you are talking about my business model and feel free to contact me for a private conversation. You need to do a full competitive analysis to see what is being offered and compare pricing.
I have a health product that is heavy on the informercial and very competitive. I was given the program and the payout, did the launch and PR, now 4 months later its a dog. Have been asked what we can do! So, I have done a CA and am showing that we are low on commission and high on price. Plus, it lends itself to a flat rate payout on a subscription model.
May 7th, 2008, 09:36 AM #7
Thanks for the feedback everyone.
I think I'll get started with a "Flat Fee" and consider paying out more in the future. As Greg Rice suggested it makes everyone happy when you increase the fee paid vs. decrease it (not a road I want to go down).
I certainly can offer an extended cookie too (like 90-days vs. the 14 days or less offered industry wide). At the moment my program is all in-house (no network) so I should be able to offer some advantages over my competitors with personalized contact and customization to those linking in.
I've dabbled as a "publisher" on the bigger networks and definately have an idea what an affiliate goes through (lack of personal contact among other things).
Again, thanks for the feedback and suggestions for my program.
May 7th, 2008, 10:43 AM #8
You might want to pocket the longer cookie, start with a good 30 day and offer it to your producers down the line.
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