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  1. #1
    Affiliate Manager MikeVillar's Avatar
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    October 23rd, 2007
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    Implementing Item-Based Commissions
    Hi everyone,
    I manage an automotive affiliate program over at Commission Junction, Linkshare, Share a Sale, the Google Affiliate Network and LinkConnector among others.

    Our commission rate has always been at Z% but due to the economic climate and the fact that we want to be able to provide better, more competitive customer-facing offers by freeing up margins on some of our lower-margin product categories, we are contemplating on implementing item-based tiers.

    To give you an idea:

    Product Category 1 would pay X% Commission
    Product Category 2 would pay Y% Commission
    Product Category 3 would pay Z% Commission

    Note that X% and Y% is lower than our current commission rate and management's directive also suggests that we lower our baseline commission.

    Of course, publisher attrition is to be expected and I was wondering if you guys have any suggestions on how to minimize this or if there's anything you think I can do to at least make this transition more acceptable to our publishers

    Thanks!

  2. #2
    Moderator MichaelColey's Avatar
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    January 18th, 2005
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    Lowering commission rates will have a negative impact on your program, and that's exactly how this change will be seen by affiliates.

    Do you have higher margins on some products? If so, consider an item-based structure where you pay higher commissions on some, the same on most, and lower on some. Then the change to item-based commissions won't necessarily be perceived as a commission cut.

    If you're dropping commissions on 100 items, try to find 500 that you can raise commission on. If you can do that, make sure to point out the number of items that fit into each category, and provide an easy way (like in your datafeed) for affiliates to tell which products earn how much.
    Michael Coley
    Amazing-Bargains.com
     Affiliate Tips | Merchant Best Practices | Affiliate Friendly? | Couponing | CPA Networks? | ABW Tips | Activating Affiliates
    "Education is the most powerful weapon which you can use to change the world." Nelson Mandela

  3. #3
    Affiliate Manager
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    May 2nd, 2006
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    I think/hope that affiliates can see you're trying to increase conversions with better deals to the consumer. I'd sell the fact that conversions should go up with lower prices (assuming you're beating most of the competition) so while the per sale commissions will go down, overall they should come out about even, again, assuming conversions in fact do go up.

    If you have the budget, you may also want to implement a bonus campaign of some type to entice partners to stay on board.

    If your margins allow, keep a portion of your product line at your current or higher commission level to offset the drop across the rest of the catalog.

    Hope that helps.

    Bob

  4. #4
    Affiliate Manager MikeVillar's Avatar
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    October 23rd, 2007
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    Michael and Bob,
    Thank you for your feedback! They're very well appreciated.

    I actually fought hard to keep the commission rate on our top-selling category (replacement auto parts) to be the same. I will never lie to my affiliates and when I said that I expect conversions to be up because we can offer more aggressive coupon offers (hopefully through volume), I meant it.

    Glad to know I'm, at least, doing something right. A bonus campaign also definitely makes sense at this point so I think I'll work on getting something like that out.

    Thanks again!

  5. #5
    OPM and Moderator Chuck Hamrick's Avatar
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    If you lower commissions offer affiliates a coupon code as a concession. Look at the average order value and double it then give a 10-15% discount for orders over that amount. This will allow affiliates to drive sales via the coupon but the consumer will need to add to their cart to get the benefit. Many programs with a standard commission rate of 10% offer a 5% commission when making sales via a coupon code.

  6. #6
    Moderator MichaelColey's Avatar
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    Quote Originally Posted by Chuck Hamrick
    Many programs with a standard commission rate of 10% offer a 5% commission when making sales via a coupon code.
    They do? Name three programs that do that. Very, very few do that from what I've seen.
    Michael Coley
    Amazing-Bargains.com
     Affiliate Tips | Merchant Best Practices | Affiliate Friendly? | Couponing | CPA Networks? | ABW Tips | Activating Affiliates
    "Education is the most powerful weapon which you can use to change the world." Nelson Mandela

  7. #7
    OPM and Moderator Chuck Hamrick's Avatar
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    Let me rephrase, I have worked with a merchant who did that for their outdoor gear outlet program and it was the best converting of the five sites we ran.

    Also had to make a commission concession for 1000Bulbs but were able to allow affiliates to promote any coupon or promo offered by the merchant. Previously affiliate were not allowed to use the retention email coupons sent to previous customers. The result is an increase in conversion for the program.

  8. #8
    http and a telephoto
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    Commission Junction, Linkshare, Share a Sale, the Google Affiliate Network and LinkConnector among others
    You could lower your overhead dramatically by picking ONE network and moving everyone to it and dropping the others and all the associated costs. Plus the headaches of cross platform tracking.

    Otherwise, like others have said, if you are going to item based commissions, you need to have some items with higher commissions plus clear and easy ways for affiliates to pick those products and promote them. Make sure your tiers and the associated products are made VERY clear otherwise you could not only end up with attrition, but outright abdication when your top performing affiliates that are pushing the products you drop your commission on go running to your competition.
    Deborah Carney
    TeamLoxly.com BookGoodies.com ABCsPlus.com

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