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  1. #1
    Newbie
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    March 12th, 2007
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    How to pay your affiliates?
    Hi guys,
    I have just launched a new affiliate program and am in need of some advice before I really start promoting it.

    I currently have a policy where I pay affiliates monthly via paypal for he previous months earnings. I.e. March's earning are paid on the 10th of April.

    I have however just thought of one problem, what to do about fraud/returns on affiliate orders?

    If it is committed/actioned after I have paid the affiliate then I stand to lose a lot of money. I would be very interested to hear from other merchants about this and how to avoid it or minimise losses?
    Do you have a specific accounting policy? are your payments structured to minimise losses this way?

  2. #2
    Newbie TooLegitToQuit's Avatar
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    November 16th, 2006
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    I have found that affiliates really appreciate monthly commission checks or direct deposit. We offered PayPal a while ago, but hardly anyone chose that method of payment. I think payment options are one of those things you will figure out and develop as your program grows. Just listen to your affiliates’ needs.

  3. #3
    Classic Rocker Mack's Avatar
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    January 27th, 2007
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    Check or direct deposit is better. I would not sign on to a program that only paid via Paypal. The only paypal account I have is my merchant account and I get charged a % for everything I get.

    The way you explained it now, if I made a sale on March 30, you pay me on 10 April, that is not "normal" in affiliate marketing from what I've seen.

    Most merchants wait at least 30 days before payouts for the reasons you listed. Fraud, returns, chargebacks, etc. take longer than 10 days. Affiliates understand that this is just part of the game and it happens.

    I would strongly suggest you look at this book:

    http://forum.abestweb.com/showthread.php?t=83364

    Or search around the forums here and consider hiring a program manager to help launch your program. It is probably the most important step and decision you'll make for your online business.

  4. #4
    Newbie PassionateManagement's Avatar
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    April 3rd, 2007
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    Quote Originally Posted by Mack
    Check or direct deposit is better. I would not sign on to a program that only paid via Paypal.
    I am based in Australia and most affiliates would be in the US. As far as I am aware PayPal is the quickest and cheapest way to get money over there. International transfers or cheques are much more expensive (expecially when the value is not that high).

    Or have you got any other ideas?

  5. #5
    Full Member
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    December 20th, 2005
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    It can be expensive and cumbersome to cut paper checks. Not saying that some might not prefer it, but it's more work on the part of the merchant.

  6. #6
    Outsourced Program Manager e-Gazer's Avatar
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    January 18th, 2005
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    Toronto, Ont, Canada
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    Hi HerbalBazaar,

    Welcome to ABW.

    You or your affiliate manager (not sure if they are one and the same) will be communicating and working with a variety of different types of affiliates from various backgrounds - they have a variety of preferences as well. It is best to offer your affiliates as much in the way of variety as you can afford to (both financially and otherwise) for best results.

    Some affiliate prefer checks, some affiliates prefer Paypal. Some affiliates won't join a program unless it offers one or the other, so why shut the door on opportunity?

    Your Affiliate program should enable your affiliates to choose payment preferences from whatever options you can make available. For domestic affiliates they may prefer check or Paypal. You may want to offer wire as well.

    Whatever option you choose, and whatever time interval for payments you choose to offer, be sure to be consistent and accurate when it comes to their payments. Handling payments can become a full time job if not organized well which is one of the reasons why running your program on a third party affiliate network is a good idea when managing a program - they h andle all the payments for you, enabling you (or your Aff. Mgr) to focus efforts on the all-important areas of recruitment, activation, maintenance and growth.

    Having said that, faster payments are always better. If you have someone in-house who can dedicate their time to processing and issuing payments on time on a weekly basis, then fast payments can be a good selling point for your program. In my experience however, if you have to manage payments in-house, monthly is usually best as it enables the affiliates to acquire a larger sum for payment that they receive all at once and enables you to spend the majority of the month focusing efforts on recruitment/activation/growth/maintenace as opposed to sorting out payment discrepancies or responding to payment inquiries each week.

    Hope that helps. Good luck in your launch.

  7. #7
    Outsourced Program Manager e-Gazer's Avatar
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    Smile
    Sorry - I missed the second part of your post until I re-read it now.

    Re: Fraudulent orders and returns. Most affiliate programs are set up in such a way that you can 'chargeback' an issued amount for a paid sale if need be - i.e., in the case of cancelled (unshipped) orders, fraudulent orders, or returns - depending on your program policy and T&C of agreement w/ your affiliates.

    Also, if you set up your program so that you're paying your affiliates monthly, you should know well in advance of your affiliate's payment being issued that a sale is fraudulent (unless for some bizarre reason your processing & fulfillment of new orders takes more than a week or two to process - I wouldn't imagine that is the case?).

    In my experience, with very few exceptions, fraudulent orders amongst affiliates only count for a very small % of total sales coming through the channel anyhow so it shouldn't become a big issue - at least not one that is un-manageable.

    Another option (though not the most favorable one from the affiliate's end for obvious reasons) is to put all sales on "hold" for say, 30 days (depending on your return policy for products) whereby you (or your Aff. Mgr.) let the commissions sit in queue so to speak until they've either been confirmed or denied, depending on whether the order has been returned within those 30 days or not. In this case however, the affiliate gets the short end of the stick because they end up waiting however many days you have the commissions on hold before they can either be paid, or find out that their commissions have been retracted due to returns.

    Some merchants consider paying commissions on returned product the cost of doing business with affiliates, others find themselves either unable or unwilling to absorb that cost. Remember, your affiliates don't get paid unless a sale occurs, which means in between sales, they're putting in the efforts to advertise you for absolute FREE. You have to decide where your company stands on that issue, how you plan to handle it, and work it into your program policy as well.

    Cheers,

  8. #8
    Full Member ADesertRose's Avatar
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    January 19th, 2005
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    What is your minimum payout or do you send the months commissions regardless of amount? I like paypal, but also use direct deposit or receive paper checks. The thing about paypal is the cut they take, for small amounts it makes the payment almost useless.

  9. #9
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    December 20th, 2005
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    I've set the minimum payout at $20. That's big enough to reduce the impact of Paypal's cut to me, and small enough to be achieveable in a reasonable time by my affiliates.

    I'm also putting a small bonus in each affiliate's account when they sign up, so they don't actually have to earn the full $20. Are initial bonuses appreciated, or is that not on the radar screen?
    [URL=http://themoneyforums.com]The Money Forums[/URL]

  10. #10
    Newbie
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    March 12th, 2007
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    Thanks for all the replies, you've really helped me along. I will be announcing the official launch of the affiliate program on the ABW forums later this month once we have concluded the testing phase of the affiliate module. It is in house at the moment but we hope to move to a network like SAS soon.
    I have added cheques to the payment option to give more choice to our affiliates. So now you can choose paypal or cheques. In terms of the payments, we have set a min of $50 with payments going out monthly, all payments are held for 30 days to catch fraud. I really hope to be able to reduce this soon as I want my affiliates to get paid for their hard work ASAP. As an affiliate turned merchant I can understand how it can be frustrating to have to wait for your money. For now this is the only option we have though.

  11. #11
    Newbie PassionateManagement's Avatar
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    Hi DoctorMike
    I also had the initial bonus payment set up for my affiliates, but found that too many were signing up just for the bonus and did not do anything after that, so I took it out again to really only get the serious ones.

  12. #12
    Outsourced Program Manager e-Gazer's Avatar
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    Hi Passionate- what kind of follow up are you doing after the bonus has been received? Often affiliates can be slow at really getting active as in putting forth effort to focus on developing content and strong pre-sells for your product but the process can be sped along by communicating regularly to address their concerns, find out what's holding them back from focusing on your brand etc.

    Activation bonuses are not usually something that provide instant ROI but what they do is

    a) show affiliates that you're serious about getting them paid by starting them off with something in their account

    b) gets your links up into more places, sooner, than would be otherwise for more brand visibility


    If an affiliate has taken the time to put your links up they were interested in promoting you so don't shut the door on opportunity. Sometimes they need to be nudged along and it can be a slow process. But once they get up and running, look out! You never know which of today's "inactives" is tomorrow's "top performer."

    Sometimes the sites they put you on in order to get the bonus can be deceiving. They may be a PPC whiz for example. Give them the benefit of the doubt. The bonus just reinforces (for the affiliate) that you are interested in gettign them paid for their efforts even if it's just a small amount up front. And, it gives you an opportunity to open a much-needed dialogue w/ these new affiliates and to find out WHERE they plan to promote you in many cases. So consider the linking/activation bonus an investment in all of that.

    What you can do in order to prevent obvious non performers from just signing up to nab the linking bonus is set up a disclaimer in your policy which says "no banner farms" or "we reserve the right to decline issuance where affiliates are found to be...X, Y or Z" or "to qualify affiliates must meet the following criteria" (be reasonable and fair of course, you don't want to be a tyrant or come across as too harsh especially when you're supposed to be thinking about first impressions).

    As well, I like to include a clause which states that two links have to be up rather than just one, and one of the two (at least) must be a text link.

    Just some ideas to make newbie bonuses work for you rather than against you.

  13. #13
    Affiliate Manager MINDsprinter's Avatar
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    August 18th, 2006
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    Another idea for activation bonuses is to pay a bonus on the first sale, of the first click, instead of on the actual activation.
    Jason Rosenbaum
    Affiliate Manager
    MINDsprinting

  14. #14
    Newbie PassionateManagement's Avatar
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    Thank you so much for these excellent thoughts. I will relook at the bonus in this new light. Do you think AU $25 would be a good incentive? And by setting the minimum payout to $50, it automatically links the payment to the first sale.
    Regarding the follow up, I have integrated an autoresponder for new affiliates with emails that focus on different promotional possibilities. Have to do some more work on that though.

  15. #15
    Full Member
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    December 20th, 2005
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    Our signup bonus is more modest. We're trying a combination of modest bonus amount with relatively low payout threshold, to see how that works. Liz and Jason, thanks for your thoughtful advice above.
    [URL=http://themoneyforums.com]The Money Forums[/URL]

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