Affiliates are an often-discussed and frequently misunderstood component of any e-commerce program that has come of age since Amazon popularized affiliate programs nearly 15 years ago. Good affiliates are worth their weight in gold through the high volume of traffic they direct and, ultimately, the sales they produce. Affiliates look for certain things in an e-commerce affiliate program, so be sure that your program is attractive to them.
In the software space, successful affiliate programs can generate between 15 and 20 percent of all sales, while other companies generate virtually nothing from their affiliate programs. Then there are some affiliate programs that result in 70, 80 or even 90+ percent of a company’s annual sales! So, what makes the difference? It all depends on your business model.
Prior to joining any e-commerce affiliate program, such as Commission Junction, One Network Direct or even a company’s private program, affiliates do their research to ensure the greatest opportunity of success, which generally means being paid on sales, not leads. Here are eight questions that affiliates ask e-commerce affiliate programs before deciding to join.
- What is the cost to join? Joining an e-commerce affiliate program should be absolutely free of charge. Since most affiliate programs work on some form of revenue sharing, the success of the affiliates is pivotal to the success of the program. Programs that charge to join usually end with poor results.
- Who is the online retailer? With an e-commerce affiliate program, affiliates need to be able to select the online retailers they would like to work with. Affiliates need to know they are doing business with a reputable company. Likewise, the online retailer needs to know who the affiliate is to help spur growth by providing the affiliate with marketing materials, such as banner ads and interstitial landing pages. The more an affiliate knows about the vendor and the products, the greater the opportunity for success.
- What statistics are available to affiliates? Your e-commerce affiliate program should be capable of offering vital statistics, such as impressions, hits and sales. The affiliate interface should be available and online with real-time statistics 24/7. Additionally, robust reporting capabilities are becoming more and more important to optimize conversion rates.
- How are referrals tracked from an affiliate’s site and how long do they remain in the system? Affiliates need to have confidence in an e-commerce affiliate program to track customers referred from their site. This is the only way an affiliate can receive credit for a sale. The period of time that users’ cookies stay in the system is also important because some users don’t buy during the initial visit, but may return later to make the purchase, and affiliates should still receive credit for the sale, sometimes even up to 365 days later, based upon your program rules.
- Is the affiliate program single-tier or two-tier? A single-tier program pays only for sales that affiliates generate. A two-tier program pays affiliates for the sale, plus it also pays primary affiliates a commission on the sales generated by any affiliate signed by them. Some two-tier programs are even paying small fees for each new affiliate sponsored, similar to a recruitment fee. Please note: Two-tiered programs are rare and risky, as the quality of traffic becomes less reliable the further an affiliate distances itself from the actual online retailer.
- How much commission is paid? The commission rates found in an e-commerce affiliate program range anywhere from 15 – 90 percent or 0.01 – 0.05 percent for each hit (or click). As you can imagine, the average sales amount and hit-to-sale ratio is very important to affiliates.
- What is the hit-per-sale ratio? Currently a hit-per-sale ratio of 3 to 5 percent is competitive. This is the average number of hits to a banner or text link that it takes to generate a sale. This factor is extremely important because this tells affiliates how much traffic they must generate before they can earn a commission from a sale, and what to expect for potential revenue from the traffic affiliates are receiving to their website.
- When are commission checks issued? Every program is different. Most e-commerce affiliate programs issue payment via check/Paypal/ACH (Automated Clearing House) to affiliates once per month. Affiliates should select the program that is suited to their payment time of choice. Most affiliate programs have a minimum amount that needs to be earned in order to issue an affiliate check, the amounts are typically 50 or 100 USD/Euro. Please note: High-volume affiliates may expect to negotiate for biweekly or even weekly payment dates; it all depends on how much revenue the affiliate generates.
These are important questions on the minds of affiliates when looking to incorporate an e-commerce affiliate program into their website. There are hundreds of affiliate programs out there; this insight can help you understand what affiliates are looking for when determining if your program is right for them.
Make sure you pay attention to what affiliates are looking for in an e-commerce affiliate program to ensure the relationship is mutually beneficial. What else do your affiliates look for or ask about? What is your hit-per-sale ratio compared to the industry average?