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A little advice about affiliates

by rkcc4
9 replies
I have a client who has a traditional business, they usually sell through resellers but this is a declining market and people seem to want to deal direct via the internet.

They have build a great site that can take orders etc online.

I have recommended they redefine their route to market and use affiliates to bring traffic to their sites. I have three questions...

1. Would affiliates be interested in promoting a business that offers a low commission of say 5% when the typical sale value is around $8k?

2. Would they be better off using someone like Trade Doubler to manage their affiliates including some sort of accreditation or should they just manage it themselves and use something like Post Affiliate Pro/Network?

3. Would they be best to recruit local affiliates or take advantage of the world talent.
#advice #affiliates
  • Profile picture of the author rickfrazier1
    Given that 5% of 8,000 is $400, I'm sure someone would bite, or at least try.

    However, whether people would want to promote is more likely to be determined by WHAT is being sold/promoted.

    From the perspective of the business owner, if he has established resellers, what happens if he opens another potential source of leads? Does his established reseller base abandon him? This has got to be going through his head whenever you bring it up. If he can't be certain of keeping his existing sales channels while adding another, he is very unlikely to make any changes for fear of losing more business.

    What kind of business is it? If you are an affiliate for Amazon products, the commission isn't much more at best, and for much lower cost items.

    Depending on the product, there can be a huge up-front time investment to generate a sale. Some products just aren't sold like commodity items.

    Take for example, solar electric installations. The sales cycle on these is more than just presenting an interesting Return On Investment scenario. There are also location issues, installation, the prevailing situation with the public utility (if you are selling grid intertie), and the relative ease of operation and/or maintenance down the road. Each of these must be addressed and overcome before you are likely to see a sale. There are numerous products with similar issues in the sales cycle...
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    • Profile picture of the author rkcc4
      Originally Posted by rickfrazier1 View Post

      Given that 5% of 8,000 is $400, I'm sure someone would bite, or at least try.

      However, whether people would want to promote is more likely to be determined by WHAT is being sold/promoted.

      From the perspective of the business owner, if he has established resellers, what happens if he opens another potential source of leads? Does his established reseller base abandon him? This has got to be going through his head whenever you bring it up. If he can't be certain of keeping his existing sales channels while adding another, he is very unlikely to make any changes for fear of losing more business.

      What kind of business is it? If you are an affiliate for Amazon products, the commission isn't much more at best, and for much lower cost items.

      Depending on the product, there can be a huge up-front time investment to generate a sale. Some products just aren't sold like commodity items.

      Take for example, solar electric installations. The sales cycle on these is more than just presenting an interesting Return On Investment scenario. There are also location issues, installation, the prevailing situation with the public utility (if you are selling grid intertie), and the relative ease of operation and/or maintenance down the road. Each of these must be addressed and overcome before you are likely to see a sale. There are numerous products with similar issues in the sales cycle...
      Hi Rick, you are spot on, they are of course worried about their existing channel, but I don't think they can afford to depend on a declining route to market. Their resellers are going bust left right and centre. If they don't change with the times they will do down with them.

      I have recommend a complete review of their channel with tiers and also a credit of direct sales that are not delivered by affiliates and partners to a joint marketing pool.

      $8k is probably a typical spend, they have some that are double that and more.

      They operate at the high end of their market and are only interested in customers in the UK.

      Now they could go create a blog and go around doing all the donkey work but I feel that there are many more capable people out there who could give better results.

      I don't think this is commodity sale, more like niche blogs promoting their offerings. There are some clear benefits of dealing with them and any professional marketeer would be able to promote these.

      Personally I think this is the only way to go, they can either watch their business sink because customers are buying their type of products on the web and their resellers are either going bust or being acquired (which risks them being dropped).

      I am not sure if they need hundreds of affiliates, perhaps just 10 or 20 carefully chosen who can demonstrate their ability to give constant attention. When I see the amount of work people do for tiny commissions, seems like a no brainer when there is such a high ticket product.

      For anyone that knows the UK market it is a bit like HMV a high street record shop. They have 600 stores and keep shutting 10% every year because customers are buying music, games and stuff over the internet.

      HMV have to wise up and start selling online, perhaps even acquire a successful competitor. Otherwise they will just see their results dwindle and their shareprice drop.

      Now compare HMV with John Lewis, a shop selling to affluent people, they keep announcing better and better results. There may be a recession on but the JL customer has money, the HMV customer does not.

      The customers of this company are more like the JL customer, it is just a case of attracting them. They have a pretty good idea of their demographic.

      I wonder if it might be an idea to suggest dipping their toe in the water by seeking to employ just one or two affiliates and using software like Post Affiliate Pro to start with. Then it comes down to finding the right affiliate, it something that I think is quite enjoyable to write about. I don't think it could be done by spinning articles, it has to have a personal element to it.
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  • Profile picture of the author mikeevee
    Originally Posted by rkcc4 View Post

    I have a client who has a traditional business, they usually sell through resellers but this is a declining market and people seem to want to deal direct via the internet.

    They have build a great site that can take orders etc online.

    I have recommended they redefine their route to market and use affiliates to bring traffic to their sites. I have three questions...

    1. Would affiliates be interested in promoting a business that offers a low commission of say 5% when the typical sale value is around $8k?

    2. Would they be better off using someone like Trade Doubler to manage their affiliates including some sort of accreditation or should they just manage it themselves and use something like Post Affiliate Pro/Network?

    3. Would they be best to recruit local affiliates or take advantage of the world talent.

    5% of 8000. Yes, that would interest people so long as it was something they thought would convert from their site. And you would definitely get people trying. It depends also on the competition though.

    For managing the affiliate network I would say go with Tradedoubler or similar. You get trust. With standalone affiliate deals the clients never know if its a genuine offer and if they will get paid.

    Local vs World? Well, who cares. If its internet let whoever comes to you come to you.

    Good luck
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  • Profile picture of the author McGrrrrr
    I have been selling a $300 range product for the past 5 years and the manufacturer (who drop ships for me) just said he has to cut my wholesale margin from 45% TO 20%. Well at that rate I can't make any money --so we discussed it and he decided to set up an affiliate program that pays me 20%. This was a no brainer as I already had the website and traffic. So yes - now I only make 20% --but he does all the work.
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    • Profile picture of the author Alexa Smith
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      The thing they perhaps need to bear in mind is that from the potential affiliates' perspective, they'll wonder if it can be easier to sell an $8,000 product for a 5% commission paying $400 than it is to sell an $800 product that pays $50% commission for the same $400.

      To be honest, I strongly suspect it may be extremely difficult to attract affiliates.

      Difficult to say more, without knowing what it is. But when it comes to attracting online affiliates, that's their true competition, clearly - rather than other people in their industry, whatever it is.
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      • Profile picture of the author rkcc4
        Originally Posted by Alexa Smith View Post

        The thing they perhaps need to bear in mind is that from the potential affiliates' perspective, they'll wonder if it can be easier to sell an $8,000 product for a 5% commission paying $400 than it is to sell an $800 product that pays $50% commission for the same $400.

        To be honest, I strongly suspect it may be extremely difficult to attract affiliates.

        Difficult to say more, without knowing what it is. But when it comes to attracting online affiliates, that's their true competition, clearly - rather than other people in their industry, whatever it is.
        Thanks for reply Alexa, of course you are right about their effort but I think it is like any business there are affiliates who pile high low cost items and make lots of small sales and those that really get into a high ticket item and create a series of processes that involve their time and rake in the rewards.

        I don't think they want hundreds of affiliates, just quality ones selling a quality product to a high end audience.
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        • Profile picture of the author rkcc4
          bumped to get few more replies.
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          • Profile picture of the author JohnMcCabe
            Originally Posted by rkcc4 View Post

            bumped to get few more replies.
            A word to the wise...

            Bumping threads like this is not a good idea. The mods (member or super) tend to frown on it...

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  • Profile picture of the author adelainewatson
    The most successful way to use affiliate programs is to anticipate and meet the needs of your readers. Consider why they are coming to your site. What are you providing that they are looking for? Make sure the affiliate products you are promoting provide a solution to your audience's problems.

    If you are writing about sports, don't put up affiliate ads for printer toner just because everyone has a printer and those programs have a high payout. The people who are coming to read commentary or get stats for their favorite teams aren't thinking about those things when they're on your site.

    The more relevant the ads are to your readers, the more likely they will use them.
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