Advice needed on super-affliate & affiliate recruiting

Thank you for taking a look at my post.

I have a lot of online/offline marketing related experience, but have never needed to attract others to become affiliates to resell anything. I would appreciate any thoughts, comments and feedback.

We are launching a unique public relations (marketing) service for businesses with a $495 price point (not SEO related). The target market are entrepreneurs, small/medium size businesses, insurance agents, real estate agents, auto dealers, legal professionals, financial planners and medical professionals (basically, professions that make money and have $495 to spend to help increase their business awareness).

My questions include:

1. If we had $100 to pay for each sale, how would you suggest splitting the money between super-affiliates and affiliates? We don't have any and my thoughts are to offer $50 to super-affiliates and $50 to affiliates so there's a heavy incentive for both but perhaps it should be $25 to super-affiliate and $75 to affiliates. Any thoughts?

2. Aside from obvious ways to market to recruit super-affiliates and affiliates (e.g. affiliate networks, adsense, related forums, etc.) what creative methods have worked for you or others you have seen recruit?

3. We have the ability and ethics to pay super-affiliates and affiliates, but I completely understand how people wouldn't know and shouldn't trust. What ways should we consider to help establish / assure that we are for real and won't rip anyone off?

4. How much of a difference in unit sales do you think it makes if we priced our service at $495 vs. $395? For example, if we could to sell 100 units at $495, how many units do you think we would sell at $395? I doubt it makes a difference, but this is a service that requires us to spend a good amount of money for every order and it isn't something like link building or an ebook that costs very little. There's actually items we produce and deliver. I would be happy to elaborate, but I think (maybe wrong?) that I am not allowed to give details like that here.

5. For a service at this price point and with the $100 split the way you think, what do you think the average affiliate would sell per year? We are thinking 2 packages a year, but have no idea what's typical if there even is a 'typical.' If we had say 100 affiliates; any educated guess on how many packages they would sell per year?

6. I probably put all of you to sleep with this long post already, but I'd love to hear any other thoughts, comments and advice you are willing to share (whether it be on this thread or by PMB).

Thanks so much for your time and consideration.

Happy thanksgiving to those in the U.S. too!

you are not making a lot of sense.

1) the $100 is the commission paid to people that sell this product. why are affiliates and super affiliates splitting this money?
Affiliates are people that sell your product... super affiliate are people the EXCEL at selling your product... if you normally pay $100... then super affiliates will be expecting more than that after so many units are sold.


2) I have no experience answering this one.

3) That is part of the game. You start new and people do not trust you. Its an up hill battle. But with time, you will gain the affiliates trust. There is no shortcut to that.

4) There is no way anyone can answer that question without pulling an answer out of their azz. In fact, your research is what would answer that question, not the affiliates or us on BHW.

5) I do not know your product, but if they are only selling 2 per year. Then there is no way they would be super affiliates.



Good Luck

Virus1 - thanks for your reply.

Ok, so I am using the wrong language. When I said "Super-affiliate" I was thinking that was a person who would recruit affiliates and then get paid on what they product. So, if "you" got 10 other people to sign up as affiliates, then you would get an override on whatever the affiliates generated. So if the 10 affiliates generated one sale each, they would each get say $50 and you would get $500 if the payout was $50 for each sale too. I imagine there's a proper word for having affiliates recruit other people. Easier if we have 10 people recruiting affiliates than if we try to do it all ourselves.

Hopefully that makes more sense. Thanks for pointing out the confusion!

You're thinking of Tier 1 and Tier 2 affiliate commissions. Tier 1 would be the customers the affiliate generated and tier 2 would be the customers that were referred by affiliates underneath the original affiliate.

I would expect to get paid $100 or more for a sale of a $495 product. That's a tough sell. Considering I can get a $100-$200 commission on a $25 minimum purchase for adult webcams, casino, forex etc (all niches for which there is a large amount of existing traffic and a large buyer market), then if I've got to convince someone to fork out $495 then you'd better be paying me through the nose.

Autumn,

Thanks for your input. I understand your point about how some niches can pay a relatively high dollar amount because of the nature of their service (e.g. adult, forex, etc.) and especially when they have a recurring revenue from each customer.

In your view, how much of a difference would it make if we had a $395 price and still paid out $100? The issue with our service is that there are actual items we create & deliver as well as a professional service that is highly customized so our direct cost per sale is about $200 excluding any sales commissions. If we paid $100 out, we'd be left with about $100 for ourselves to cover our costs and make a profit. We have a professional team with 100+ years of collective experience (which would be visible to affiliates and to potential clients), so this can only really work out if we can get enough traction at a minimum of $395 per sale.

Do these facts influence how an affiliate would view our offering? I imagine affiliates don't really care about anything except what they would make for themselves, but I think if people saw the details of what we are doing, the fact it is totally unique and understood the value to the target customer; am I naiive to think that makes much of a difference?

We are obviously not selling televisions, but if Amazon were to sell a $500 TV, they clearly couldn't pay out $100; but yet they have hundreds of thousands of affiliates.

Thanks so much for your thoughts!

Amazon might have tens / hundreds of thousand of affiliates but few of them are super-affiliates. I'm sure there are a few people out there making big volume out of Amazon (simply because Amazon has so many products to promote) but most big dog affiliates eschew Amazon because the commissions are so low. I suspect the majority of Amazon affiliates with an Amazon widget on their blog or whatever only make beer money.

You're 100% correct that as a professional affiliate I only care about what's in it for me, ie. how much money I will make promoting your offer compared to alternative offers. The end buyer's experience is largely irrelevant to the affiliate and the quality of your service is only relevant as far as I can use it as a selling point. There are a lot of good products out there (from the consumer's point of view in terms of price and quality) but I won't promote them because they're not geared up to make money for me as an affiliate. I only care that your product converts, that I get a good payout, and that you actually pay me.

Price wise you would have to split test your price points to find the most profitable one. In terms of overall profitability you might find that selling the product at $395 made you more money than at $495 because of increased conversions. You might find that selling it for $995 made you more money overall because even though you sold less units, the increased margin more than made up for it. You might find that $495 or $785 converted better than $395 because of psychological cues about quality or value. You just have to test rigorously.

From the affiliate's point of view, expensive items like that fall into one price category: "a lot." It doesn't make a huge difference being $395 vs $495 because for a specialized expensive service there are a multitude of other factors affecting conversions than just the price. I already know it is going to be a tough sell but if the sales page and conversion chain is convincing and there isn't too much competition in the niche then some affiliates will give it a shot.

Anyway my point is not to skimp on the payouts if you want to attract affiliates. It's a partnership; you do the backend work and deliver the product and the affiliate delivers the customers. Without the affiliates, you have to do customer acquisition yourself and your costs are effectively doubled (or more, because an experienced marketer will be able to get leads more cheaply and efficiently than you can). Without customers you are dead in the water. You might have steep costs on your end, but the affiliate also has steep advertising costs to cover out of their end.

In many industries the affiliate makes more of a cut than the end merchant. You also have the opportunity to make more money on your own backend by upselling your customers on other products and services and of course the affiliate never gets a cut of that.

Generally the 80/20 rule is more like the 95/5 rule with affiliates, and 5% of your affiliates will deliver 95% of your sales. Rather than making your own affiliate program (and dealing with the concomitant fraud and other issues) you might find it more efficient to just partner with an existing affiliate network.

Autumn,

Thanks for your very thoughtful and detailed response.

I haven't found any other service offering similar to what we are hoping to sell through affiliates and we have a set of unique skills that makes it unlikely others would successfully replicate, so perhaps we have an edge.

Given my general description (e.g. price point, type of service, gross margin, etc.) which of the affiliate networks do you think would be better for us to go with?

Also, this may be a silly question but how does a company test various price points within an affiliate network (or did you mean another way)? Meaning, if we had 10 affiliates selling at a $395 price point, 10 at selling $495, 10 at selling $595, etc. - how is that done?

Many thanks.