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  1. #1
    Moderator MichaelColey's Avatar
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    The Dark Side of Analytics?
    I received this email from a LinkShare merchant that I've worked with for over 5 years:

    I'm writing to inform you of some changes we are making to the [merchant] affiliate program. We have recently done a deep dive into the financials of our affiliate network, and we have decided to remove your site from our affiliate program. This decision is solely based on the financials, and over the past year we have found that shoppers coming from Amazing Bargains tend to buy items with much lower margins and with a significantly higher discount usage.

    Also, as we continue to expand our retail store locations, we must focus more on retention marketing efforts. Once we are ready to be aggressive with our online acquisition efforts, I hope to bring your site back into our program.

    We plan on making this change no earlier than Tuesday, October 25th. Please feel free to email me with questions or concerns. Thank you for your business.
    I've received a couple emails like this from LinkShare merchants lately, and I'm starting to wonder (based on this and other things LinkShare merchants have told me) whether this "analysis" is being done through Synergy Analytics.

    In any case, I think the analysis is flawed. By not taking into consideration new customer acquisition, life value of customers, smaller incremental costs from additional orders, brand exposure, and many other factors, merchants are making bad decisions on incomplete data.
    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

  2. #2
    Outsourced Program Manager
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    Hey Michael,

    We do have insight into the profitibility of affiliates, but sounds like some merchants may be using them the wrong way. Instead of using the data to "optimize" their program, they are going the "Best Buy" route and just cutting affiliates.

    Unfortunately, they don't realize that it is their own fault. Allowing "stackable" coupons on clearance items is an example of where many merchants go wrong, yet you get punished.

    If you wanted to salvage the relationship, you may want to try to explain that to them. The only reason I can see that they wouldn't want to keep you as an affiliate is if the Aff. Manager was paid on immediate profitibility of the program, and would thus be tempted to be very short minded.

  3. #3
    Internet Cowboy
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    Retailers can't afford to have a customer base that buys only sale merchandise and buys only when a coupon is available. Those people are out there. At the risk of sounding like Mike, merchants can't afford to have only cherry picking customers.
    In the apparel business, closeout items are often priced below dealer cost to get rid of them. If customers never buy anything at full price and only buy closeouts and only use coupons, there is no margin for the merchant.
    As to customer acquisition, what good is acquiring a customer who will only buy when something is on sale cheap or when they can use a coupon.
    Talk to any retailer and they will tell you that they would rather not acquire such a customer.
    I guess this is part of the game when you operate coupon/deal sites.


  4. #4
    ABW Ambassador
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    Sometimes affiliates have acquired the customer and to get that customer, merchants will offer up the coupons. Some people will only shop thru their favorite deal site. And a lot of deal sites can drive sales. Merchants know this and can use coupons to up the average sale. Let's say the average sale is $60. Merchants can use a 10% off $100 coupon to get that higher sale. And there are different segments of shoppers and it's good for merchants to try to hit as many of them as possible. There are people who will only shop during a sale, only shop in the clearance department, only shop when their is a coupon available etc. And if that merchant doesn't recognize that, their competition will. Coupons are also utilized to grap another competitors shoppers.

  5. #5
    notary sojac Herb ԿԬ's Avatar
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    >>>Once we are ready to be aggressive with our online acquisition efforts, I hope to bring your site back into our program.<<<


    Good Grief. Slap you upside the head and hand you a rain check.

  6. #6
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    Thanks for sending us sales over the years but since we didn't have enough gumption to set everything up to make a profit every time, kiss off.

    How lame.

  7. #7
    ABW Ambassador Ron Bechdolt's Avatar
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    Michael,

    This is one of those merchants you really should provide their name for, if possible. It would be good to alert other affiliates that this company does not care how much you sell, but are looking for specific type of sales if they are going to keep you. Quite frankly, if I knew that up front, I'd probably not sign up for that merchant.
    Ron Bechdolt | Affiliate Program Management Consultant
    7 Days A Week Marketing

  8. #8
    Life is Supposed to be Fun! Rexanne's Avatar
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    Could this have anything to do with merchants getting nervous and trying to boot the SAHS and ebates type affiliates and because you send lots of bargain traffic, they might have lumped you into this group Michael? If they're a good converted, might be worth a phone call to plead your case.

    I don't understand a merchat turning away an affiliate who sends them tons of sales. It's just wrong. If they arent' making a profit on coupons, they need to figure it out and adjust their margins or just stop offering them. You certainly don't deserve to be booted. It just seems so lame.
    Peace,

    Rexanne

    Rexanne.com
    Loving Everyone's Child Creates Magic


  9. #9
    ABW Ambassador Andy's Avatar
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    Once we are ready to be aggressive with our online acquisition efforts, I hope to bring your site back into our program.
    And you can tell them when they get to that

    Now that you are ready to be aggressive with your online acquisition efforts, and want to bring my site back into your program, I've found that I'm making so much more money promoting your COMPETITION. Their site is designed to SELL, and therefore people don't just go there to buy cheap stuff and leave.

    The also have their business plan designed so they make money on all of their customers, while providing good values that encourage people to return. At this point, your program doesn't fit in with my aggressive online efforts.
    Andy

  10. #10
    ABW Ambassador simcat's Avatar
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    Some merchants actually offer MORE coupons (not available to everyone) to well-performing affiliates.

    There are lots of different marketing strategies I guess..

  11. #11
    The slot machine that IS paid! Billy Kay's Avatar
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    Michael...

    Even when you're being "dumped"

    even for a stupid reason...

    you remain professional

    You amaze me dude!

  12. #12
    ABW Ambassador buy_online's Avatar
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    Quote Originally Posted by Billy Kay
    Michael...

    Even when you're being "dumped"

    even for a stupid reason...

    you remain professional

    You amaze me dude!
    I was about to say the same thing.

    So what do you stand to lose by letting us know who they are?

    Fred

  13. #13
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    Interesting... I got booted from something recently (a merchant I've sold well for for many years) and was given similar reasons for the boot... wasn't verbatim what Michael got though, but it does make me wonder if he's onto something.

  14. #14
    ABW Ambassador Ron Bechdolt's Avatar
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    The more times I read this thread the more it disturbs me that a merchant could be using SynergyAnalytics like this.
    Ron Bechdolt | Affiliate Program Management Consultant
    7 Days A Week Marketing

  15. #15
    ABW Ambassador Sam Bay's Avatar
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    THE REASON YOU GET THAT MESSAGE IS ME.

    The same merchant, BABYSTYLE.COM (correct me if I'm wrong), cut me off last week, without any early warning, like you got until October 25th. They just sent me a message that they removed me from their program. I do generate sales for them, so I asked why. The reason in my case is: "The customers you refer tend to return items at a rate that double our usual return rate."

    OK. If you can drill down on your program and find out this info, great! But, why tell me this after you remove me, not giving any notice, warning. The manager apologized and told me he will be giving out notices other affiliates. That's probably how you got yours.

    I have been promoting them for about 3 years now, generated a bunch of sales every month. I will not remove content pages I made for them, as they receive a lot of traffic, I will just refer the visitors to their competitors, who I am sure will know how to manage returns.

    Every merchant has the right to optimize and protect their financial bottom line with their affiliate program, but I doubt cutting the sale-generating affiliates is the way to do that.

  16. #16
    ABW Ambassador Sam Bay's Avatar
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    Of course, the merchant finds it profitable to work with ShopAtHomeSelect:
    http://www.shopathomeselect.com/all_merchants.asp?m=B

  17. #17
    2005 Linkshare Golden Link Award Winner  ecomcity's Avatar
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    This is just a merchant's natural reaction to save their business from being cannibalized by pure play incentive marketers. Those pushing only the rebate/coupons and loss leader deals, when added to the BHO's also pushing the same incents, double dipping and cash back BS can easily bankrupt a merchant. Incentive marketing is bankrupting the deep pockets of GM -Ford & Chrysler, so how is a baby products middleman supposed to keep on accepting 90% of their affiliate sales with incentives attached??

    It's best to fire the incentive tainted AM and use the incentives to push additional sales to the existing customer base. Then raise the commission rate for those willing to pre-sell the merchants actual products. How many merchants have been told by the incentive pushing affiliates to hit the road if they refuse to play ball on the Trademark/Merchant name + coupon/rebate SERP spam plays. Imagine the shock and aghast of affiliates having to actually learn what products a merchant sells after years of pushing just the merchant name + coupon as a point of sale trick to set a cookie like a BHO popup. .
    Webmaster's... Mike and Charlie

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

  18. #18
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    Sam Bay, that would be the same merchant I was referring to at least.

  19. #19
    Moderator MichaelColey's Avatar
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    The specific merchant doesn't really matter. It's the way they're using Synergy Analytics that matters. This isn't the first merchant to do this, and it won't be the last.

    So, does LinkShare realize that these great "analytics" they're providing are reducing their network fees? When merchants cut off affiliates, it hurts LinkShare too.
    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

  20. #20
    Resident Genius and Staunch Capitalist Leader's Avatar
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    The specific merchant doesn't really matter. It's the way they're using Synergy Analytics that matters. This isn't the first merchant to do this, and it won't be the last.

    So, does LinkShare realize that these great "analytics" they're providing are reducing their network fees? When merchants cut off affiliates, it hurts LinkShare too.
    This really sounds more like the Better Fool effect in action. (If something is made more foolproof, they'll make better fools.)

    In other words, the same ones making dumb decisions based on such data, would just make different (but still dumb) decisions without it.

    If they arent' making a profit on coupons, they need to figure it out and adjust their margins or just stop offering them. ~Rexanne
    Definitely!
    There is no knowledge that is not power. ~Hemingway

  21. #21
    Moderator MichaelColey's Avatar
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    Quote Originally Posted by Rexanne
    If they arent' making a profit on coupons, they need to figure it out and adjust their margins or just stop offering them.
    Or, structure the coupons so that it meets their goals. Coupons can be fantastic tools for merchants if they're used properly.

    Want new customers? Offer coupons that are good for new customers.

    What to increase average order size? Offer coupons that require a minimum somewhat over your current average order size.

    What to move specific products? Offer coupons that apply to those products.

    Want to just give away the farm? Offer coupons with no restrictions. Then blame it on your affiliates.
    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

  22. #22
    ABW Founder Haiko de Poel, Jr.'s Avatar
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    [OT retribution post]
    If it's any consolation I removed the babystyle forum from ABW lastweek.
    [/OT retribution post]
    Continued Success,

    Haiko
    The secret of success is constancy of purpose ~ Disraeli

  23. #23
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    You referred customers to them. That was your job. They offered the coupons and discounts and it is their responsibility to structure their programs to be profitable. That's absurd to punish you for the shopping behavior of customers at THEIR site. Once you refer the customer to the merchants site it is ultimately up to the MERCHANT to SELL THEIR PRODUCTS.

  24. #24
    ABW Ambassador LinkShare Moderator's Avatar
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    Michael et al,
    You're jumping to a conclusion about SynergyAnalytics and a cause/effect relationship that just simply isn't correct. For a long time, merchants have been diving deeper into the overall affiliate channel profitability and looking beyond top line sales. This isn't even unique to affiliate marketing. This is a trend we've been seeing in e-commerce for some time. Merchants often look at new vs. repeat customers, margins/profitability by affiliate, etc.

    Actually, I don't believe any of our merchants currently pass their margin or cost data to us so that information can't even be presented in SynergyAnalytics. Most merchants do this analysis on their own by matching up customer level and affiliate level data on their side. When they advise LinkShare, in advance of making decisions like this (and they don't always notify us before doing so), we always caution them NOT to make broad brush decisions based on one metric. We encourage them to work with us to understand the root cause before making decisions that will impact their program and affiliate relationships. We ALWAYS recommend that they reach out to affiliates in question to discuss the issue before making any final decisions.

    That being said, we do hope in the future to have merchants pass other variables to us so that we can present the information to them in Analytics. We want to do this for two reasons. First, we can be sure the information is presented in a way that it doesn't lead to false conclusions or bad business decisions. Second, by being able to see the information ourselves, we are better able to help the merchant analyze and address the actual root cause of the problem.

    If you're trying to blame these kinds of decisions on SynergyAnalytics, you're simply barking up the wrong tree.

    Kelli

  25. #25
    Affiliate Manager PaulS's Avatar
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    Quote Originally Posted by MichaelColey
    By not taking into consideration new customer acquisition, life value of customers, smaller incremental costs from additional orders, brand exposure, and many other factors, merchants are making bad decisions on incomplete data.
    I couldn't agree more... Too many people look at the single-sale ROI and make decisions based on that.

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