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  1. #1
    Affiliate Manager
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    Increasing Commissions as Incentive
    Hi,
    I would like to reward publishers for working hard for our program, but I am not sure of how much to reward them.
    Taking in consideration that the program starts at 7%, would an increase to 8% motivate affs to try to reach the new sales threshold? The goals wouldn’t be impossible to reach. I was thinking in negotiating different terms with different affs.
    For instance an aff that sells $750 a month would only need to reach $1000 to receive the extra 1%.
    An aff that sells $4000, would have to reach $5000 to receive the extra 1%.

    Would those terms motivate affs? Should it be more, like 2%, 2.5%.

    Please be realistic.
    There would be other thresholds. For instance, if they aff sells $750, he would get 8% over $1000, and then 9% over $2000, than maybe $12% over $5000

    I am looking for suggestions. How to motivate affs?

    Out of 2000 affs, only 800 get any click AT ALL, and out of the 800, only 80 SELL SOMETHING...

    Thanks for your feedback.

    Skuba

  2. #2
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    That sounds kind of complicated, and not to equitable if affiliates talk to each other.

    Affiliate #1 "I've been sending mechant xxx $750 in sales per month and they just told me that if I bump that up to $1000 they'll pay me 8% instead of 7%.

    Affiliate #2 "Um, I've been sennding them 4x your incentive target for the last 2 years and they've only only pay me 7%...hmmm wonder if there is another merchant that offers better terms.

    I think a standard tiered structure for all affiliates works well

    7% Base
    8-9% at some realistic level ($2500.00/month)
    9-11% at a significantly higher level ($5,000.00/month)

    Just like attracting new customers in the retail world is more expensive than keeping current ones happy, the same is probably true when attracting productive affiliates.

    So, in order to keep those affiliates that send sales, it may be worth considering offering a 10-20% bonus each month to each affiliate who rings up higher sales month over month.

    Scenario might be:

    New affiliate signs up & generates $1,000 in sales the first month and makes $70.00

    Next month same affiliate generates $2,000 in sales so the affiliate gets $140.00 + a 10% bonus (extra $14.00) = total $154.00

    Next month same affiliate generates $1,500 in sales & gets $105.00

    Next month 2k & gets $140.00 + a 10% bonus (extra $14.00) = total $154.00

    Let's say after a while the affiliate is up to $3,000 in sales and collecting $240/month & it's going to be next to impossible to hit $5,000. Time to let that program ride and go find more to promote, BUT if there is a bonus for just increasing sales month over month, there is ALWAYS an incentive for the affiliate to keep pushing that program higher and to stay with this merchant.

    Tiered recurring commissions are always great for getting affiliates to keep pushing harder and harder as well but most companies don't seem to be into paying recurring commissions.

    There are some merchants that have incentivized payout structures such that no other merchant in the industry will get my traffic, no matter what they offer. Their margins on what I send them may be lower than what other merchants think they have to make (because the payouts struture is lucative) but they will get all the traffic I can send them every single month, month after month after month.

  3. #3
    Full Member bwc's Avatar
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    WHY is it merchants think it's up to the affiliate to SELL something?
    Why is it merchants cannot do the selling for themselves?
    An affiliate's job is an effective pre-sale and introduction of who the merchant is and what it is THEY sell. A merchant's job is to close the deal. Once we deliver our visitors it is YOUR job to sell. Your job is to convert my visitors into your customers. Any questions?

  4. #4
    Full Member bwc's Avatar
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    Oh, I forgot to follow the stream here . . .

    The best thing you can offer as an INCENTIVE for an affiliate is to convert the traffic they send you. Nothing else will motivate better than a paycheck from you. Repeat . . . N O T H I N G else matters.

  5. #5
    2005 Linkshare Golden Link Award Winner  ecomcity's Avatar
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    BWC tells it just the way I would. We DO NOT get paid for advertising on behalf of any merchant. Not one word in any major network's or merchant's TOS spells out how we make even a penny for sending 1 million shoppers to their sites. Merchants are totally responsible for converting the shoppers we transport to their stores. Their refusal to even publish their sites average monthly conversion ratio reeks of deception.

    If you want free traffic and free advertising then go convience Google's Adwords or Yahoo's Overture staff to waive your keyword click fees in lew of paying them a commission on completed sales. Better yet try and get the SEO/SEM team at CJ, armed with terrabytes of shoppers clickstream data and network conversion ratios, to run PPCSE campaigns for ya on a incentive tiered commission basis.

    The only network plan that guarantees 100% reporting and exposes the merchant's ecatalog to their real conversion potential is the Safe Haven Network model. All else is the advertising mindset spin and false bottom promise your traffic is worth purchasing.

    Real value-add affiliates in 2006 will demand, and get, slotting fees from merchants who know their traffic is worth more then what they can snag with coupons and Adwords. Those merchants know their site's conversion ratio and average order size... and profit. Maybe they'll wake up and smell the cofee next year!!
    Webmaster's... Mike and Charlie

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

  6. #6
    Affiliate Manager
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    Affiliate #1 "I've been sending mechant xxx $750 in sales per month and they just told me that if I bump that up to $1000 they'll pay me 8% instead of 7%.

    Affiliate #2 "Um, I've been sennding them 4x your incentive target for the last 2 years and they've only only pay me 7%...hmmm wonder if there is another merchant that offers better terms.
    But what if I am setting the sales increase as a goal, for instance, they need to gro their sales by 20% to get the extra 1 or 2%? So it wouldn't really matter if you are making $60 and will increase to $72, or if you make $1000 and increase to $1200

    Would that change your mind?

    We already have affiliates under different terms, because someone managing the program negotiated individually with them. 99$ of the affs are in the 7% range, but a few are in 8% and 12%.

    Isn't that a commom practice?
    We are actually trying to help affiliates, I don't think they are competing against each other so much and would care how much the other ones are making.

    WHY is it merchants think it's up to the affiliate to SELL something?
    We are not asking the aff to sell anything, but for us to sell something we need to recive qualified traffic, right? So, if conversion rate is 1%, you need to send me 100 users to convert 1 sale, 1000 to convert 10. So the more traffic affiliates send, the more sales he gets. The commissions is based on sales, so we need leads to convert sales.

    Thanks

  7. #7
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    "reward publishers"

    "motivate affs?"

    These are means to an end.

    What's your objective? Is it to increase revenue?

    Well you should start by looking at the mix of your 80 perfoming affiliates. What percent are your product centered pre-sell affiliate sites, secondary promotion or just running PPCSE ads.

    Secondary promotion means the sites mainly promote a differnent type of product but yours (posters) are just there to maximize selling space and add content.

    Whats your average sale value? What is the average bid price on popular keywords related to your sales?

    What could you current performing affiliates possibly do to increase quality traffic to your site? Which type of new PERFORMING affiliates do you want to attract (based on which are most succesful currently)?

    Once you have the answers to these questions you will have a better idea what incentive structure and rates to implement.

  8. #8
    Moderator MichaelColey's Avatar
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    I really despise tiered structures. You can put a lot of extra work in, just miss the tier, and not get anything extra for your efforts. In had one merchant a few months back where I missed a tier by $100 in sales and it made a $600 difference in commissions. What was even more frustrating was that I had over $100 in "Non-Commissionable" sales that month.

    For me, I find it much more motivating if the increased commissions come unconditionally. If a merchant says "I'm increasing your commissions from x% to y%", I'm going to promote them more to take advantage of the higher commissions.

    I really don't see why merchants can't just pay the commissions they can afford to pay without playing games. I switch my links for one merchant from a major network to a CPA network that was paying several times as much. A rep from the network asked why the sales had dropped to $0 and I told them how much I was making on the CPA network. They said they might be able to match that if I could generate so many orders per month. But what's the point? I get that rate with even 1 sale on the other network.
    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

  9. #9
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    >>But what if I am setting the sales increase as a goal, for instance, they need to gro their sales by 20% to get the extra 1 or 2%? So it wouldn't really matter if you are making $60 and will increase to $72, or if you make $1000 and increase to $1200<<

    It depends on the affiliate site and the affiliate. If an affiliate is promoting several hundred programs, they are probably just going to go with the program that generates the most cash as Michael noted.

    It would be next to impossible for one person to keep track or 100 or more merchants and all their different commission tiers and trying to hit different percentage increases for all those different programs. One reason to jump into affiliate marketing, where the free branding and awareness affiliate generate is not compensated for is to keep things simple and minimize negotiating stuff and dealing with everything involved in working with an agency or the whole media buying/planning process.

    Best strategy, IMHO is to make sure the site converts, figure out what a fair payout is and if tiers or incentives are going to be put in place, make them very easy to understand. If someone in the plus size clothing market, for example, would break out of the standard 5% payout range and offer 10% or 15% which is probably far lower than the cost of marketing for any standard ad buy on Yahoo, MSN, paid search or demographically targetd banner buy, they could probably still make money and take an awful lot of traffic & sales from competing merchants.

    I suspect merchants & affiliates would save time and make more money if the merchant just posted higher payout (and attracted more affiliates w/o having to recruit) and both parties could skip the negotiation stuff.

    As an affiliate it is always nice to find a merchant who wants to see the affiliate make more money and simply pay what the traffic is worth and not simply generate the cheapest sales possible.

  10. #10
    Not that fat. ReallyBigGuy's Avatar
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    I remember amazon did those funky tier things, based on your previous qtr sales... It wasn't too well liked by them or some of the affilaites... Better to stick with something similar for all affiliates.
    Why effectively punish your top sellers by paying the smaller ones higer commission rates. You should be kissing their feet, and getting more traffic by rewarding them even more.

    And as to the job of selling. I've begun dropping stores where I send considerable traffic with little sales in favor of similar stores who know how to get the customers to complete the sale. (coupons, specials, easy to use sites, no outside ads...)

  11. #11
    The slot machine that IS paid! Billy Kay's Avatar
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    For me, I find it much more motivating if the increased commissions come unconditionally. If a merchant says "I'm increasing your commissions from x% to y%", I'm going to promote them more to take advantage of the higher commissions.
    I agree w/ MC - but I'm more jaded.

    I wouldn't lift a finger for a 1% increase.

    It would have to be 15% to get my attention...

    AND...

    you would have to have a good track record of good conversions with me to begin with

    Probably not what you wanted to hear... but it's the truth

  12. #12
    Life is Supposed to be Fun! Rexanne's Avatar
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    Quote Originally Posted by skuba

    We are not asking the aff to sell anything, but for us to sell something we need to recive qualified traffic, right? So, if conversion rate is 1%, you need to send me 100 users to convert 1 sale, 1000 to convert 10. So the more traffic affiliates send, the more sales he gets. The commissions is based on sales, so we need leads to convert sales.

    Thanks
    If this were the case, you'd have more affiliates sending you more traffic without prompting. Sadly, most merchants don't convert at 1%, even with qualified plentiful tracking.
    Peace,

    Rexanne

    Rexanne.com
    Loving Everyone's Child Creates Magic


  13. #13
    Member Chocolate_Chicken's Avatar
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    The best thing you can offer as an INCENTIVE for an affiliate is to convert the traffic they send you. . . . . . N O T H I N G else matters.
    I'll agree 100% but also add that assurance that sales will be tracked and paid for is also imperative.

    Bonus tiers, 'spiffs', contests, 'lock and load' high-school-football-coach pep talk and all that jive means nothing. Even the base commission rate itself is a non-issue so long as it's about the same as what competing vendors offer.

    CC's checklist:

    1) stuff that sells
    2) sales get tracked
    3) commissions get paid.

  14. #14
    Life is Supposed to be Fun! Rexanne's Avatar
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    Quote Originally Posted by Rexanne
    If this were the case, you'd have more affiliates sending you more traffic without prompting. Sadly, most merchants don't convert at 1%, even with qualified plentiful tracking.
    Ooops ...duh ... I meant to say TRAFFIC. LOL - but qualified tracking is always good, too.
    Peace,

    Rexanne

    Rexanne.com
    Loving Everyone's Child Creates Magic


  15. #15
    Life is Supposed to be Fun! Rexanne's Avatar
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    Quote Originally Posted by Chocolate_Chicken
    I'll agree 100% but also add that assurance that sales will be tracked and paid for is also imperative.

    Bonus tiers, 'spiffs', contests, 'lock and load' high-school-football-coach pep talk and all that jive means nothing. Even the base commission rate itself is a non-issue so long as it's about the same as what competing vendors offer.

    CC's checklist:

    1) stuff that sells
    2) sales get tracked
    3) commissions get paid
    .
    I like it. Short & sweet and BASIC.
    Peace,

    Rexanne

    Rexanne.com
    Loving Everyone's Child Creates Magic


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