% commission for blog site affiliates

[Morgzz]

Hey guys,

I'm looking to connect with some bloggers to promote some products I sell on my ecommerce store. I haven't reached out to them yet as I'm first trying to get an idea about the whole process. Some of these bloggers already feature links to some of my competitors, some don't.

So, I'm basically wondering what type of sales commission I should be offering initially and also how high to go if they asked for more.

Most products I sell have around a 40% margin on them.

Any advice is greatly appreciated. Cheers

 

[Graybeard]

You have to consider your markup after your COGS; less your ad /or customer acquisition expense -- your affiliate compensation will replace this.

How do you plan on paying your affiliates?

1. customer reoccurring sales revenue; or,
2. for one time customer acquisition

Do you have enough business history to calculate the Customer LV (Lifetime Value)?

**without knowing the real numbers 8% to 12% on a referral based sale and one time payment. This also greatly depends on you and your product's merchantability. <<< difficulty of achieving a sale CR etc...

 

[hacxx]

If is one time purchase then referral should get compensated 5% or 10% from the value. You said that is 40% margin then 35% to 30% for you.

Note: Re-invest to grow sales.

 

[T J Tutor]

Offering commissions for a product sales is going to require a significant amount of your net on a product. As well, the price of a product will definitely have an impact on whether an affiliate will have interest in promoting a retail item. Low cost items bring low commissions, high priced items will bring higher commissions which will effect the quality of an affiliate and the extent of their interest.

 

[Morgzz]

You have to consider your markup after your COGS; less your ad /or customer acquisition expense -- your affiliate compensation will replace this.

How do you plan on paying your affiliates?

1. customer reoccurring sales revenue; or,
2. for one time customer acquisition

Do you have enough business history to calculate the Customer LV (Lifetime Value)?

**without knowing the real numbers 8% to 12% on a referral based sale and one time payment. This also greatly depends on you and your product's merchantability. <<< difficulty of achieving a sale CR etc...

Thanks for your insight Graybeard.

I don't yet have enough business history to calculate the customer LV but it's something I'll definitely keep in mind. As for paying affiliates, I was thinking as one off payment but open to recuring sales for a period of maybe seven days or so. I'm just getting started with affiliate marketing so I've still got a lot to consider. Cheers for the input.

 

[Morgzz]

Offering commissions for a product sales is going to require a significant amount of your net on a product. As well, the price of a product will definitely have an impact on whether an affiliate will have interest in promoting a retail item. Low cost items bring low commissions, high priced items will bring higher commissions which will effect the quality of an affiliate and the extent of their interest.

Thanks T J

I'll take your advice on board in terms of finding quality affiliates. I'm thinking I can offer a slightly lower percentage on higher cost items but will have to sacrifice more to attract affiliates to low cost items, unless I can prove high product turnover... does that sound right to you?

 

[Morgzz]

If is one time purchase then referral should get compensated 5% or 10% from the value. You said that is 40% margin then 35% to 30% for you.

Note: Re-invest to grow sales.

Thanks Hacxx

I was thinking around the 5-10% mark so it helps to hear I was in the ball park. cheers

 

[T J Tutor]

Thanks T J

I'll take your advice on board in terms of finding quality affiliates. I'm thinking I can offer a slightly lower percentage on higher cost items but will have to sacrifice more to attract affiliates to low cost items, unless I can prove high product turnover... does that sound right to you?

I understand your thinking, but keep in mind the Amazon affiliate program. That is a functional and successful model and even they are having a struggle keeping it alive due to competitive pricing drive profits down.

I would consider paying affiliates for successful traffic. Maybe a CPM, or hybrid CPA maybe.

Much of this will be reliant on your current volume of traffic and conversions as a baseline by which to measure a small ALPHA or BETA test with affiliates.

 

[Morgzz]

I understand your thinking, but keep in mind the Amazon affiliate program. That is a functional and successful model and even they are having a struggle keeping it alive due to competitive pricing drive profits down.

I would consider paying affiliates for successful traffic. Maybe a CPM, or hybrid CPA maybe.

Much of this will be reliant on your current volume of traffic and conversions as a baseline by which to measure a small ALPHA or BETA test with affiliates.

Ok, thanks. CPM is also an idea that I hadn't considered yet. When you talk about CPA, are you referring to acquisitions as sales or can it mean something else?

 

[Graybeard]

You need an affiliate platform that is known and trusted if you want to pay CPA to affiliates.
Wordpress and woocommerce with some cheap unknown affiliate tracking program is something that any experience marketer will not find acceptable.

 

[Morgzz]

You need an affiliate platform that is known and trusted if you want to pay CPA to affiliates.
Wordpress and woocommerce with some cheap unknown affiliate tracking program is something that any experience marketer will not find acceptable.

Are there any that you would recommend? Cheers

 

[T J Tutor]

Ok, thanks. CPM is also an idea that I hadn't considered yet. When you talk about CPA, are you referring to acquisitions as sales or can it mean something else?

The Cost Per Action can be one of many actions. A sale, a click, a form submit, a contact request, newsletter sign up, registration, etc.

 

[Graybeard]

to promote some products I sell on my ecommerce store

TUNE/HasOffers has a good interface $800 mo or so
NATS has a good reputation (generally) widely used in Adult
These two are Blue Ribbon SaaS

Tune has excellent filtering and traffic quality checks from what I saw a while back. This can save you a lot in the long run.
I have always worked with custom developed solutions but they are for large-scale operations as they require development and maintenance developers on staff.

You should read through this What is Affiliate Marketing? (START HERE) so you understand the terminology

If my average customer pre-tax lifetime profit is $500 then could I pay $270 for the one time sale of a customer by an affiliate? Is the customer lifetime 4 months or 18 months and what are my GEO Medians both customer pre-tax lifetime profit and the churn (the customer lifetime). You need a few years of data to establish these metrics.

This is similar to the front-end loading of a commission that an insurance company pays to an agent for writing a policy --this has been done for many years.

The advantage in using this PPS (pay per Sale [@one time only per customer]) is that the payout is big and an affiliate can afford to buy a lot of good quality advertising. The hazard to you is that you need to be right on your data and metrics; then also market conditions down the road can change your anticipated return for the revenue spent by the acquired customer.

The other advantage to the affiliate is that he can't get shaved on his referral customer he sold on a long term reoccurring revenue deal.

If you don't have 2 or 3 years of sales data for your customer base you will be working blind and strictly on a per forma accounting basis. In that case, either avoid acquisition/PPS compensation altogether or make the program a *beta* subject to change on a 10 day notice basis --up front and spelled out clearly to avoid any conflicts.