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How much money do I need to offer you to become an affiliate of mine?

by Mac the Knife
26 replies
I am having a gentle disagreement with my business partner and I need some info from some of the experienced affiliate marketers here, REALLY could use the knowledge!

I am in the process of launching a service. We have a front end product, and a backend training membership model. Our pricepoints are $49, $79, and $129. The product has a lot of interest and all signs are point to it being a HOT commodity (have already made sales pre-launch and have about 5 affiliates with databases of over 50,000 each ready to roll!)

Now, because this is BRAND new, and we really don't have any serious proof sources, I was thinking we should offer upwards of 40% to affiliates. My partner believes 20% is more than fair. Now, our potential market is HUGE and the affiliates see that as well, but still, 20% of our HIGH END product is about $26. Even if MOST sales come from our $79 product, affiliates walk away with a whopping $16. Now, our PROFIT MARGIN is high...we make money giving away 60% (or more)

So, my dilemma of course is, what is fair, what do affiliates look for, etc? In addition, how much promotional material is expected from affiliates? If we handpick affiliates who have tens of thousands of people on their list, is text for their newsletters enough to get started with without having to do banners and other graphics for the affiliate program?

Thanks in advance!

Mac the Knife
#affiliate #mine #money #offer
  • Profile picture of the author EvcRo
    I wouldn't raise a finger for a 20% of a under 200$ product. Whopping 16$ ? If you got any little tiny competition i would promote them.

    Any affiliate with a list, assuming he doesn't spam his list every day, would think very hard before sending out a message for a whooping 16$ while there are tons of things to promote for more lucrative products. I know i won't, i don't spam my lists and i choose what i send carefully.
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  • Profile picture of the author ozduc
    I think most affiliates will look at the amount they make per sale. So at your low end product of $40 @20% =$8 and of course the middle product wow a whopping $16. Some millionaires will be made with that one and of course the billionaire maker at $26 a pop for the big one Wow!.
    My advice would be to offer 50-75%.
    After all, your percentage left would be money you would not otherwise have made and having affiliates with lists as big as you say will help to increase your list for sales of future products.
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    • Profile picture of the author David Bryant
      Hi Macurdy...

      You may be looking at this from the wrong angle. It isn't a question of how much money you can offer an affiliate per sale. The question comes from your potential affiliates, and they are asking..."How much money is your product going to make me?"

      Serious Affiliates are looking for offers that convert...period.

      In some cases, such as listing your offer on CB, you may find that 50% is a magic number to be above, but that is because of the way many affiliates choose (or have been taught) to use CB's search forms.

      Here are a few tips that can help you:

      -Test your affiliate recruiting campaign just as you would your offer, or the market that you have targeted. Start with a lower percentage and raise it slowly to see if you gain any momentum in accruing affiliates.

      -Take care to note the different methods that your affiliates will use to market your product. For example, if Adwords is a good candidate, then be sure to price your product in such a way that affiliates can run a profitable campaign; such as being able to break even at 100 leads per the cost of a medium competition keyword.

      -Make sure that your sales page graphics, and layout, are appealing and professional. A poorly designed page will quickly deter an affiliate, often times more quickly than it would a prospective buyer.

      -Be sure that your copy is as finely tuned as possible. An experienced affiliate will read your copy. If your copy has the appeal to create a "need to buy" from a cold reader, then the affiliate will certainly pick up on this, and will be more inclined to choose to promote you.

      -Have top quality sales materials ready for your affiliates; such as banners, product reviews, graphics, squeeze pages, and so forth.

      -Open a dialog with your affiliates. Many fail at doing this, but you will find that taking the time to converse with possible and current affiliates will help them to decide to come aboard, and most important...to stay.

      -Offer your product free of charge to an interested affiliate. Some product creators shy away from this and even cringe at the thought, but I assure you, it will always be to your benefit in the long run.

      -Offer sales incentives to your affiliates. Have contests, or give prizes away at certain tiers of sales.

      The hardest part of finding affiliates is on your first product. However, if you follow the tips above, and you produce quality products, then you will find that many of your affiliates will be more than happy to support you in your next venture.

      Good luck.
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  • Profile picture of the author sloanjim
    40%+.....i wouldn't do it for less. The marekting is 80% of the sucess not the product. You are right.
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  • Profile picture of the author breadtoaster
    I do think 50% (low, but reasonable) to 75%
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  • Profile picture of the author Bill_Z
    Speaking as a vendor mainly, I agree with you Mac. Try to convince your partner to look at the advantages of establishing long term partnerships with these affiliates by offering them more commission, and not so much of the short term 'look what we are losing per sale'. I know he doesn't like giving up so much profit, but try to get him to also understand that these buyers that come from the affiliate list would make him 0 if he didn't have them.

    We just recently raised our commission on Clickbank from 50% to 75% to attract the bigger affiliates.
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  • Profile picture of the author breadtoaster
    Yes, me as a affiliate marketer look for higher profitable commission rate too
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  • Profile picture of the author JayXtreme
    50% upwards.. I wouldn't touch it for any less

    Peace

    Jay
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  • Profile picture of the author Andy Fletcher
    Are you talking about a percentage of the single sale frontend or the continuity backend or both?

    Continuity offers can pay a lower percentage than single sales. If your continuity offer is good enough consider offering 100% (or more) on the frontend and then making your money on the back.

    Remember, you are not giving away X% of money that you would've made anyway you're gaining 100 - X% of money you wouldn't have had at all so be as generous as possible and cast a wide net. Then make your money on the backend.
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    • Profile picture of the author Alexa Smith
      Banned
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      • Profile picture of the author Gary King
        Originally Posted by Alexa Smith View Post

        Sounds to me like this may be exactly the sort of business model to adopt here. I understand that such arrangements are widespread and can be very successful for all parties.
        This is a proven model... CPA offers do it, the guy on TV that "gives" away his computer training for only shipping and handling because "he's sure that once you try it, you'll come back for all your training".

        The risk comes in that you have to convert well enough to make the continuity worth the up-front loss.

        All success.

        Gary
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  • Profile picture of the author lowjo
    What is the long term value of your customer?

    That's the question I would ask myself, or my partner. Short term cash or long term business.

    Plenty of companies will readily take an initial loss to get a customer. In fact not too uncommon for folks to spend money to obtain an email lead...heck CPA networks spring to mind.

    Many programs offer 100% affiliate commissions. I belong to one which pays 250% on the front end - they take a $225 loss on each customer I give them!

    Because average lifetime value to them is well into the thousands.

    Got to make it worth the effort for your affiliates, got to balance your immediate and long term needs.

    Cheers,

    Jonathan
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  • Profile picture of the author Mac the Knife
    Wow! Thanks everyone! I swear, I posted this and then went to bed and woke up to all kinds of good info, ideas, and insight! This product IS going to have a recurring revenue model of backend training...but we were hoping to go for a simple $9/month continuity model but I am thinking maybe we should open that up a bit and try to offer affiliates a piece there as well. Again...beginners with this model. Thanks for everyone's suggestions and insight!

    Mac the Knife
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    • Profile picture of the author butters
      Originally Posted by Macurdy View Post

      Wow! Thanks everyone! I swear, I posted this and then went to bed and woke up to all kinds of good info, ideas, and insight! This product IS going to have a recurring revenue model of backend training...but we were hoping to go for a simple $9/month continuity model but I am thinking maybe we should open that up a bit and try to offer affiliates a piece there as well. Again...beginners with this model. Thanks for everyone's suggestions and insight!

      Mac the Knife
      Give affs 100% on the front end and a recurring 50% on the back end... This way, 100% is sooooo attractive, your get much more affiliates and 50% is just an added bonus for them. They will constantly get money from you and they would have done only little work but this means they will promote for you again and will recommend others to promote for you. Remember for every customer they send you, they are giving you a list basically, this list can then be used for other products where you can make a lot more money on.
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      • Profile picture of the author JohnMcCabe
        Mac, here's another piece for the stew...

        Who says you have to pay all of your affiliates the same rate?

        You could offer a basic commission, and if someone shows up as a star, offer them more to keep them.

        I also agree with David Bryant's observation - I'm far less worried about the commission rate than I am about how much money I'll be making. It's one reason I often choose an item from Amazon over one from Clickbank - the commission from Amazon may be lower, but sometimes conversions are far easier.
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        • Profile picture of the author Gary King
          Originally Posted by JohnMcCabe View Post

          Mac, here's another piece for the stew...

          Who says you have to pay all of your affiliates the same rate?

          You could offer a basic commission, and if someone shows up as a star, offer them more to keep them.
          Excellent thoughts... helps when soliciting bigger names to offer them a cut above the standard.

          After you have launched, identify those that are the best sellers... then, you can offer them another bump (or retro-activate it and cut a separate payment if necessary) to get them to re-blast their lists.

          All success.

          Gary
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          • Profile picture of the author dspeake
            I would say 50-70% however if the product offers a recurring commission you can get away with offering at the lower end of the scale, half of nothing is still nothing better to be making more sales and taking back less profit.
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  • Profile picture of the author JonathanBoettcher
    Yeah, I agree with John - why not set performance tiers?

    Also, I can distinctly remember finding products that offer commissions of 20% and I even told some friends about them so we could have a good laugh.

    In most cases, 20% shows you're just not serious. And the funny thing is, they say those were 'industry leading percentages' - with a full time affiliate manager you'd think they wouldn't be quite so naive.

    You can't look at the commission as lost money... look at it as how much you're willing to pay to gain a customer - especially as you said you have a recurring revenue model. Remember, without affiliates, you're dead in the water. Anyways....

    Sounds like you've got a winner on your hands - all the best with that!!!
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    • Profile picture of the author opiel
      20% is a joke. If your partner thinks it is more than fair... have him promote your product and walk away with a whopping $16 per sale.
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  • Profile picture of the author Sparhawke
    Personally I would not even consider less than 70% as an affiliate, what you have to remember is that you as the owner are probably still going to make 30% on everything which if you have 1000 salespeople will make you a fantastic amount of money.

    If I get 70% of a $100 sale each day as an example I have $70, quite a decent living and I am fairly happy with that, I am not struggling and stressed out. If you have 1000 people all making a sale a day you are getting $30,000!!!

    Isn't this better than only getting 10 people to sell for you because it is not worth it if your partner believes they are not worth paying?

    $30,000 per day at 30% or $700 at 70%, do the maths.

    Reward your sales people and don't screw them over is the motto, if you make them happy with what they get then they will sell more.
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  • Profile picture of the author Sparhawke
    It is the Superman 3 principle, you can get a far deal more by taking a penny from the many than the pound from the few...plus you can keep doing it and people will gladly let that keep happening.

    Get rid of your business partner, he sounds like an idiot.
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  • Profile picture of the author Steve Powers
    Of course they search for profit.Since your brand is new,I prefer to agree with your idea.But How can judge whether it's suitable or not?I don't think it's an easy problem.I only want to say that,keep it go and then the cake will be bigger and bigger.At least,you should make sure that you have enough power to make the cake.And that's enough.
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  • Profile picture of the author Mac the Knife
    Good points. I like the idea about offering the VIP affiliates more. I know we have a good handful of people right now who have massive lists (I am talking owners of MAJOR mlm companies) and they want to be EXCLUSIVE...I mean, if a company could give me 1000 sales a month, I can see a reason potentially for that, but simply offering them MORE since they are major producers, that seems to offer a potentially PERFECT solution.

    Mac the Knife
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  • Profile picture of the author TheRazor55
    100% with evcro.

    one problemo though... I really dont know what is it that you will be selling. But assuming it's an ebook on the front end, you can bet 20% is NOTHING, specially on a $47 price point. Bump it up to 60%, have a good copy on both your front and end sales pitches, and now we're talking.

    solid piece of advice mac - dont be afraid to give more upfront to your affiliates, you will still have a huge database of buyers you can sell to after they make the purchase, so dont really sweat it all upfront.

    btw if you need an hand on your product launch get an hold of me on skype.

    TheRazor
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