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January 21st, 2007, 11:55 PM #1Best Start-up Commission
As we are starting with our Affiliate Program, I was wondering what practical things to start with. First in the list is the proposed incentive/commission available for our affiliates. I noticed that most programs in here start with something then the commission goes higher for any hardworking affiliate.
For a pay per sale program, what do you think guys is the most practical commission to start with?
Thanks very much.
January 22nd, 2007, 12:45 AM #2
- Join Date
- January 18th, 2005
- Nunya, Business
Depends on what you're selling. Inkjet merchants pay in the neighborhood of 25% - 35%, vitamins in the 8% -15% neighborhood, computers usually 1% - 5% etc. A good idea would be to check out what your competition is paying to get some kind of idea.
January 22nd, 2007, 03:53 AM #3
Create an affiliate account with all the top networks and do a competitive analysis. Also, what is your unique sellling proposition for a customer and an affiliate to market your site?? 99% of affilliate programs fail because they have no brand identity and never find a reason for affiliates to bother.
January 23rd, 2007, 01:06 AM #4
Thanks for you ardvice, Trust and Chuck.
Overall, we belong to the niche of OIL PAINTING PORTRAIT FROM PHOTO GIFT IDEA. We take pride in our expert artists. While others make hand-made family portraits prohibitively expensive, we offer to create a masterpiece for our masterpiece without the ridiculous price tag. Do you think this is UNIQUE and COMPETITIVE enough for affiliates to give their attention to us?
January 23rd, 2007, 11:06 AM #5
- Join Date
- January 18th, 2005
'portrait' wrote: > "Overall, we belong to the niche of 'oil painting portrait from photo' gift idea. * * * Do you think this is unique and competitive enough for affiliates to give their attention to us?" <
It's definitely not unique, and it's impossible to know if your program is competitive without spending a lot of time looking at your web site, pricing, product quality, delivery times, affiliate program terms, etc.
There are other merchants out there offering very similar services -- you'll need to look at their affiliate programs and do some homework on the experiences that affiliates have had with these merchants in the past. (In some product categories, there are merchants who have "burned" affiliates in the past, making it much harder to recruit affiliates to a new merchant's program.)
Keep in mind that it can be hard to make affiliates understand your "value proposition" for them. If there is a competitor who charges higher prices and offers a higher commission than you do, many affiliates will blindly sign up with your competitor instead, not realizing that the price difference may reduce sales. Also, getting affiliates to "switch" from one merchant to another is difficult.
Understand also that even if you don't think consumers will equate your products with the pre-designed posters offered by many online poster sites, many affiliates will mentally lump you into that category. Certainly, most of the affiliate directory sites (the few that actually update their sites at all) will include you with those sites under a general "art" or "home decorating" category.
You may want to think about whether it makes sense to position yourself in some other way -- for example, considering your product as a complement to "scrapbooking" or "geneology" activities. You'd also want to identify the most likely 'events' that might trigger order of your product -- I assume that these would include Christmas, anniversary, birthday, Easter/Thanksgiving, graduation, and of course wedding. This could help you target "niche" web sites that might represent great matches for your program.
January 24th, 2007, 02:33 AM #6
Thank you very much for your valuable suggestions Mark.
When we engaged in this particular business, we work on art gift sets that would answer to most gift-giving blues of any customer for ALL OCCASION. Thus, it's quite hard for me to work only on one particular area because we cover it all.
Since our services have a lot of competitors in the world wide web, I guess we need to make our finished products stuffed with something different from the usual oil painting portraits. Like for example a portrait of some place as ordered by a particular customer is shipped to this customer now framed with something exotic or native by nature. How's that?
Honestly, after discovering a lot of web sites that offer the same services that we have, I couldn't even sleep at night. I'm at a loss thinking of stuff that would definitely spell our store's USP.
January 24th, 2007, 10:41 AM #7
- Join Date
- January 18th, 2005
'portrait' wrote: > "we work on art gift sets that would answer to most gift-giving blues of any customer for ALL OCCASION. Thus, it's quite hard for me to work only on one particular area because we cover it all." <
When I talked about "positioning" or identifying appropriate "events," I wasn't suggesting that you limit your business in some way, but instead that you consider promoting your business and recruiting affiliates within a specific niche, as a starting point.
When I am recruiting affiliates for QuoteProducts.com, I am aware that "every" web site is a potential affiliate, but on any given day I choose a "theme" or "audience" to target. For example, since I realize that our products are often purchased by teachers, I may spend a day recruiting web sites that target teachers; on another day, I will work on identifying and recruiting web sites that are about motivating employees; and on a different day, I may target sites that list thousands of famous quotes.
You may also want to create different "landing pages" for these various audiences or events. This isn't about limiting your business, but making sure you are serving your customers well.
January 24th, 2007, 11:48 PM #8
Sorry if I misunderstood your suggestion Mark. In response to your suggestion, I've prepared a huge file containing contact info of our potential affiliates. Afterwhich, I grouped them according to some category. So far, I already have those under the weddings category, photography category and I also have paintings category.
I was thinking that I should start with the one that is mostly visited by most internet surfer. But on second thoughts, I said why not start with the category where Affiliate Marketing is not so much taken cared of. Am I in the right track?
Once again, thanks so much for sharing with me your ideas.
February 5th, 2007, 06:29 AM #9
It would eventually be up to you on how you would award your commission. There are several ways wherein you can use this as a tool to push your product. As suggested, it is wise to get your hands dirty and see how your competitors give out commission.
February 5th, 2007, 10:01 AM #10
I prefer to see merchants give a pretty competitive commission across the board. Sure, they should hold back a bit for their top performers and for promotions and incentives, but it shouldn't be excessive.
For instance, something like this is not at all appealing:
Base Commission: 1%
Over $100K: 5%
The top performers deserve a bit more, but FIVE TIMES AS MUCH? No thanks.
Similarly would be a merchant who offers a very low commission (for their industry) but is willing to extend considerably higher commissions for good performance. I have one merchant who publicly pays 8% but has given me a private 25% offer. What's up with that? If you have the margin to do well with 25%, why are you offering 8%?
By putting out a low base commission, you greatly weaken your affiliate program.
1. Affiliates will be much less likely to sign up if your commissions aren't competitive or industry-leading.
2. You never know which affiliates will be your big performers.
3. Affiliates who do sign up will give you far less exposure on their sites.
I recommend that merchants set their base commission at least 70-80% as high as the highest commission they're willing to pay.
And if you're going to use tiers, make them reachable. I've seen several merchants with tiers so high that only a handful of affiliates even make it out of the first tier.
February 5th, 2007, 12:31 PM #11
- Join Date
- January 18th, 2005
MichaelColey wrote (in part): > "... I have one merchant who publicly pays 8% but has given me a private 25% offer. What's up with that? If you have the margin to do well with 25%, why are you offering 8%? By putting out a low base commission, you greatly weaken your affiliate program. ..." < (emphasis added)
Michael's arguments are compelling, I think, and anyone launching an affiliate program in 2007 should probably heed his advice.
But as a consultant, I've given the opposite advice in the past: don't pay the highest commission rate you can afford, unless your competitors are offering the same or higher rates.
I once had a client approach me, almost ready to launch their affiliate program with a high affiliate commission rate -- almost double the highest competitor. The client's web site was already a "leader," and none of the competing affiliate programs had much traction at that time.
My advice was to offer a lower commission rate, perhaps 1% more than the competitor, because offering a higher rate wasn't likely to bring any additional affiliates nor additional sales. I also felt the client needed to leave some room to offer higher rates to affiliates who demanded them. The client's original affiliate commission rate did not leave much margin, so if the business model proved 10% less profitable than expected, they might have needed to reduce the commission rate, which would alienate current affiliates. The client agreed, and launched the program with a lower rate than originally planned. A couple of years later, the client told me that this was the single most valuable piece of advice I'd given him. (I disagree, but it certainly was the one piece of advice where the "extra profit" could most easily be counted.)
My advice would be different today because there are entrenched affiliate programs in every product niche, and you need to offer the highest rate possible to have any hope of persuading affiliates to add your program.
However, there are some affiliates -- including a few very successful "super affiliates" -- who simply won't enroll in any program unless they get better terms. Certainly, in any "tiered" program they will demand (or at least ask) to be paid at the top tier for all sales, regardless of whether they hit your tier levels, or they will demand 1% more at every tier. If you offer your highest affordable rate to everyone, a few of these potential affiliates will simply "stonewall" and refuse to do business with you, because they believe you must have left yourself some room to negotiate.
For my own "affiliate PPC" campaigns, I no longer work with any merchant paying less than 10%, and all my significant PPC campaigns (spending hundreds of dollars per month, and thousands per month from October through January) are for merchants paying more than 20%.
It is also important to recognize that certain affiliates need less incentive than others. A great example are "directory," "coupon," and "price comparison" sites, which seek to convey to consumers that their sites are comprehensive -- these sites often will include merchants who offer NO affiliate commission, or very low affiliate commissions, because they must do so in order to appear legitimate. (Of course, these sites may present the higher-commission offers more prominently. When I reorganized a directory web site from "alphabetical" to instead show the best-paying merchants first, that site's revenue tripled.)
Keep in mind that there are many factors that affiliates OUGHT to consider other than commission rate, and if you can communicate to your affiliates that your site has a higher conversion rate, or that your average transaction size is larger, then you can often "win" affiliates even with a lower commission rate than your competitors.
Oh, yes, those "other factors" can be huge. I recently had a merchant offer me a higher commission rate (by 5%) than the already-generous competitor, and I initially agreed to switch -- but the merchant insisted that I sign an agreement that included non-disclosure terms which I considered unacceptable. I wouldn't sign it, and the merchant wouldn't compromise, and I almost certainly gave up at least $500 per month with that decision.
Finally, a merchant who already has a large affiliate base will prefer to reserve higher rates for "private offers," because they don't want to just hand over an extra percentage to the existing affiliates who are already sending customers. Think about it: Amazon could probably increase sales if it increased its published affiliate commission rates, but the profit from the new sales would be much less than the increased payments to the existing affiliate base.
Last edited by markwelch; February 5th, 2007 at 12:49 PM. Reason: Added: Hey, look, this is my 500th post. Yay.
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