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  1. #1
    Member
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    A certain contact lens company on CJ is currently paying 8% on all new orders. An average order (for me) is $60 - $100, therefore my average commission is $4.80 - $8.00.

    However, beyond the sale, they now have established a brand new client relationship that is potentially worth a lot of money: i.e LIFETIME VALUE of a New Customer.

    Here's the question:

    What should an affilaite be paid as a reasonable commissiion percentage based on the LIFETIME VALUE OF A CUSTOMER. (keep in mind that LV calculations assume retention factors).

    It seems to me that I am being poorly compensated for the new client relationship I have created. If a typical client spends $350 per year, over an average 5 year period, that's $1,750 in revenue. What did the company have to pay for that relationship? 8 bucks. [please keep in mind that I don't have gross margin numbers for that revenue, but I'm sure it would be a reasonable percentage.]

    Your 2 cents please.

    Apollo

  2. #2
    ABW Ambassador
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    I don't know the margins in that industry but a smaller percentage and giving the affiliates lifetime accounts would be my 2 centavos

  3. #3
    ABW Ambassador
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    It sucks, but thats the reason most merchants get into affiliate marketing, new customer acquisition. Luckily there is a neverending stream of new customers, each day someone shops online for the first time. You can always make a site where you would get repeat customers, therefore clicking the link again and setting the cookie again.

    "The successful man is the average man, focused."

  4. #4
    ABW Ambassador Mike O's Avatar
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    What "should" a affiliate be paid?

    Whatever the vendor chooses to offer and that you are willing to accept.

    If the commission offered is too low, not enough good affiliates will sign up and the vendor will have to raise the rate to get to the affiliate sales level he wants.

    They offer, you accept...or "vote with your feet" and deal with someone else.

    Affiliate sales is a voluntary, mutual-profit deal for both sides. A nice clean "free-market" situation.

    "Supply and demand" probably isn't a perfect system for setting prices and commissions and such, but it's better than any other method yet invented.

    -- Mike

    "Men travel faster now,
    but I do not know if they go to better things."
    -- Willa Cather

  5. #5
    Member Azam's Avatar
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    That's why most of the affiliate 'gurus' will tell you to look for affiliate programs paying residual income.

    I have spent six years promoting affiliate programs which only pay me one-off lead/sale fees, but have now shifted 80% of my effort towards affiliate programs/business opportunities paying residual income.

    You have to be extremely careful though, because if a company paying lifetime income closes down - as the majority of MLM/network marketing do - you're left with nothing.

    Of the hundreds of residual-income paying companies I've researched, there are a couple of decent ones I've found (see my sig. below). There are a few excellent directories which specialise in programs that pay lifetime income. Search for 'em in Google or send me an email at ceo@NOJUNKMAILazam.com and I will send you the links to some of the directories.

    Good luck

    Nadeem Azam
    No1Free.com - promote your website for free
    Azam.biz - go here to develop a residual income stream

  6. #6
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    Apollo-

    You need to look at the retention rate of a new customer as well. Maybe the Customer service of the lens company is such that they don't get "lifetime value" or that LV is only two months?

    Keith

  7. #7
    Ad Network Rep ToddCrawford's Avatar
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    Good question Apollo. The lifetime customer value (LTV) is surprisingly difficult for many advertisers to estimate. I should know because I ask them all the time. Many advertisers cannot determine this due to their lack of reporting tools (or access to the data) or inability to mine their data. Believe it or not, many cannot tell you the exact traffic they are getting monthly or the breakdown between new and existing customers.

    To complicate matters, many advertisers see that their existing customers do buy through various online channels that cost them money with each purchase. For example, affiliate A sends them through the first time and gets her commission. Next time, affiliate B sends through the customer and he gets his commission. The next time the customer comes through another channel (Advertising.com, ValueClick, AOL, etc.) and the advertiser pays again. This further cuts into their margins and the LTV of the customer is reduced or in some cases negated.

    Of course all of this depends on the advertiser and the products they sell. Disposable contact lens or inkjets are great consumables that need to be replaced on a regular basis, so the chances that an affiliate will get credited with referring the sales are better than say a product that someone would buy very seldom or once in a lifetime.

    Most advertisers base their commission payouts on their margins and are willing to share the margins if the affiliate is able to send them the sales. So it is up to the affiliate to provide enough value via their web content or reach through their search marketing efforts to capture and refer the customer over and over.

    My 2 cents,

    Todd Crawford
    Commission Junction

  8. #8
    ABW Ambassador qball0213's Avatar
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    If you're not happy, ask for a raise, if they value your business, they'll probably work with you, especially if they are afraid you will leave.

  9. #9
    ABW Ambassador Ron Bechdolt's Avatar
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    Todd,

    I think that was really about 4-6 cents worth, but in any case, it was a bargain basket full of information.

    Nice to see you posting again.

    Ron - 7 Days A Week Marketing

  10. #10
    2005 Linkshare Golden Link Award Winner  ecomcity's Avatar
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    Well the value of the pre-sell affiliate who continuously sends targeted traffic to a merchant is going to rise. No longer can the merchant count on outbound e-mail or telemarketing campaigns ever reaching a potential customer. Those two industries will be ghost towns by the first of the year.

    Where will those Ad budgets go when the Do-NOT-Call and Do-NOT-e-mail lists gut the DMA membership. The consumer is already fed up with drive-by and bundled Adware/Spyware perps ruining their systems and pressure Microsoft to un-plug the BHO plug-ins next.


    Nice little diddie to strengthen this conspiracy theory against the Ad whores and gorrilla marketers....

    "WASHINGTON (Reuters) - The U.S. Senate voted on Wednesday to outlaw deceptive "spam" e-mail, and set up a "do-not-spam" registry for those who do not want to receive unsolicited commercial e-mail.

    Internet "spammers" who flood e-mail inboxes with pornography and get-rich-quick schemes could face jail time and million-dollar fines under the bill, which passed by a vote of 97 to 0.

    The vote marks the first time the Senate has taken action against an online scourge that now accounts for 50 percent of all e-mail traffic, frustrating consumers and costing businesses billions of dollars in wasted bandwidth and lost productivity.

    Similar legislation in the House of Representatives has stalled as lawmakers try to hammer out differences between two competing bills. The Bush Administration said it supported the bill.

    Senators noted that spam has become a top constituent concern and could overwhelm the Internet if left unchecked.

    "Every day the Senate delays, big-time spammers (get) another opportunity to crank up their operations to even more dizzying levels of volume," said Oregon Democratic Sen. Ron Wyden, a sponsor of the bill.

    "I don't go to a town hall meeting, I don't meet a friend who doesn't say, 'Take care of that spam,"' said Montana Republican Sen. Conrad Burns, another bill sponsor.

    The bill would not outlaw all unsolicited commercial e-mail, focusing instead on the fraudulent or deceptive messages estimated to make up two-thirds of all unsolicited commercial e-mail. All commercial e-mail will have to be identified as such within the subject line.

    Marketers who falsify return addresses or routing information, hide their pitches behind misleading subject lines such as "Re: your request" or promote body-enhancement pills or other fraudulent products would face jail sentences of up to a year and fines of up to $1 million; repeat offenders could face jail terms of up to five years.

    Marketers would have to label sexually explicit messages to allow users to filter them out.

    The bill would also prohibit marketers from sending unsolicited messages to consumers who place their e-mail addresses on a "do-not-spam" registry, similar to the popular "do-not-call" anti-telemarketing measure launched earlier this month by the Federal Trade Commission. Marketers could e-mail addresses not on the list until asked to stop.

    Other common spammer tactics, such as hijacking users' identities, using multiple accounts to evade filters, and sending messages to millions of randomly generated e-mail addresses, would be outlawed as well.

    State and federal law enforcers and Internet service providers such as EarthLink Inc . would be allowed to pursue spammers, but individual users could not sue directly.

    More than half of U.S. states have passed anti-spam bills of their own, many of which set tougher regulations for marketers. The bill would preempt most state laws, but would allow states to set higher penalties for deceptive or fraudulent activity if they wished.

    Mike & Charlie ...

    If they won't adopt and feed a bird ..flip them one! BBQ some Gator and remember to flush WhenU..

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