by Rosalind Gardner
This week I had the good fortune to meet with a couple who own one of the dating services that I promote at Sage-Hearts.com.
The extraordinary effort they made to travel to my location to discuss business over dinner speaks volumes about the value they place on their affiliates and their program.
They certainly didn’t need to travel so far to make me aware of their care and concern.
I’ve been affiliated with their program almost since its inception, and have always been impressed by their fair and ethical partnership approach.
Right from the outset, they paid one of the highest commissions in the Internet dating service industry, and continue to do so. They share commissions on both new and recurring subscriptions equally with their affiliates.
Compare that with companies that have lowered commissions to a paltry 15% despite the increasing costs to advertise an affiliate site. Or how about those merchants that split affiliate commissions 50/50 on initial subscriptions, but not on recurring monthly fees.
Let’s look at how much the merchant and the affiliate partner will each earn, based on a fifty/fifty non-recurring split.
According to industry statistics, a consumer who buys an Internet dating service membership, will remain a member for about 6 months. If the monthly membership fee is $25, the gross revenue over six months will be $150. The affiliate’s share of the proceeds is $12.50, or 8.3 percent of the total money earned.
Considering that advertising costs usually eat about 50% of my gross income, my net profit in this particular case is reduced to $6.25, or 4.16 percent of the total. The merchant makes $137.50, and my take is $6.25. Even if the merchant’s expenses amount to fifty percent of their gross, they still earn $68.75, or more than 10 times the amount they pay their affiliates.
Is that fair?
Some may argue that merchants are entitled to a significantly higher take because they invested in the program software and have to hire staff to provide ongoing customer service.
From the perspective of someone who also owns an online dating site, software development is a finite business expense and a tax write-off. It’s not a cost that should be indefinitely borne by affiliates. If the software is written correctly, customer service is primarily self-service, as signup, initial and recurring billing are all automated processes. Hiring staff to provide timely responses to customers and affiliates costs only a tiny fraction of the proceeds, and in some cases, doesn’t seem to be a budget item at all.
The point is to know your industry both from the affiliate and the merchant perspective. If your assessment uncovers a less than equitable commission structure, get in there and negotiate a fairer deal. If the merchant won’t budge, go and find a better program.
The merchants with whom you want to do business – or have dinner – will understand from the outset that fifty percent of your sale, is better than 90 percent of no sale at all.
Article by Rosalind Gardner, author of the best-selling The Super Affiliate Handbook: How I Made $436,797 in One Year Selling Other People’s Stuff Online.