I have had a Twitter chat with an online marketer who is working for a software company. The company she works for builds custom software. Great company, quality products.
Everything started with my Twitter message to her: “Does your company have an affiliate program? You may want to start one for it.” The rest of the conversation may be found below. I’ve decided to post it here, because of the eloquent format it has had. None of us could go over the 140 characters in any given question or answer. I hope some of you will find this conversation of help.
Q: How is that program different from resellers’?
A: In essence, it is indeed very similar, but you don’t have them stock anything. They refer the customers to you, and you pay them a commission.
Q: How can they track how much the customer has purchased?
A: The amount gets pulled from your shopping cart with the help of a tracking script.
Q: It’s a great tool but if you sell to enterprises and the quote is always custom, there’s no way you can sell online?!
A: You can have affiliates be remunerated on a PPL (pay per lead) model.
Q: Then it’s the same as PPC/PPL advertising programs.
A: PPC = you pay for clicks. PPL = you pay for leads (i.e. actual forms filled out by real people and submitted on your site, or subscriptions)
Q: Isn’t it the same as Google AdWords does?
A: No. Adwords is PPC. When you pay for leads – you pay for actual leads (interested people) referred to you by affiliates. See previous reply.
A 2: With AdWords you pay for clicks. With PPL affiliate model you pay only if there is a conversion. Let me know if this makes sense.
Q: So you just provide the platform for collecting these leads?
A: I’m an affiliate manager. I can manage & recruit into your affiliate program. Platforms are provided by affiliate networks (or in-house soft).
You may read more about the differences between affiliate networks and OPM companies here.
If you sell software development services, or any other services that require a custom quote (and/or where the sale may not be closed online), you can run an effective affiliate marketing program, paying affiliates for every valid lead they send in. Roughly one-fifth of all affiliate programs out there use the PPL model.
I have to disagree with this line of logic. Maybe it’s the fact that you’re trying to discuss affiliate technology in 140 characters :), but a big point has been missed.
Although it’s true that PPL/CPA is an option here, you’ve moved away from the original option which should not be so quickly discounted.
I have some doubts about PPL as a better option, but first let’s review the “pay per sale” for custom quotes.
Just because the quotes are custom doesn’t mean that she can’t sell them online. Companies sell custom products online and although they don’t use a shopping cart they use some sort of configurator OR they simply give a quote and the buyer pays online.
There’s no reason why an affiliate program can’t be set up to handle the online sale for custom priced sales.
And even if they were sold “offline” it is possible to track the referred sale back to the affiliate – e.g. using coupon codes or quote enquiry forms where the affiliate id is hidden on the form so that the merchant knows it came from a referral.
As for paying for the lead, this can be open to fraud (e.g. paying for low quality leads) and also may be less attractive for affiliates who *know* their leads are high quality but they are getting paid an average price-per-lead based on ALL affiliate traffic.
So both options are still open and I’d suggest they take a closer look at paying a % of the sale – whether it happens online or offline. Even better is if the customer can pay either way and the affiliate still gets the credit.
There you go – I don’t think I could have said that in a 140 char. tweet 🙂
Peter,
Thank you for your comment. Much appreciated.
You wrote: “Just because the quotes are custom doesn’t mean that she can’t sell them online. Companies sell custom products online and although they don’t use a shopping cart they use some sort of configurator OR they simply give a quote and the buyer pays online.”
Providing the customer with a real time quote, and taking payment online would definitely be one of the better options. However, the reality is such that it is close to impossible to give such a quote in real time, and most most of these “custom” deals are eventually closed offline (on the phone, or even in person). When they are, it requires a special level of transparency (100% one!) on the part of the merchant to accurately track the transaction back to the affiliate and appropriately credit their account for the referral. Yes, “it is possible to track the referred sale back to the affiliate,” but will the affiliate fully trust them to credit their account a 5% commission off a $10,000 custom software order, or would they prefer to be pay for leads instead? I don’t know the answer, but I may put together a poll on this question tomorrow. It’d be interesting to get affiliate feedback on this (in forms of both votes).
I agree with you on the higher chances of receiving fraudulent leads, or “low quality” leads, when you’re running a PPL program. For this reason, I always advise merchants to clearly spell out what a qualified lead is (right in their affiliate program’s TOS), and police any unacceptable affiliate behavior.
Again, I appreciate your thoughts on the question, Peter. They give me additional food for thought, and that is good.