Chapter 10. Step Seven—Paying Your Affiliates

Chapter Summary

How you pay your affiliates and when you pay them are two important elements of an affiliate program. You’ll find that affiliate payment plans can vary considerably, depending on your strategy to attract customers and the type of affiliate program you are running—pay-per-sale, pay-per-lead, pay-per-customer, pay-per-click-through, two-tier, or residual revenue program. When you pay your affiliates is also an important part of your payment plan. When to pay them takes into account how often you cut checks to affiliates, what the minimum check amount should be, any thresholds they must meet before being paid at all, and whether affiliates should be paid at higher levels as they generate higher sales.

You must be aware of the red flags that can signal affiliate program fraud. Although affiliate marketing fraud is not a big problem as of yet, it’s only a matter of time before unscrupulous affiliates make use of software to garner fraudulent payments. By monitoring your program stats frequently and analyzing them closely, you should be able to protect yourself from affiliate fraud.

If it can be sold online, then there’s probably an affiliate payment plan designed for it. Besides commodity products, there are seminars, credit cards, merchant accounts, marketing programs, advertising—even real estate—sold through affiliate programs today. And although there’s very little that can’t be sold or acquired through an affiliate program, there are some basic rules to keep in mind when designing an affiliate payment plan.

Compensation plans are as varied as affiliate programs themselves. They range from a 15% commission on some Amazon books, to 1% on Dell PCs. On the financial services side, LendingTree (www.lendingtree.com) offers up to $14 per qualified application and NextCard (www.nextcard.com) offers $20 per enrolled card-holder. Consumer retailers such as FogDog (www.fogdog.com) offer a fairly typical 5%.

So when marketing a product or service through an affiliate program, you must think about the type of affiliate payment model that best fits what you are selling. Every affiliate payment model does not work with every product or service. Some models work better than others do. For instance, does your product or service lend itself more to paying for each sale or does it have a long sales cycle more suited to paying affiliates for sales leads?

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