Those who follow my blog, magazine articles, and conference presentations know how fascinated I am with the subject of motivation, especially when it comes to effective motivation of such a unique “workforce” as affiliates.

Needless to say why a post published on Econsultancy.com yesterday has immediately drawn my attention — right upon spotting its title in my Google Alerts list of notifications — “The art of affiliate incentives”.

Overall, it’s a good solid article by Owen Hewitson, a Client Strategist at Affiliate Window/Buy.at. But I have two things to add to the important subject he has chosen to tackle.

First of all, it is important to make sure that the goals (that qualify an affiliate for the prize/incentive/motivator) are achievable. Nothing is more useless than a “performance incentive” which sets unrealistic (or close to unrealistic) performance goals.

There’s a merchant on Commission Junction — with a default commission level of 6%, and an average order value (AOV) of some $650 — who has the following commission increases embedded in the structure of their affiliate program:

A simple calculation tell us that to reach $35,000 in monthly sales, you want to refer over 53 sales for the merchant’s expensive merchandise. This will give the additional 0.5% (or $175). If you send them some 77 sales in any given month, you’ll get an extra 1%. Yes, it’s gonna be $500 in extra commissions, but c’mon, 77 orders with an AOV of $650 — that’s hardly an enticing goal. It is actually very similar to the “winner-takes-all prize draws” mentioned in the “The art of affiliate incentives” article.

Secondly, Owen has surely gotten my attention when he started his “Which incentives work” section with “Rather than offering cash prizes, one of the most effective ways to incentivise affiliates is to offer them a ‘money-can’t-buy’ reward…” But when I started reading about “VIP tickets”, “adventure weekends to destinations such as Monaco and Las Vegas”, “trips to Bali, Cannes and Venice”, iPads, and laptops, I couldn’t help but shake my head in disappointment. These are still extrinsic motivators (just a bit more expensive, that’s it!) and external incentives like these always lose in comparison with those that produce a real and lasting motivation. It’s good to use them as a starting point, and a stepping stone on the way to cultivating intrinsic motivators within affiliates, but not as ultimate motivators of any sort.

More on the topic:

A speech given by Dan Pink at the RSA and later animated by Cognitive Media was uploaded to YouTube last month, and has already received close to 400,000 views, and a storm of accolades from marketing and management professionals around the world. No wonder why. Dan talks one of the most fascinating subjects in the world — human motivation. In his speech he points out that the so-popular carrot-and-stick method generally works for simple, straightforward tasks, but “when a task gets more complicated” and “requires some conceptual, creative thinking, those kind of motivators don’t work.” He doesn’t talk about it, but the fact is that monetary bonuses, which so many of us, managers, are using as the main motivators, stop being motivating when used repetitively, and you cannot motivate a worker by the same amount of bonus indefinitely (larger amounts start being expected, and at one point, the whole model stops making economic sense to the employer/manager).

Dan emphasizes that with tasks that involve purely mechanical skills, monetary (read: extrinsic) motivators work well; but when the task calls for rudimentary skills, larger rewards have actually been registered to lead to poorer performance. The experiment has been replicated in hundreds of settings, and in all contexts experimenters have seen that “higher incentives led to worse performance.”

There are 3 motivators that lead to better performance and personal satisfaction. They are:

1. Autonomy — the desire to be self-directed
2. Mastery — the urge to get better at stuff
3. Purpose — that transcendent something that really makes you race to work in the morning

Why can’t I help, but think affiliate marketing (an industry that has autonomous marketers at its very foundation!) here? All three of the above-quoted things are called intrinsic (i.e. stemming from within the individual) motivators, and they’ve been proven to create the most lasting motivation, regardless of the context.

In my opinion, this research has implications both for affiliate program managers, and for affiliates:

~ Affiliate program manages should finally understand that extrinsic motivators are NOT the only, and neither the best, way to motivate affiliates. They should look beyond the immediate monetary remuneration and, as Frederick Herzberg said, seek to “charge a person’s battery, and then recharge it, and recharge it again” (through external bonuses only), but by focusing on “intrinsic factors” which “answer people’s deep-seated need for growth and achievement” help affiliates get a generator of their own.

~ Affiliates can get good ideas from this presentation (e.g. about creating new user-driven websites in unsaturated niches).

Grab a drink, a pen and paper, and devote 10 minutes of your life to this superb presentation of “the surprising truth about what motivates us” (you won’t regret it):

With the Black Friday, Cyber Monday and the peak of the online holiday shopping activity coming up, it is sad to see some affiliate program managers (and advertisers) mixing, and often misunderstanding, the target audiences for these two types of promos.

The traditional meaning of sales promotions has always implied giving “consumers a short-term incentive to purchase a product” (Schultz, Robinson & Petrison, 1998, Sales Promotion Essentials, p. 5). I call these customer-oriented promotions. Affiliate-oriented promotions, on the other hand, aim at motivating affiliates (through short-term extrinsic motivators) to sell a product/service.

So, while it is extremely important to keep affiliates updated on the sales promotions (or customer-oriented campaigns) that you are running, advertisers must word their newsletters in a way that does not suggest mistaking affiliates for customers. By all means, do tell them about the hottest offers to push, but don’t forget to also include an affiliate-oriented promotion in your newsletter. Give your affiliates an additional incentive to push those hot offers! This time of the year, there is no deficit of customer-oriented offers. Give affiliates a reason to jump on yours, and here are just a few ways you can do it:

• One time monetary bonus (e.g.: $100 once they reach a $1000 threshold)
• Regular monetary bonuses (e.g.: $20 with every 3rd referral)
• Tangible (and popular!) prize (e.g.: iPhone, weekend getaway for two, etc)
• Temporary commission increase
• Tiered commission opportunity (the more they sell, they more you pay them)
• Permanent commission increase and/or cookie life extension

Use that right brain; stay creative, and make it fun not only for your customers, but also for your affiliates!