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  1. #1
    Outsourced Program Manager Rick - Bitcom's Avatar
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    Any hard data on effect of affiliate incentives?
    Can anyone offer any hard data on the revenue effect of offering tiered commissions and incentives to affiliates? In other words, what are the numbers that support using incentives to motivate affiliates as opposed to a straight static commission for everyone. It certainly makes sense but is there hard evidence to support that it is worth the extra effort and time?

  2. #2
    OPM and Moderator Chuck Hamrick's Avatar
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    Ask Andy that's his gig!!

  3. #3
    Moderator MichaelColey's Avatar
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    I would be interested in seeing this, too. My suspicion is that too "wide" of a tier variation (i.e. the difference between the base offer and the highest affiliates) will cause a major negative impact on the smaller affiliates, which will greatly reduce the "long tail" of smaller affiliates and the future growth potential of the program.

    In Geno's book, he suggests that the base be 20% lower than what you're willing to pay the top affiliate (yet he gives examples with a much wider variance). I would tend to agree with the 20% number. I have no data to back it up, though.
    Michael Coley
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  4. #4
    OPM and Moderator Chuck Hamrick's Avatar
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    Actually I have a standard commission of 10% for my LittleGiantLadder.com program on CJ and AvantLink. I have bonused my top affiliates a higher commission to keep them interested and active. I created a mid tier level to incentize performers who are not actively making sales. Just getting started with that.

  5. #5
    AM Navigator Geno Prussakov's Avatar
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    Quote Originally Posted by MichaelColey
    In Geno's book, he suggests that the base be 20% lower than what you're willing to pay the top affiliate (yet he gives examples with a much wider variance)...
    I do. ...and very often in the examples with much wider variance I step into the contests, promos, commission increases, etc. Sometimes more, other times less. The pattern that works best for me and any given merchant is a 60/40 pattern: on any promo I run they pay 60%, and I pay 40% of the money required to run a promo, a contest, a commission increase, etc.

    Geno

  6. #6
    Outsourced Program Manager Rick - Bitcom's Avatar
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    So Chuck...it sounds like you don't use them. Any reason?

  7. #7
    OPM and Moderator Chuck Hamrick's Avatar
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    I do have incentives for several new launches like $100 bonus for the first $1000 in sales in a 30 day period. I just don't throw willy nilly. I tend to work with producers and reward them with a higher commission for increased sales. My objective is to develop a relationship rather than just running sales contests.

  8. #8
    Outsourced Program Manager Rick - Bitcom's Avatar
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    Thanks everyone for your responses.

    So I guess no one has anything like "compared to last year during the same time, my multi-tiered commission structure drove 40% more revenue" or something to that effect?

    I know incentives just makes sense... given human nature... but there is a cost involved which would be nice to justify with hard data.

    Here's one that would be easy: How about revenue per tier? For example...

    During the 4th quarter...

    My top tier did $xxxx of business with a net profit of $xxxxx
    My second tier did $xxxx of business with a net profit of $xxxx
    etc...

    That would be a way to gauge overall effectiveness. I certainly would not expect folks to share actual numbers but clearly if net profit is significantly higher for top tiers then the higher costs could be justified.

    Anyone want to share net profit per tier as a percentage of overall sales? No dollars required just % of overall sales.

    I'll show you mine if you show me yours...

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