Affiliate program payout

Does this sound good or bad

[jdancing]

I would like some input about an affiliate progam I am putting together: Does this program make sense and does it seem to be fair. The service is an auction site. The average charge to sellers is $12 - $25 with the high end charge being around $100 on a large auction. As with most auctions, bidders pay nothing.

Before I start pushing this program I would like some imput from the experts here. My goal is to keep it simple and make payouts high as possible.

Are there any red flags here? Is it clear? Are payouts to high, too low or just right? Any help with the agreement lingo would be appreciated. Below is what I have put together so far. Thanks, John

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Below are the four ways you can earn affiliate dollars

1. Referrals: You will earn $2 [This may go to $5 or $10 if things work out well] for every member referred to L.A.D. that successfully buys or sells an item in an auction. This is a one time bonus for each new member referred.

2. Percent of sale: Promoting a website is hard work and we believe you should be rewarded for your efforts. We offer 30% of every dollar successfully collected by L.A.D. from the members you refer.

3. Second Tier percent of sale: We offer 10% of every dollar earned by the affiliates you refer that become LAD Affiliates.

4. Second Tier Bonus: You will earn $1 everytime one of your referred affiliates signs up a new member to L.A.D. that successfully buys or sells an item in an auction. This is a one time bonus for each new member your affiliates refer.

Detailed stipulations

*We have implemented a 180 day cookie to track your referrals

*All payouts are based on collected revenues from referrals

*The 30% commission is paid as long as your referred member remains at L.A.D

* The 10% commission of your affiliat's, affiliate earnings is paid as long as your referred member remains at L.A.D

* Referred members that do not abide buy the User Agreement of LAD may lose their membership

* Affiliates that are inactive for 6 months will be terminated from the program and will forfeit all future commissions

* The Referral bonus is a one time pay out per new referral that either successfully wins or sells an auction

**We do not accept download S/W affiliates into our program. Any affiliate caught using a Browser Helper Object (BHO) application or e-mail spamming agrees to immediately forfeit all Commissions earned and pull our links from their pages and BHO.

Promotion for Current Members

* Current LAD members that become affiliates and refer at least two active members per month will get a 25 % discount on transactions they make at LAD. "Active members" are new members that generate affiliate income for you from either # 1, 2, 3 or 4 above. Just send me an email when you meet this qualification.

[jdancing]

Any opinions? I'm about to implement this program "as is". Either it is great or it is just not exciting enough to bother with...

[mfishy]

It is an extremely attractive payout plan.

The key, for affiliates, will be whether you have enough items for auction to entice people to sign up. In other words, a big payout is nice, but meaningless without a solid conversion rate.

[firstmark]

Requiring members to buy or sell something before crediting the sign up and paying the affiliate will put many affiliates off.
You can do that too but it would be helpful to pay something for anyone that signs up rather they bid or not.
Other wise what can your site offer that ebay can't at $6 for each person that signs up and bids and other auction sites that just pay for each sign up regardless of buying and selling?

[mfishy]

ouch, i misread. I thought it said $2 regardless for signup.

[jdancing]

My fear is fraud. There will be those that sign up 20 different fake accounts to collect and easy $40

What would be better...

$2 for any sign up or $10-$15 for every sign up that wins or sells an auction? I figure option two would cost more in the short run but less in the long run.

Thanks for the input!

[jdancing]

Ok I am about to put finishing touches on plan. I will give $10 instead of $2 for referals when they buy or sell their first auction. Once I adjust all the settings I'll announce the plan officially on the affiliate forums and directories.

[jdancing]

Well on second thought, I think I found a problem with my thinking of "why not offer affiliates $10 for their referal's first successful buy or sell instead of $2." It would be much more of an incentive meaning more referrals..

Then I got to thinking, Joe Scam affiliate, refers two fake referrals, Joe Jr. and Joe Shmoe. Joe Jr. lists an auction worth $50 for $200 minimum bid. Since it is over priced, no one bids until the last minute when Joe Shmoe buys the auction at $200.

So Joe Scam collects $10 for Joe Jr' first successful auction and $10 for Joe Shmoe's first successful bid. Joe Scam also gets his 30% of the commission on the $200 auction for another $6 dollars.

In the end Joe Scam gets $26, I get $16 and the affiliate program company gets $4.

Is there of big danger of affiliates playing a program like this?

Other then moving the first time buy /sell back to $2 to remove the scam incentive, what are my other options?

[jomaxx]

Definitely don't set up your program so affiliates can make a net profit that way.

I'd barely even call that hypothetical scenario a scam; it's closer to arbitrage, and it's inevitable people will try it.

[jdancing]

I could put a clause in about the bonus program will be lowered at anytime if affiliates are found scamming etc... but the more clauses the more the bonus looses its luster.

I really would like to reward those that bring real buyers or sellers with $10. But too many $20 scams puts me out of business.

Maybe I start at $5 and go up frome there. Everyone though $2 was too low for a buyer and sell. I could do $2 for each registrations but there are affiliates set up that reward people to sign up for free membership programs for a share of the sign up money.

Other suggestions, keeping in mind that modifications to how the payout tracking works costs money?

[jdancing]

Well with the some slight modifications I have started the affiliate program. I went with $6 dollars per the first buy or sell. Plust the 30% of commissions and second tier stuff also..

As far as scammers, I'll keep a sharp eye out and give them the boot.

Thanks,

jl