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  1. #1
    Affiliate Manager PetsWarehouse.com's Avatar
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    Value to your customer v. Commission
    When comparing merchants in the same vertical do you only look at your affiliate commission or do you look at what those merchants are selling similar products for.

    If one sells a product for $20 and the other for $27 do you ask yourself where you would shop.

    Now if I were an affiliate and wanted to build my own brand and customer loyalty, I think I would want to offer better value to my customer by offering the product for $20.
    Thus, keep them coming back---(that site always find great deals I’m book marking this)

    The issue here is that the merchant with the product for $20 pays 7% the other one pays 12%.

    With all other things being equal which would you promote?


    PS: They are both on one of the good guys Networks


    Bob Pets Warehouse
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  2. #2
    Merchant & ABW Ambassador
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    Nothing is mutually exclusive and holding everthing being equal (conversion, product selection, support, etc)

    $27 @ 12% = $3.24
    $20 @ 7% = $1.40

    If you are a price comparison affiliate, I would personally pick 7% although I would not be too happy and try to get a better rate. At $20, it might be lower than other places and more than likely, I might be able to make the sale

    If I am a content affiliate and do product review, more than likely I would pick 12% because the visitors on my site that are clicking over are more than likely to shop around. i.e. an eleborate product review about a $3000 gucci purse, that visitor is not going to browse around and look for the deal of the century on that purse.

    Also, one consideration is the nature of your vertical.
    I.e. if you are in PC, tough luck man cos more than likely, they will source out for the lowest price.
    Premium products like $3000 gucci purse, that lady is less likely to browse 20 sites for a deal.

  3. #3
    Kung Fu Master Eathan's Avatar
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    You might also look into customer satisfaction/loyalty. In some cases, higher price also includes better service which garners positive word of mouth, as well as more repeat business from initial conversions. That's not always the case, but it's probably worth researching a bit.
    Eathan Mertz

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  4. #4
    Classic Rocker Mack's Avatar
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    7% of something is much better than 12% of nothing. I'd take 7% for a merchant that converts over 12% from one that doesn't. Eathan has a good point that some people think that higher price = value. If you were buying the exact same item and you find it in 2 different locations, which price would you choose?

  5. #5
    Moderator MichaelColey's Avatar
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    I always look for value to the customer, value to me, and value to the merchant. If you can find situations that provide all three, you do much better. If you miss one (or two), it's much harder.

    $27 @ 12% = $3.24
    $20 @ 7% = $1.40
    This doesn't tell the whole story. What if you get three times the conversion ratio with the $20 @ 7% merchant? Now, you get 30% more commissions from the same traffic. Lower prices usually produce higher conversions.

    Also, keep in mind that value to the consumer isn't entirely about price. You have to consider customer service, brand, ease of ordering, return policies, and more. Price is probably the biggest factors, but if there's very little difference in price the other factors become more important.
    Michael Coley
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  6. #6
    ABW Founder Haiko de Poel, Jr.'s Avatar
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    Yep, conversion is the MAJOR deciding factor.

    I'd like to add that generally on a lower ticket item the site's usability and ability to convey confidence are more important than just price factor in conversions.
    Continued Success,

    Haiko
    The secret of success is constancy of purpose ~ Disraeli

  7. #7
    Action Jackson - King of the World
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    I would promote both providing both had feeds and coupons. The More merchants the better for the customer.

  8. #8
    Affiliate Manager PetsWarehouse.com's Avatar
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    Quote Originally Posted by jackson992
    The More merchants the better for the customer.
    Jack that's an interesting comment, I respectfully disagree.

    When I see sites with several merchants on the page selling the same products I call it that initial interest confusion.

    I came here to find what I'm looking for and expected this site to help lead me to it.

    Now the site looks like they’re confused about where I can find it. As if to say hey maybe one of these stores has what you need I'll dammed if I do. But go click thru these links who knows you may find it?

    Now if one merchant is displayed to them that instills confidence that here is where you can and will find what you need. No confusion as to where to shop.
    Bob Pets Warehouse
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  9. #9
    ABW Ambassador Ron Bechdolt's Avatar
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    The one thing I don't think was listed above, but should also be included when you are doing actual comparisions is the shipping costs to the customer. If Merchant A is charging a lower cost per item than Merchang B, but is charging a higher shipping rate, then you may lose a customer at the checkout phase.
    Ron Bechdolt | Affiliate Program Management Consultant
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  10. #10
    Affiliate Manager PetsWarehouse.com's Avatar
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    That's a great point Ron. I really get pissed when I think I found something at a fair price later upon checkout get banged for shipping or worse yet a "handling" charge that is such BS.

    I ordered a part from CA it costs $19.99 on special the weight < 1 lb, shipping and handling was $18.

    Found the same part in NC for $22 shipping $4.95.

    Yes that is a factor
    Bob Pets Warehouse
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  11. #11
    Merchant & ABW Ambassador
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    This doesn't tell the whole story. What if you get three times the conversion ratio with the $20 @ 7% merchant? Now, you get 30% more commissions from the same traffic. Lower prices usually produce higher conversions.
    Conversion is critical too but I think I CYA in my statement.
    "holding everthing being equal (conversion, product selection, support, etc)"

  12. #12
    ABW Ambassador Snib's Avatar
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    Quote Originally Posted by jackson992
    I would promote both providing both had feeds and coupons. The More merchants the better for the customer.
    For once I agree with you. It's better to list both because the merchant selling it for $27 may have the lower price on another product that both merchants share. But you'd have to list both prices on the same page to be helpful to the customer. If the same product is on two separate pages on your site the customer will never even know about the other seller. Offering merchant reviews would help even more.

    Quote Originally Posted by PetsWarehouse.com
    Now the site looks like they’re confused about where I can find it. As if to say hey maybe one of these stores has what you need I'll dammed if I do. But go click thru these links who knows you may find it?

    Now if one merchant is displayed to them that instills confidence that here is where you can and will find what you need. No confusion as to where to shop.
    I don't think they'll be confused. If you sort the prices from lowest to highest they'll most likely check the cheapest merchant first then go down the list. And there's no reason you shouldn't find the product if all of the prices are linked up properly to the correct product. If you only offer one price you're going to have to try extra hard to make that sale because the customer is probably checking multiple sites to find the lowest price.

    Quote Originally Posted by 7-days
    The one thing I don't think was listed above, but should also be included when you are doing actual comparisions is the shipping costs to the customer. If Merchant A is charging a lower cost per item than Merchang B, but is charging a higher shipping rate, then you may lose a customer at the checkout phase.
    Very good point. Ideally you should offer both prices plus the shipping cost to their zipcode.

    - Scott
    Hatred stirs up strife, But love covers all transgressions.

  13. #13
    Resident Genius and Staunch Capitalist Leader's Avatar
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    If one sells a product for $20 and the other for $27 do you ask yourself where you would shop.

    Now if I were an affiliate and wanted to build my own brand and customer loyalty, I think I would want to offer better value to my customer by offering the product for $20.
    Thus, keep them coming back---(that site always find great deals I’m book marking this)

    The issue here is that the merchant with the product for $20 pays 7% the other one pays 12%.
    The one that will add the most to my bottom line. Which in this case, is not necessarily the 12%er. They're charging the customer so much more, that it'll likely hurt conversions.

    At a 7-12 differential, the lower one would have to convert quite a bit better than the 12%er to get my interest, because there's not only the commission difference, but the lower base price in there as well.

    That said, the $20 place would have to suck really bad to convert less than the $27 one. At that price range, $7 is a big difference! Customers are most certainly going to know that and respond accordingly.

    So in this particular scenario (and only this scenario) I would expect customers to buy way more often from the $20 place, assuming that it has an okay rep.

    **If this is actually brought up because of one merchant trying to decide whether to charge more or less, and putting out this "what if" to test the waters--I would advise him/her to be mindful of what their competition is charging.

    Quote Originally Posted by Ron 7-Days
    shipping costs to the customer.
    That certainly needs to be considered, too. If the $20 place also has a $20 shipping fee, they're no longer a deal.
    Quote Originally Posted by Bob
    worse yet a "handling" charge that is such BS.
    Reasonable handling charges are NOT BS! Those boxes and peanuts aren't free, you know! And "handling" also covers: Printing the receipt and label, actually packing the thing up (labor), having it picked up (or taking it to a delivery dropoff point), any "residential surcharge" the delivery co. tacks on (all non-postal delivery services have this irksome fee), and other assorted hidden crud/overhead that merchants get stuck paying.

    $18 for a < 1-lb item seems very excessive, though. My guess is they usually ship much heavier items, and don't seriously expect anyone to buy just one lightweight thing from them.
    Last edited by Leader; May 4th, 2007 at 03:08 AM. Reason: Thought of something else

  14. #14
    Affiliate Manager PetsWarehouse.com's Avatar
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    Quote Originally Posted by Snib
    For once I agree with you. It's better to list both because the merchant selling it for $27 may have the lower price on another product that both merchants share. But you'd have to list both prices on the same page to be helpful to the customer.

    I don't think they'll be confused. If you sort the prices from lowest to highest they'll most likely check the cheapest merchant first then go down the list.

    Very good point. Ideally you should offer both prices plus the shipping cost to their zipcode.

    - Scott
    I think your both thinking about comparison sites listing the products, that not the isssue of the question.
    In that case the the lower price will most likely get picked.

    What I'm asking is if as an affiliate if you list these merchants by name or displays banners without any direction are you doing a diservice to your user by the following;

    By promoting the higher priced merchant(s) to begin with.

    By not doing a review of all your merchants in that category.

    By not saving them money.

    In so doing are you curtailing return visits and commisions?
    Bob Pets Warehouse
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  15. #15
    Affiliate Manager PetsWarehouse.com's Avatar
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    Quote Originally Posted by Leader
    The one that will add the most to my bottom line. Which in this case, is not necessarily the 12%er. They're charging the customer so much more, that it'll likely hurt conversions.
    That's what I would think.

    **If this is actually brought up because of one merchant trying to decide whether to charge more or less, and putting out this "what if" to test the waters--
    Not at all.

    Reasonable handling charges are NOT BS! Those boxes and peanuts aren't free, you know! And "handling" also covers: Printing the receipt and label, actually packing the thing up (labor), having it picked up (or taking it to a delivery dropoff point), any "residential surcharge" the delivery co. tacks on (all non-postal delivery services have this irksome fee), and other assorted hidden crud/overhead that merchants get stuck paying.
    I think that's all part of the overhead and shouldn't be added.
    The order can't be sold without those expenses.

    When you shop at a store do you pay for the bag?

    $18 for a < 1-lb item seems very excessive, though. My guess is they usually ship much heavier items, and don't seriously expect anyone to buy just one lightweight thing from them.
    Both places were dealers selling exactly the same things.
    Bob Pets Warehouse
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