How to avoid Conflict with your Affiliates
All Change Please
So you have an affiliate program and you are called IAMAMERCHANT.com, your affiliate program bumbles along and sixteen months later you decide to change your name to IAAM.com. You have spent a lot of money on a branding agency (don’t we love those guys, tip don’t waste your money, ask your staff, friends and customers or even an external graphics agency, it’s cheaper. Why would you be asking a complete stranger who knows nothing about your company anyway) You now have a new logo and a new domain name, how are you going to get your affiliates and customers to swap over to the new website? First of all put your self in the affiliate or customers shoes for a moment.Remember that time you went to the supermarket, the one where you shop all the time.You walk to a particular isle that you know is where that product is located and low and behold, it’s no longer there! They moved it! So, now you have to go and find where they moved it to. Think about your emotions when you first found out that they had moved that product. Surprise? Confused? Frustrated? Did you maybe give up and think ok, I don’t need the product that badly, Ill give it a miss? Were you annoyed?
Now let’s go back in time a bit, imagine you are en route to your local supermarket, the one where you have been shopping at for ages, you get there and the entire building is gone! What would be thinking then? Why were we not told? Where did it go? What do we do now?
The above is how your customers and affiliates will feel if you don’t plan ahead. We are by nature creatures of habit and routine, we like familiarity, we like to know where things are, we feel safe and secure with “familiar”. So website changes like navigation around your site, if you have to change it, give clear directions. A new domain name, give advanced warnings to every one.
There was a recent case where one merchant did not change their domain name, but changed the linking urls (example) www.somemerchantwebsite.com/aproduct/an/item.asp to www.somemerchantswebsite.com/newcategory/newproduct/productid23.asp they did not tell any one and just went ahead and did it. Was ok for their customers but they did not factor in their affiliates. So take a few seconds to think how a change in urls could affect your affiliates? (The links above are just examples, how many of you clicked on those links :0) )A lot of affiliates will use embedded html affiliate links. In a nutshell it means that the affiliate is hard coding your links on to their site, meaning you or the affiliate network have no control over what is being displayed on their site, the emphasis is upon the affiliate having control over the content on their site (as it should be, from a personal perspective).
Java script is whereby merchants via an affiliate network can set up a dynamic link for affiliates to use. In a nut shell it means, when ever a merchant or affiliate network changes that link from their side, it automatically updates on all affiliates websites (dynamically). The emphasis is placed on the merchant or affiliate network having control over content on the affiliate’s website. Now before you all go stampeding off to your affiliate network to create dynamic links as the perfect solution, you need to look at the facts first (no pain no gain). Why do most affiliates prefer to use HTML?
Wayne Porter http://www.revenews.com/wayneporter/archives/001893.html sums it up well.In short HTML helps with the search engines. Not all merchants update their java script links, meaning affiliates visitors are seeing old out of date products and so on. By making changes on your website, this can have an impact on your affiliates whereby they are using HTML, by you changing “deep link Urls” to products or categories, without factoring in your affiliates, your are causing your affiliates to send their visitors to a potential page can’t be found which is of no economic benefit to anyone. Let’s get back on track.
Your first port of call is to obviously contact your affiliates and customers in advance * about the changes you are going to be making. Explain what you are going to do and why. Talk to your affiliate network and ask them to help you to make the transition, if they don’t want to help you, move to a different affiliate network, it’s in their own interest to help you and 99% of them will. On a side note, PaidOnResults.com have made changing a merchants website name and their affiliate links really simple in the way they have set up their tracking, they had the foresight to implement procedures for this very scenario. An utterly painless experience I may add.Keep your old website up for as long as possible, with a clear message about the changes you are making**, your customers will want to know too. Affiliates, who don’t read their emails but check to see what new products you have in, will see the message. It’s a complete myth that affiliates are anything less then responsive to these types of changes, the majority will migrate, but it takes time, so patience is key here.
There was a case a few years back where by a company decided to change their domain name and logo. Adequate advanced notification was given to affiliates and the vast majority removed their old links and updated everything across their own sites. After a number of weeks of migrating affiliates across, it became clear that not all affiliates had changed links or logo. The merchant had taken precautionary steps to ensure all their customers would get to the new site by putting an old website redirect, so when a customer went to IAMSOMEMERCHANTEXAMPLES.com it forwarded the customer on to IASMES.com, ensuring no potential or existing customer leakage.
The affiliate manger at the time made attempts to contact these affiliates personally to let them know about the changes, there were varying degrees of success. But the upshot was, that some affiliates could not be reached much to the unhappiness from the merchant’s senior management.
Why could these affiliates not be reached and what can you do?
Let me explain something here, why do you suppose affiliate marketing some times gets a bad press? It’s because some merchants simply don’t have any simple common sense when they enter into our world. Their thinking seems to be, if some affiliates don’t conform to their own personal interpretation of affiliate marketing of what constitutes an affiliate, their thinking when problems arise, is that affiliates must some how be deliberately trying to harm the merchant in some way. Please be assured that the majority of affiliates are not out to make your life difficult, that is a fact, stop and think for a minute, why would they? What possible reason or motivation would an affiliate have for not wanting to swap over links and logo? What has the affiliate got to lose by not doing this?
Some affiliates will build a site and promote merchants on that site using HTML links behind text, images and merchant logo, over time it could be that the affiliate moves on and abandons the site. Could be affiliate marketing has not worked out for him/her, could be that email has changed and who is information has not been updated or is a private registration. There are probably dozens of legitimate reasons why you can’t get hold of an affiliate. So in this scenario, what are the pros and cons?
The down side:
A) Your Company is not being represented the way you want your company to be represented. B) There maybe legal issues surrounding the original domain name / trading name.
C) Company may have diverted away from selling one product to a completely new product.
D) Customers may be confused.
E) Pressure from external investors or suppliers
The upside:
1. The affiliate will still be sending traffic and sales and new customers (no leakage)
2. The affiliate is still protecting you from sending their visitors to your competitor, they found the old site before your competitors.
3. Chances are, with the passage of time, their site gets lower and lower in the search engines until they end up so far down that no one sees them ever again.
4. Proof that once some affiliates put up links to your site, they maybe there for a very long time.
And these are just some examples.So let’s go through the down sides.
A) Your Company is not being represented the way you want your company to be represented. See above ref: 3 and remember 1
B) There may be legal issues surrounding the original domain name.It’s very rare when a merchant has to change their domain name and company logo for legal reasons. If a company has to do this, then it could mean that the merchant has broken some kind of law, if the merchant knew this at the time of setting up the company or even if the merchant did not know, regardless, blaming those hard to reach affiliates is not fair. There should be no legal recourse if the merchant is seen actively complying with the law. I’m not up to speed on this and I don’t know of any case where by this has happened. But having spoken to a legal brief “If the business website has been asked to cease and desist, they may have to show evidence that they have contacted all their third party suppliers to tell them about the change of their business name” This in theory should be enough. But don’t take this as fact.
C) Company may have diverted away from selling one product to a completely new product. See ref * **
D) Customers maybe confused. See ref * **
E) Pressure from external investors or suppliers.I have noticed that a fair proportion of investors are great with regards to looking at new internet business opportunities, their forte is in number crunching, profits and margins, some internet knowledge. Few have a good understanding of how affiliate marketing works. Similar could be said of suppliers. Whilst it could be argued that they may not need to know such marketing in any great depth. This may cause conflict, but it needn’t, if you, the merchant, has even the most basic understanding of affiliate marketing, a simple explanation is all that is required, see ref 1,2,3,4
We seem to belong to a “blame” culture. We like to pass the blame on to others as this removes the action of “taking any responsibility”. Finger pointing at affiliates, that’s easy, any one can do that and sadly some do. Problem solving requires time and maybe resources, you never know, the end results may yield dividends, I rather suspect, in most cases it will, thus earning you little rewards called respect and loyalty from your affiliates.
Your Margins and affiliatesWhat are your margins, how do you calculate this and factor it in to your affiliate program. A huge clue can be found in a simple to do metric, what is the life time value of your customer. (Not applicable to new online businesses as you may not have the metrics in place to work with, but there is bound to be loads of research done, white papers and case studies to be found on the internet. For the UK I would recommend the following, e-consultancy.com, IMRG.org and for the US MarketingSherpa, Forrester.com. Yes some will cost you money, but if you don’t do your research, you may end up regretting that you had not)First of all, what does the term “life time value of a customer mean”? Simply number of times one customer comes back and shops with you. Calculation can be, customer x average order basket over 12 months, longer if you can. This will give you an idea on what the life time value of a customer is. It should be noted that every merchant’s ultimate goals should be, new customer acquisitions and to keep getting that customer to come back over and over again, affiliates are great for this.
Let’s assume that Mr Customer is referred by an affiliate and makes a purchase of two widgets at a basket value of £35.00 (let’s assume VAT is included) Mr Customer comes back four times in one year. Mr Customer has spent £140.00. Now let’s also assume that you want to set up an affiliate program, let’s use 10% on all referred sales and cookie date of 120 days. Excluding P&P. Let’s now calculate your margins and factor in affiliates.
On Mr Customers first order affiliate cookie is set
£35.00 + 2.95 P&P customer pays it
Shopping basket is now £37.95
minus VAT @ 17.5% = £5.21
Minus 10% affiliate commission= £3.50
Minus Affiliate network override = £1.05
Minus VAT over commission + override = £0.80p
Minus product costs inclusive of overheads (value of x) call it 45% (£29.79 x 45%) =£13.40p
Returns 10% = (Product costs and overheads £13.40 + P&P on orders £ 2.95) = £16.35 * 10% = £1.64Profit: £35.00 – £5.21 – £3.50 – £1.05 – £0.80 – £13.40 – £1.64 =
Left over £9.40
To acquire a new customer it has cost you £5.35p
If Mr Customer never comes back to you again, that’s your fault, not the fault of the affiliate.
Now lets factor in the affiliate cookie of 120 days
If we assume that the average customer comes back three times in a year spanning over 12 months (365 days) and cookie is (120 days) the chances maybe that the affiliates get paid twice for a repeat sale. What is the likely hood that affiliates will be paid out on a third sale?
Even if this were the case, after 120 days, you own the customer at a cost of £16.05 with a profit of £28.20
The day before yesterday, I was told by some one that their customers were fickle and they go all over the place and not just to their online shop, that their investors never look at the life time value of a customer, that they are not interested in this metric. I found this a little disturbing to be honest. If your business practice is only ever factoring in a one time sale only customer, then your business needs volumes of new customers to sustain it.
Conflict can arise where by there is a cookie issue.
First of all if you are working with one affiliate network, most tracking is set so that the last affiliate referrer gets the sale. It is a myth that your customers are picking up affiliate cookies from all over the place and when a sale is generated loads of affiliates all get a commission on that one sale. The only time multiple commissions to affiliates could arise is when you have an affiliate program across multiple affiliate networks, but even this is avoidable, just ask your affiliate network account manager for details.
There is another scenario whereby you need to do your due diligence and this is with reward sites. The affiliate cookie can on occasions be reactivated by the same customer. Some Merchants are ok with this and some not, the buck stops with the merchant. Ask your affiliate network account manager about this, they have been working with reward sites and will have a good relationship with them, get some advice. My stance on this is that they drive big volumes of new customers, sales and profits, but the bottom line is my client’s have the last word on this, at least they have enough knowledge at hand to make a calculated and informed descision.
Discount voucher codes
Did you know that not all voucher sites are affiliates? So when you see your magazine discount voucher code being propagated around the net. Stop for a minute and see if it’s not one of your magazine readers that has thrown up your discount voucher on some forum.
But of course we also have to empathise and say, yes this can cause conflict with you and your affiliates. The reason why affiliates ask for discount vouchers in the first place, is they know your potential customers are looking for a bargain, affiliates want to use something that will push your customers into making that purchase. Some of your customers are bargain hunters, there is so much evidence out there that tells us this. http://google.blognewschannel.com/archives/2007/04/30/shocker-people-stopped-using-google-checkout-after-google-stopped-paying-them-to/ Of course it would be remiss of me to say that it also makes commissions for the affiliate. But some merchants don’t take into account, by affiliates promoting a discount voucher, its not always in their interest to do this, simply because it takes the value of the order basket down, thus lowering their own commissions, but they recognise the value of a new customer for you and are now relying on you to ensure the customer comes back so the affiliate can get a repeat sale.
Another problem that can occur is when an affiliate promotes your discount voucher without an expiry date and then does not take it down. I don’t support this is any way shape or form, I don’t think too many people would. It makes you look bad in front of your customers, puts added pressure on your customer services, and could make all the difference between your first time customer experience and that customer ever coming back. I can’t see why any affiliate would support this either. But, we don’t live in a perfect world, so use some common sense. Do not allow affiliates to promote a discount voucher code on their site without them displaying an expiry date. If you want to be clever, get a techy to write a script. Again, contact your affiliate network, they have answers to these questions. It is their job to advise you, but equally, it is your job to get educated.
Another way around this, if you are targeting first time customers, get them to register their details first and the incentive for doing so is an email with a unique, one time use only discount voucher.Affiliates sending you customers you would already have gotten.
First of all let’s define what this could mean, I hear this so often that it’s another dissertation in itself, I’m going to refer you to Fraser Edwards and Adam Viener
http://www.affiliateblog.co.uk/why-ppc-restrictions-dont-always-make-sense.htmlhttp://www.revenews.com/adamviener/2005/10/trademark_bidding_on_search_en.html
Merchants can get really confused re PPC, a good example is affiliate “brand bidding””, they will type their name into Google and behold and affiliate is seemingly bidding on the merchant’s name, they rush off and come down like a ton of bricks on that affiliate and accuse them of something they may not actually be doing. An example could be the merchants name is doublebubblexyz.com. Keep, in mind you can’t ask affiliates not to bid on generic terms. Affiliates can have what we call negative key words, for example they can have a negative term for the generic words double and another for bubble. When a user types double space bubble Google will bring back a potential broad match. Remember Google is not human (thank god for small blessings), it scans its own data to bring back the best match. What this does highlight of course is that some affiliates are better at PPC then some merchants. Instead of being completely frustrated with it all, talk to these affiliates. I encourage all our clients to talk to these guys. Don’t be scared to say “hey… I don’t understand this”. You won’t lose face nor will it be seen in a negative way that you don’t know your way around this space, on the contrary, you will find out things that you never thought was possible. You need to understand that affiliates in the past have been really trusting and imparted some of their wisdom, only for that merchant to take that newly acquired knowledge and end up competing with their affiliates and then implementing an outright PPC ban. We work with a huge PPC agency and loads of PPC affiliates. If in doubt, contact us, we would be more then happy to put you in front of the right people.
It’s what we are here for.
Paying for sales you would already have gotten
Another misconception that some merchants may have, is where by a potential customer has come directly to the site, gone a way and was prompted and cookied to come back to the site via an affiliate. How can you know with any certainty that this potential customer would have come back without the intervention of an affiliate reminding them? We work on statistics, there is no predictive statistic tool in existence that can read the mind of your potential customer as and when they are surfing on the net, if there was, then maybe, the human race would cease to exist (possibly). Example (not of the human race ceasing to exist, I don’t have one of those) Mr Potential customer comes to your site and perhaps sees something, but… we all know a lot of customers will do further research on the company before committing to buy, whilst you may be content with No1 ranking for your company name, your affiliates are busy telling your potential customer why you are so great, that may be the only push they need to come back and buy something. How can any one scold an affiliate for doing their job? Remember, they put your links up and they get nothing until they refer a customer.
So what is the life time value of your customer?
A lesser merchant is the one that thinks they know it all, but in reality knows very little, when the weakness is highlighted they attack, rather than listen to a few thousand voices that are all saying the same thing, but refuse to accept the smallest possibility that they could have got it so wrong.A great merchant is one that communicates and listens, that believes in using his/her affiliates as an additional revenue stream and source of knowledge somtines and not as scape-goats for poor conversions and lack of technology, web analysis and customer statistics. A great merchant is the one that works with its affiliates by providing clear guidelines. Where the goal posts don’t keep shifting, whereby they take responsibility for website conversions, getting the right products, getting their customers to come back. A great merchant will be a problem solver not a finger pointer. Thankfully we have an industry full of great merchants, these guys and girls represent 2 billion+ pounds worth of proof that affiliate marketing does work and merchants can have a successful affiliate program and enjoy it and reap the rewards.
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