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Before reading here the way I had expected to increase sales was by third-party agents who were knowledgeable in our business sector. If the agent introduced our software to one of their clients who decided to buy it then the agent would charge their client the standard price and shortly afterwards would pay us the discounted price keeping the difference as their commission. We, on receipt of payment from agent would release the software password to allow the customer to fully use the application and we would thereafter fully support them.
A prime difficulty with my proposed method is recruiting agents with deep knowledge of our particular business sector. My question is really to do with how best to set up affiliates for my business. The software we sell costs between $200 (US) and $700, with the best selling version costing $500. Anticipated commission payable of c.25%. Are there are recommended affiliate programs for our sort of business or is my suggested method just as good? Any comments of similar experience will be very useful.
Regards
Jonny
[edited by: JonnyWales at 6:18 pm (utc) on Nov. 26, 2002]
deep knowledge of our particular business sector
Good affiliates won't need that to promote your products, that's your end. You attract the marketers, handle the technicals and pay on time;) and you'll be laughing... of course attracting these top affiliates is the tricky bit.
Good comm.
2 tier structure
Good Cookie length
are just a few of the things these guys look for in a program.
Hope that helps!
Nick
So what do the affiliates do? Do they simply have a link from their site to mine and the affiliate software does the rest?
Many prefer a more sophisticated setup involving having the order take place on the affiliate site and the data being sent to, and handled by, the merchant.
For General "what is an affiliate" type info try the blurb on the big networks like cj.com and Linkshare.com
Nick
It can be but in many cases you are paying for access to a large number of AFM's, in your case you may not need it. Sometimes it may be better to go for a lesser known [and cheaper] company and then do the spadework of attracting the right people to your program.
This will cost very little. You can spend $20-30 and get someone to list you with all the affiliate directories. This is really free, it's only the effort.
Prepare a page on your web site that provides info about your affiliate program, pay scale, technical info, earning potential, stats etc.
Don't opt for these expensive networks unless you have a mass selling product. You could also consider advertising. It's getting increasingly cheap to advertise with so much unsold inventory around.
In a nutshell, yes. But beware of that word "simply" ... people "simply" click through from the affiliate's page to yours, but it's *anything but* simple to get new prospects to the point of wanting to click!
That clickthrough is the last link in a long chain of events on the affiliate's side. It takes significant skill, work -- and yes, product knowledge -- for an affiliate to develop appropriate pages and promote them effectively to people who would be good prospects for your products. The affiliate's task is to send new people to your site, in the mood to buy if they like what they find. After that the ball is in your court ... If you handle it well, everyone wins! :)
It's starting to click into place but I still have a few queries about how I'm going to best utilise the affiliate model. The idea of doing it myself is what I had currently thought I would do but then these questions arise :-
1) The affiliate will have a link to my site. Do I pay him a certain rate per click, or a certain % per sale, or a mixture of the two?
2) Who is to say what sales have been achieved via individual affiliates other than a tedious slog through the log files?
3) If I was to "sign-up" with an affiliate network wouldn't they be able to automatically track the clicks from affiliates and work out and process the various commissions? Doesn't this make it pretty much a pre-requisite for an effective solution?
4) My "ideal" solution (at least with my current knowledge) is to use some sort of affiliate network and then manually approach potentially interested businesses, predominently within my sector, to also sign-up as affiliates. Where can I go to get a realistic appraisal of the available networks?
Jonny
I would recommend a % of sale unless you really know and trust the affiliate. Per-click affiliate programs are tempting targets for the fraudsters.
<<2) Who is to say what sales have been achieved via individual affiliates other than a tedious slog through the log files? >>
I'm not enough of a techie to give specific advice here, but there are an assortment of programs available that will track affiliate activity for you so you wouldn't have to slog through the logs unless you want to cross-check something.
<<3) If I was to "sign-up" with an affiliate network wouldn't they be able to automatically track the clicks from affiliates and work out and process the various commissions? Doesn't this make it pretty much a pre-requisite for an effective solution? >>
Affiliate networks do a lot of things right, but their services come at a price. If your product is not suitable for the mass consumer market, it would probably be more cost-effective to keep it in-house.
<<4) My "ideal" solution (at least with my current knowledge) is to use some sort of affiliate network and then manually approach potentially interested businesses, predominently within my sector, to also sign-up as affiliates. Where can I go to get a realistic appraisal of the available networks? >>
I could only comment from an affiliate's point of view here, not a merchant's. One thing that affiliates like is the fact that Commission Junction and Performics offer combined checks so one doesn't have to meet a minimum for umpteen different merchants before getting paid.
Whether you go in-house or with a network, you will definitely need to do some work to promote your affiliate program manually. If you want to inspire affiliates to work with you, you need to be more than just another name on the merchant list.
More food for thought!
Here are a few options:
Nick
I tried to send you a sticky note, but I got an error message. Send me a sticky and maybe it would work from your end.
This kind of arrangement is very useful because you only deal with one company/person and they can send you a tremendous amount of leads. Then you can pay per sale and it won't cost you much. Some of these "super affiliates" already have affiliate program systems.
If you handle it well, everyone wins!
The merchant, especially, comes out a winner. While the affiliate gets a commission for a one time sale, or perhaps more than once if there's a cookie, the merchant acquires a customer. The affiliate has to hope that the customer will return to the affiliate's site after the cookie expires. Much more the case is that the affiliate relies on a parade of new customers.
The merchant can market directly and repeatedly to referred customers who are already familiar with the merchant's site and offerings. Therein dwells the cash cow.
Customer acquisition is one of the toughest steps in the process of internet marketing. Having a bunch of effective affiliates working on your behalf helps in overcoming this hurdle.
Of course, renewal of all customer cookies whenever a sale is made through an affiliate's site would certainly provide incentive for an affiliate to remain with a particular merchant, but I've never seen this done. Building loyalty with this sort of approach is crucial along with maintaining good relations with affiliates. That's where a good dedicated affiliate manager comes in.
It can all work, and work very well, for the astute internet merchant.
MyAssociateProgram.com
BFast.com
Ultimate Affiliate from Groundbreak.com
AssocTrac.com
QuickPayPro.com
AffiliateShop.com
Thanks for the list. I looked at a couple in depth and they seem to offer what I need and loads more. One problem I found was when doing a search for current merchants it showed only a handful of business-type products and listing their 1000's of merchants by product value indicated that the current max price was $150. My software costs on average $500 and so my initial impression is that they focus on high-volume, low-cost merchandise whereas we do low-volume, high-cost.
I'll search on to see if I can find a more appropriate offering.
Also, what are the risks of signing up? Do they tend to fold regularly, meaning disruption in finding another?
Cathay Pacific Airways is one of the clients listed on their home page so I'm certain that they can accomodate high ticket items.
As for folding...
"The one unchangeable certainty is that nothing is unchangeable or certain". ~ John F. Kennedy ;)
That being said, they've been around for quite some time, have a good deal of respect in the industry, and with clients like Mobil, Cathay, KowaBunga!, and AccuWeather I'd say they're not likely to be disappearing anytime soon.
I've opted for a 2-tier system and wonder what ranges of commissions are paid. I know this is rather open-ended but I'm sure potential affiliates look at low figures and think not to bother. Similarly, what is the realistic maximum that is offered without appearing unsustainable. We produce business software and currently have high margin but low volume and so could in theory pay high commissions.
Also, assuming we paid eg. 20% to 1st-tier affiliates what fraction is usually payable to 2nd-tier - is it 10% (ie. half that payable to 1st-tier) or more, or less?
I've opted for a 2-tier system and wonder what ranges of commissions are paid.
Depending on the products and niche I've seen everything from 5% to 60% paid on the first tier, and 0% to 20% on the second.
Similarly, what is the realistic maximum that is offered without appearing unsustainable. We produce business software and currently have high margin but low volume and so could in theory pay high commissions.
I would worry less about "appearing" sustainable, and work primarily with what is realistically sustainable. You'll want to know the Lifetime Value of your customers to establish what new customer acquisition is worth to your business and work from there. High commissions can indeed be very attractive to potential affiliates, but there are many other factors as well, such as how well your site converts visitors to buying customers, and the amount of marketing support you offer.
Also, assuming we paid eg. 20% to 1st-tier affiliates what fraction is usually payable to 2nd-tier - is it 10% (ie. half that payable to 1st-tier) or more, or less?
Based on the limited information I have from your posts, I would highly suggest emphasizing the first tier commisions. With a very targeted product that needs a deep intimacy with your business sector, I doubt you'll see a great deal of second tier commissions, and your affiliates will more than likely be looking for the highest returns on their own personal efforts.
If you're prepared to pay out 30% total as suggested above, I would recommend doing a 25% - %5 split, or even going with just a flat 1 tier commision of 30%.
Also keep in mind that as you actively build your affiliate base, many top performing affiliates (sometimes referred to as "super-affiliates") ofen expect special considerations in the way of enhanced or incentivized commision structures.
This can be a powerful selling point when you are dealing with an affiliate who can deliver a flood of targeted traffic to your doorstep.
It's hard to offer sound advice while only knowing generalities. If you'd like to offer more specifics, but would prefer not to do so in the public forum, feel free to sticky me.
I'm also thinking about not having an obvious link visible on my site regarding the affiliate scheme and therefore the only visitors will be one's I have invited. One of the reasons for this is that if potential purchasers of our software see that we are willing to offer high commissions to affliates then they will expect high discounts, which is something we rarely do other than for customers buying multiple licenses.
Any comments?
It's still worth listing your site in the affiliate program directories. You can still have a page posted on your site for potential affiliates, without linking it from anywhere on your sales pages.
Keep in mind that you don't need to accept everyone that applies, it's up to you to decide who you accept as an affiliate.
One important note... very often, your very best affiliates can come out of the ranks of your existing customer base. No one knows the benefits of your software better than those who are actually using it.
