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  1. #1
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    Over on the LS forum, I posted how to value a repeat customer. Since this is applicable to the various threads here, I'm posting it here.

    We have been talking about not being paid on repeat sales from our visitors. Well how much is that worth?

    Here's how to figure it:

    70% of all (gross) sales of any business are repeat customers. (The acknowledged figure for all businesses averaged) All those ads on TV, radio, newspaper and the sides of the busses are to increase the 30% of gross sales by increasing new customers.

    Now, to put a dollar figure on this, take the gross sales you provided to all your merchants combined, and multiply by .70. That is the dollar amount your merchants will do next year from all those "first time" customers you sent them this year.

    That's a fact based on a very well known and accepted statistic of business. 70% of all sales are from repeat customers.

    Now go back to last years numbers. Multiple your merchants gross sales by .70 and you will see how much money those merchants made off your customers this year, based on you sending them last year. Did you get paid for those sales? No, you did not.

    Also realize every merchant has your visitors name, address, phone and email information. They will contact them later. That's just good business. They will put them on their "most frequent buyer" list, and their "holiday specials" list. They might send them a post card in the mail or a catalog come Christmas. They might even do some telemarketing and call them on the phone. Any good business would do this. But if any sale is made from these methods, you will not get a commission from that repeat sale.

    My point is that the merchant never would have had any of that information had it not been for you sending them the customer in the first place. And for that you get paid 5-15% on the first sale only?

    I compare this to pre 60's baseball. Back then, the owners of the teams were making hundreds of millions of dollars per year from TV rights and merchandising, yet paying the players only a small, small fraction of that. Yet the people were coming to see the players, not the stadium. The people come to our sites to see our sites, not the merchants shopping cart. We are filling the stadiums, but only being paid a tiny fraction of the value of the those visitors.

    Okay, so maybe we could agree on a 50% split for repeat sales from our customers. I see it as a fair balance. Obviously the merchant did their part, by fulfilling the order and taking care of the customer. But we did our part too by sending them in the first place. So we should get 100% of the commission on the first sale and then 50% of the commission for repeat sales.

    Go back to the 70% numbers I had you figure above. Are you not entitled to 50% of your normal commission for those sales? If you have a successful AM business, that should be a pretty decent amount.

    (This of course does not count on sites that have gone out of business, but then it's worse: that's the dollar figure of sales potential lost.)

    http://SearchToSale.com - Turns your search box into money.

  2. #2
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    Some (maybe most) merchants probably see things this way, and would be willing to pay affiliates ongoing commissions for repeat customers, just as they would pay a sales rep.

    But then CJ indoctrinates them with their "customer acquisition cost" bulldada.

    AS SEEN ON SE!!!

  3. #3
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    quote:
    The people come to our sites to see our sites, not the merchants shopping cart.


    If that's indeed true, then all we have to do is keep them coming back to our sites to get paid for repeat sales. What's the problem here?

    {

    "Laziness, Impatience, Hubris. Pick any three" ~ YAPC 19100

  4. #4
    ABW Ambassador John Kruger's Avatar
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    Interesting thread, and I have a thought I would like to hear others opinions on.

    I have been wondering about the value of building a customer base verse search engine optimization.

    Most sites with affiliate programs are attempting to use us as a branding and marketing tool, it is in their best interest to retain the customer we bring them. This is apparent in the way they deal with cookies, but I would not expect anything different.

    If you have built a community (bb plus content site) with many members. How many of those members actually follow links to products? I would guess the newer members would, but the existing ones would not. They come to the site for access to a group of peers, the idea of community. If they want to purchase something, I guess they would know where else to go.

    Now, if your site integrates the affiliate linking, or hides the fact you actually are purchasing products from another company, the idea of community continues to sell to your growing members, but how fast does your membership grow vs people searching for product on the web?

    In the brick and mortar world, how many people go to a social setting to purchase revalent products?

    I understand that many of us have built these communities into our sites, but I am beginning to wonder about the value in the effort of doing so.

    If this post makes little sense, it is because I just woke up.

    Once a year, go someplace you've never been before.

  5. #5
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    quote:
    Originally posted by eaglefire:
    quote:
    The people come to our sites to see our sites, not the merchants shopping cart.


    If that's indeed true, then all we have to do is keep them coming back to _our_ sites to get paid for repeat sales. What's the problem here?




    But that's not what happens. As soon as that first sale is made the merchant now has a "leash" on that customer. They have added them to their list. They will actively cultivate that customer. And remember, after first sale, no cookie unless we "resend them."

    To illustrate..

    I've got a site for musicians. If they come to my site looking to talk to musicians, they then click on my link to the merchant. However, the next time they need a mic or pick, they don't need to talk to the musicians, so instead go directly to the merchant, cause that's where they bought last time.

    I'm cut out of the loop completely. But they never would have had that customer w/o my affiliate link.

    That's the problem.

    http://SearchToSale.com - Turns your search box into money.

  6. #6
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    I think that's why some people suggest having a newsletter yourself even if you are an affiliate. You can offer people a free ebook or that you will send discounts to them and have some kind of pop up box. Then when you get the affiliate newsletter sent to you, you can see the specials and send out a newsletter to your customers. Of course, if they have already subscribed to the newsletter of the merchant, they will be getting the specials first from them. Maybe have freebies you can give to people from sites that pay you commissions for freebies is another way to make extra money with the same customers , though you will probably lose the main sales once they learn the merchants url.

    I don't know what the solution is, except to find merchants that have very long cookie periods.

  7. #7
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    The solution to this kind of dilemma is always the same: BECOME the MERCHANT!

    If you don't like the fact that you're not getting adequately rewarded for the traffic/buyers you send (and there are no other fish in the niche affiliate sea worth fishing i.e. no better merchants to turn to) then there is always the option of going direct.

    Find a drop shipping company that will do 100% of the process from initial order to delivery and returns. Set up a business bank account, a merchant account, a shopping cart and a credit card processing facility. Sell the products you're getting "ripped off" on, and make 100% of the margin EVERY time.

    In other word, go from being a traffic source to a destination.

  8. #8
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    quote:
    But that's not what happens. As soon as that first sale is made the merchant now has a "leash" on that customer. They have added them to their list. They will actively cultivate that customer. And remember, after first sale, no cookie unless we "resend them."

    To illustrate..

    I've got a site for musicians. If they come to my site looking to talk to musicians, they then click on my link to the merchant. However, the next time they need a mic or pick, they don't need to talk to the musicians, so instead go directly to the merchant, cause that's where they bought last time.

    I'm cut out of the loop completely. But they never would have had that customer w/o my affiliate link.

    That's the problem.




    No, that's not the problem. The problem is for you to learn how to develop what is known in the business as "customer stickiness" - ie, customer loyalty.

    If they are indeed coming to see you, not the merchant, as you've stated above, that should not be a problem. Certainly, if your site is as enticing and exiciting as you say - that you are the "player", you should be able to find ways to add value and to present product to return visitors in such a way as to entice them to click on a link and re-set your cookie. If you can't, then your logic is somewhat flawed, as there is no added value and they are indeed going back to see the merchant's shopping cart, not your site.

    If the merchant gets subsequent sales as a result of cultivating the customer, they deserve to keep that money. There was no commissionable action on your part. It is up to you to also cultivate them - cultivate your visitors. It is no different than a customer visiting several affiliate sites, clicking through to the same merchant on each, then finally buying as a result of whatever added value the last affiliate in the queue provided. The last affiliate deserves the commission because they were the one making the sale.

    {

    "Laziness, Impatience, Hubris. Pick any three" ~ YAPC 19100

    [This message was edited by eaglefire on September 08, 2002 at 11:25 AM.]

  9. #9
    2005 Linkshare Golden Link Award Winner  ecomcity's Avatar
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    Eaglefire has touched on the real issue of commissionable fairness to both affiliate and merchant.

    If a merchant is using the affiliate channel primarily as an advertising medium they capture everything possible for followup sales campaigns from our referral visitor on the first visit...whether they buy or not.

    If the merchant is using affiliates as a secondary sales channel they allow the affiliates to pin-point target visitors with pre-sell text or PPC keyword bidded listings and develop landing pages of hot sellers that convert before the cookie expires.

    Some affiliates overcome the first approach and concentrate on building bookmarkable web sites, "incent" type sites, coupon/Freebee sites and push their own e-mail newsletters or specials to the point of UCE spamm...hoping to become the next DuperAffiliate. All Dupers will try literally anything to get their cookie attached to merchant partner sales.

    The smart merchant leverages their affiliates ability to ADD VALUE to their sales program by rewarding them a continuous revenue opportunity. They want their affiliates to reset that cookie, because they send real focused traffic without the gorilla tactics or expenses of servicing the Dupers. They'd rather reward a huge number of creative talented webmasters with a check every month than hope a few Dupers will play fair and not siphon off their traffic with competitor side deals.

    My bet is the TigerDirect's of the afifliate world will eat the Dell's and PcMall's for many years to come as these others dwindle in importance and play catchup.

    WebMaster Mike

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