View Poll Results: Would You Prefer:
- 17. You may not vote on this poll
20% Commsission (30 day cookie) on first sale only
10% Commission (30 Day cookie), with you owning the customer for life with a 2% residual on ALL future purcahses
15% Commission with a 365 Day Cookie
March 4th, 2007, 11:26 AM #1Higher Upfront, Or Lifetime Commission?
In a consumable product industry, meaning one that will have repeat customers, would you as an affiliate prefer to see:
(And as a note, these percentages are theoretical... This is for a study, and although I have discussed this with a merchant, it doesn't exactly reflect the percentages we talked about...)
March 4th, 2007, 01:03 PM #2
How do you ensure they "own the customer for life" if tracking is cookie-based?
March 4th, 2007, 01:44 PM #3
Well, the initial tracking is cookie based, but once the customer is created at the merchant, the payment to the affiliate is automatic.
You raise a good point though that I hadn't considered. Actually, you didn't raise it, but for some reason I thought of it as I read your post...
Supposing a customer forgets their login credentials... We'd have to guard against that somehow...
March 4th, 2007, 02:26 PM #4
There is no reliable way to do a cookied customer for life, it has to be tied into the DB and it's easy pretty easy to do.
I voted for option B.Continued Success,
The secret of success is constancy of purpose ~ Disraeli
March 4th, 2007, 03:14 PM #5
I love the idea of residual commissions, but I've been burned too much to count on them. I chose the highest commission rate, even though it only has a 30 day cookie. I just don't think the value of a cookie beyond 30 days is enough to justify the lower commissions.
How many times have we seen posts here (or experienced it firsthand) where you get "commissions for life" (or until the site shuts down or the affiliate program shuts down or the affiliate program moves to another network or the merchant changes their mind). Just give me what I deserve now.
March 4th, 2007, 06:58 PM #6
March 5th, 2007, 06:34 AM #7
March 5th, 2007, 06:41 AM #8
- Join Date
- January 18th, 2005
- West Coast USA
Must be tied into the DB.
Jason, that guy from Safeway, closed his site that sold cigarettes.
He still gets credit for repeat orders.
March 5th, 2007, 07:00 AM #9
It is easy enough to tie the customer and affiliate ID in the data base. There was a lengthy discussion of this last October that offered quite a bit of feedback.
March 5th, 2007, 07:43 AM #10
If I was comfortable with the merchant's ability to stay in business and pay me over time, I'd go for the lifetime program. Again, provided I thought that the numbers would play in my favor long-term. With these made-up numbers, I'd end up having to sell 6 times the product over the life of the customer to make the same commission. I'd have to figure out if the nature of the product would make that up, and if so, how long I'd be out the additional commission.Chris Sturgill
"All my life I've had one dream, to achieve my many goals." - H. Simpson
March 5th, 2007, 12:00 PM #11
- Join Date
- January 18th, 2005
Quite frankly, I'm not sure why you chose the specific numbers you've used (20% flat versus 10% first-sale and 2% continuing). The latter would rarely be preferable, though I suppose it might make sense if the average customer actually does continue the relationship beyond 5 transactions, or if the first purchase is usually a very small "sample" or "test purchase" (for example, a company making a small purchase of office supplies, and later buying all their office supplies from the company).
To me, the proper comparison isn't 20% first-sale versus "10% first-sale and 2% subsequent sales"; it's 20% flat versus 10% for ALL sales to the customer. Or it's 20% flat versus 15% first-sale plus 5% on all future sales. Your example requires that for the affiliate to prefer the "residual" option, the affiliate must project that if the average first purchase is $20, the average customer will spend at least $100 more with that merchant in order for the affiliate to make the same net earnings.
The attractiveness of residual, lifetime, or continuing-purchase commissions depends entirely on the typical purchase patterns of the merchant's customers, and of course the trustworthiness of the merchant. (We just saw a discussion thread where a merchant who offered "lifetime commissions" later claimed that it was unreasonable for an affiliate to expect to keep earning commissions after a year or more.)
I think it's inappropriate to discuss this "in theory" without knowing the specific product niche and offers involved. The most common "niche" where I see continuing commissions offered is "web hosting," where there is a continuing relationship that is renewed each month or quarter or year. The same kind of relationship probably exists for anti-virus subscriptions, and perhaps even tax software. It should also extend to other kinds of subscriptions (monthly face-creams, nutritional supplements, coffee).
Lifetime commissions seems less attractive for tangible retail purchases, at least for "one-off" purchases.
For the merchant, a key issue is whether different affiliates are likely to send customers with different profiles -- that is, will the renewal or repurchase profile change? If so, then it makes more sense to use recurring/continuing commissions to provide the "right" incentive to the "right" affiliates.
Suppose there are two affiliates: Site A sends customers who spend an average of $20 per month on hosting/services, and Site B sends customers who spend an average of $50 per month on hosting/services. But the customers from site A have an average service duration of 24 months, while the customers from site B have an average service duration of 3 months. As a merchant, which site do you prefer as an affiliate? As an affiliate, which model would encourage you more? I think Site A would prefer a recurring commission, while Site B would prefer a flat rate. (Why might these sites perform so differently? One might cater to "newbies" and the other to experienced hosting customers; one might emphasize "cheap" and the other might emphasize "quality"'; one might cater to short-term business-opportunity customers and the other to retailers with physical storefronts; one might serve high-school students and the other MBA candidates.)
Of course, from the affiliate perspective, customer "duration" seems like an issue that should be entirely in the merchant's hands -- the merchant provides the service, after all, and it's the quality of the service and customer support that create the continuing value. But, as I explained in the previous paragraph, the affiliate's audience profile (demographics) can also be a large factor in the "durability" and "lifetime value" of the customers sent by affiliates.
I think a key issue with "recurring" versus "one-time" commissions is the true value of the customer. Getting the customer to sign up for a subscription service usually has a value that far exceeds the first month's subscription fee. But the value of a customer who "signs up" is much less than the value of a customer who "signs up and does not cancel during the first 30 days," and the latter is often the trigger for any affiliate payment at all.
Last edited by markwelch; March 5th, 2007 at 12:14 PM.
March 5th, 2007, 02:06 PM #12
April 15th, 2007, 05:33 PM #13
Recurring payouts are appealing, but outside of gambling and adult they rarely work for long. Too much motion in the mainstream industry. Also, outside of gaming and adult, the margins tend to be much tighter because there's less barriers to entry (ie, on subscription products).
However, it would really come down to figuring out, from the aff's perspective, which is more lucrative. Many programs in adult and gambling offer both options (big upfront or recurring w/ smaller upfront). High quality full time affiliates prefer recurring options. Parttimers tend to prefer fast payouts.