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  1. #1
    Moderator bibby's Avatar
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    View Lowered Commission Rates as a Warning Sign!
    I arrived home and opened my email (after giving a big hug and kiss to my daughter, wife and Bichonpoo). There were three emails. In two of the emails the merchant increased affiliate commission rates. In the third, the merchant lowered the commission from 13 to 6%.

    I used to get angry when receiving commission reduction messages from merchants but I listened to a number of ABWers who told me not to take it personally.

    I donít get mad anymore but I use these messages as a warning to me and I often drop the program immediately. Itís not because I want to retaliate against the merchant. Itís because I want to protect myself from the real possibility that a merchant may go out of business in the near future.

    When a merchant lowers their commissions drastically like the one merchant did today, itís a warning sign to me that there are major issues with the merchant.

    My advice to affiliates is to read these emails and head the waning signs. Learn when it may be time to cut your losses and move to another merchant.

    Lowering commissions should be part of your overall analysis when determining if a merchant is a continued match to your site.

    Affiliates analyze EPC, return days, reversal rates, etc. Include lowered commissions in your research as well.

    Iíve been a finance professional for 12 years. My job consists of directing my company's annual budget, providing regular analysis and to conduct economic forecasts and impact analysis. My research backs-up my points.

    My job also involves writing polices on best practices for my employer to follow. Like other companies we have a sales force. Commission rates of all our personnel are analyzed.

    We have to be careful not to shoot ourselves in the foot when looking to lower staff compensation. In these times, commission rates are often increased and base salaries lowered.

    Why? We obviously want to generate revenue. Commission rates are incentives for our sales people to go out and make sales. If we were to lower total compensation (including commission rates) of our sales staff, their motivation could decline.

    Iíve seen this all too often. Thatís not to say that thereís never a good reason to lower commissions but in my role as an affiliate I couldnít care what those reasons are. I want to make money. I will move on and say ďsee yaĒ.

    Should affiliates drop merchants who lower their commissions? Not in every case but they should research this as a warning sign that trouble is brewing at the merchant.

    Dropping a merchant should not be made out of anger at the merchantís decision to lower commissions but as a good business practice and a way of protecting you from potential harm.

  2. #2
    ABW Ambassador affninja's Avatar
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    I think that's excellent analysis bibby. A few other red flags from this merchant (also discussed in this thread):

    -Unresponsive AM.
    -40% off site-wide banner. Great deal but might indicate liquidating inventory.
    -Primarily a brick-and-mortar retailer not competitive in the online footwear vertical.
    -Copyright 2008 in their footer. Shows their web business is clearly not a priority.
    Last edited by affninja; August 11th, 2010 at 11:48 PM.
    Your Ad Here.

  3. #3
    Full Member gcarson's Avatar
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    I got an email about a commission being lowered. To summarize, it went something like this:

    We noticed you signed up but have not sent any sales our way yet. To encourage you to work with us, we are going to lower your commission from say 10% to 5%. Once you start sending us sales with minimal commission, we can talk about raising the commission rate. I hope this is incentive for you to work on sending us business.

    Signed,
    Merchant

  4. #4
    Grandma broke her coccyx! Uncle Rico's Avatar
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    We noticed you signed up but have not sent any sales our way yet. To encourage you to work with us, we are going to lower your commission from say 10% to 5%. Once you start sending us sales with minimal commission, we can talk about raising the commission rate. I hope this is incentive for you to work on sending us business.

    Signed,
    Dumb Ass Merchant

  5. #5
    2005 Linkshare Golden Link Award Winner  ecomcity's Avatar
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    Quote Originally Posted by gcarson View Post
    I got an email about a commission being lowered. To summarize, it went something like this:

    We noticed you signed up but have not sent any sales our way yet. To encourage you to work with us, we are going to lower your commission from say 10% to 5%. Once you start sending us sales with minimal commission, we can talk about raising the commission rate. I hope this is incentive for you to work on sending us business.

    Signed,
    Merchant
    I'd respond to the merchant... Are you nuts or one of his relatives.....?:
    Webmaster's... Mike and Charlie

    "What have you done today to put real value into a referral click...from a shoppers viewpoint!"

  6. #6
    ABW Ambassador Greg Rice's Avatar
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    Quote Originally Posted by gcarson View Post
    I got an email about a commission being lowered. To summarize, it went something like this:

    We noticed you signed up but have not sent any sales our way yet. To encourage you to work with us, we are going to lower your commission from say 10% to 5%. Once you start sending us sales with minimal commission, we can talk about raising the commission rate. I hope this is incentive for you to work on sending us business.

    Signed,
    Merchant
    Wow, what were they thinking???
    Greg Rice Affiliate Program Management
    www.gocmc.com info(AT)gocmc.com | 330-259-1223

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  7. #7
    Moderator bibby's Avatar
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    Quote Originally Posted by Greg Rice View Post
    Wow, what were they thinking???
    Obviously they weren't thinking. This isn't bad news for affilaites. It's good to know who we should drop like flies.

  8. #8
    Newbie natelewis's Avatar
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    Originally Posted by gcarson
    I got an email about a commission being lowered. To summarize, it went something like this:

    We noticed you signed up but have not sent any sales our way yet. To encourage you to work with us, we are going to lower your commission from say 10% to 5%. Once you start sending us sales with minimal commission, we can talk about raising the commission rate. I hope this is incentive for you to work on sending us business.

    Signed,
    Merchant


    First post! but to stay on topic, this merchant is a complete dumb ass. If you are trying to encourage an affiliate, lowering their commission is the last thing you would want to do. and that's obvious so they are just be making an excuse to lower your commission rates

  9. #9
    Roll Tide mobilebadboy's Avatar
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    Quote Originally Posted by bibby View Post
    In the third, the merchant lowered the commission from 13 to 6%.
    I know who this one is, got the same. Sad thing is I started off with some decent random sales with them, but over the last several months have not seen one. So the lower commission is definitely encouraging.

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