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100% commission - How is the vendor profitable ?

by baokhau
12 replies
Lots of the vendors pay 100% commission for the affiliates. I want to know how they get profit from this element. :confused:
#100% #commission #profitable #vendor
  • Profile picture of the author scott33
    usually from the back-end from upsells, and promotion through the mailing list
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  • Profile picture of the author Troy Broussard
    This is a tactic that is more advanced. Once you have a seasoned backend system and the tracking in place to know the value that a subscriber carries for you, you can consider paying out 100% commissions or even higher. Some pay 125% or even 200% commissions in order to attract many JV's and accelerate list growth.

    Obviously, however, you better really know your numbers before you do this. Not only can you easily lose money if you don't, but the higher commission payouts can accelerate the popularity and put you paying out upfront before you've reeled in the money from the back end system.

    Having a well-tuned backend system is what separates the men from the boys in Internet Marketing. If you make more money per visitor than your competitor you can accelerate your advertising and spending to levels they can't compete with. That's the "magic sauce"...

    Hope that helps...
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  • Profile picture of the author TonyNorton
    Hey,

    What scott said.

    Seriously, too many people are focused strictly on making money with the first transaction. This is the biggest kind of mistake in my opinion. Any time you can break even on the initial sale and add to your "customers" list you should be jumping for joy!

    Think about it. You just added the absolute BEST lead possible to your list and it cost you NOTHING! Now you have a customer who knows you, likes you and trusts you (assuming you delivered good value and they're satisfied), that you can now sell other stuff to.

    And sinceit's 5X easier (and cheaper) to resell an existing customer than it is to find a new one, the benefits of this model should be obvious.

    Also you don't have to skip making any money on that initial sale, since you can and should offer upsells, cross sales etc on the backend.

    I could go on about this all day, but I'll stop here.

    Tony.
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  • Profile picture of the author TonyNorton
    Hey Troy,

    Looks like you beat me to it! LOL

    I particularly liked this bit...

    Having a well-tuned backend system is what separates the men from the boys in Internet Marketing. If you make more money per visitor than your competitor you can accelerate your advertising and spending to levels they can't compete with.
    I couldn't have said it better myself.

    Tony.
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  • Profile picture of the author DonMarketer
    It's a system used by more experienced internet marketers. They understand the LTV of a customer and are more than happy to pay others to do the donky work for them. The product owner wins in many ways. It helps them build their list, them upsell them on all range of other products and services.
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  • Profile picture of the author steveniam
    These vendors are more interested to get leads and are looking at back-ends. Once they capture the buyers email addresses they will become their potential life-long buyers. They are looking at long-term.

    Originally Posted by baokhau View Post

    Lots of the vendors pay 100% commission for the affiliates. I want to know how they get profit from this element. :confused:
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  • Profile picture of the author HelpingYouBeAnExpert
    You can pay 300% and make a profit if you understand and implement a great converting funnel which less then 1% of people in the IM will ever do.
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  • Profile picture of the author Anonymous Affiliate
    As others have pointed out, back-end funnels are the reason as of why it's OK to offer a 100% affiliate commission on the front end.

    However there's another reason to do it: when you start out fresh in a new niche, you have to get the word out about yourself and your brand/products/services. 100% affiliate commissions can get you that initial push to establish yourself within the niche.
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  • Profile picture of the author Alex Copeland
    It's already been said as to why people do this, it is much easier to 'sell' someone something for free at first and build a reputation with them which then equates to sales later on down the line.

    If you think about it then a OTO or upsell after a free product is this in action straight away, they sign up for something for free and then straight after are offered something for a cost.

    I can't remember who did the case study I read (there are many anyway) but it has been proven time and time again that you can make more money with a free front end than with a paid one as they are now on your list and much easier to sell to.
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  • Profile picture of the author Andy Fletcher
    You can pay 100% commission for the same reason you pay for advertising. You expect to make money off the resulting traffic.

    If it helps, think of a 100% commission product as advertising spend rather than a typical product.

    Andy
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  • Profile picture of the author sbucciarel
    Banned
    I promote a product and get 100% commissions from it. I had to buy the product at $200 to get that. There was a cheaper version with less commission percentage, but I went with it and every time someone signs up (and it's a recurring payment), I get the whole payment. The vendor sells via his list, so that's where he profits.
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  • Profile picture of the author ZILLIONAIRE
    the same question used to baffle me when i first started IM. it all comes down to your sales funnel.
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