Every email sent to an affiliate threatening them with “termination” unless they do something (and here it doesn’t matter what the affiliate manager is asking for — putting up links, traffic referrals, or lead/sale generation) is a big thick nail in the coffin of the affiliate program. Even in traditional management contexts threats are demotivating. How could anyone expect them to work in performance marketing contexts? I just don’t understand it…

Here’s a video from one of my Affiliate Summit presentations where I spoke on the topic:

Speaking in Alexander Hiam’s words, we want to present affiliates “with opportunities to succeed instead of telling them what to do”. Merchants should always remember that affiliates were the ones who have chosen to work with them — to invest their effort, time, and money into the promotion of the merchant’s product/service. And that step of theirs should be valued. It — as well as the very idea of performance-based remuneration! — should also dictate our approach to affiliate motivation.

Remember my Puma Affiliate Program Manager Doesn’t Get It post on 1/7/2011? Well, checking my affiliate account’s email box today I’ve found a follow-up message which reads as follows (highlighting mine):

At first, when I just started reading it, I thought: “Awesome!! They finally get it!”… but as I read on, I realized that they didn’t.

Looking at things in light of the previous email, the affiliate manager’s above message essentially says:

• That prior note “was sent to you in error”
• We apologize “for this oversight”
• We meant to “to provide you with additional resources and opportunities to drive transactions and optimize your relationship with PUMA”
• We wanted to receive “insight” which “helps us to prioritize program updates and ensure that we create a more productive affiliate program”

The last sentence is highly confusing, but some bits of their text do leave room for hope. The affiliate manager seems to understand what they need to do — motivate affiliates by providing them with “additional resources” and stimulate them by “opportunities” (not threats).

However, the above text is only half-okay. There isn’t a word about the previous removal threat, and neither is there any guarantee that it won’t happen in the future. Affiliates are just being told that “based upon your approval date” into the program “this communication was sent to you in error.” Additionally, that last sentence is highly confusing, and reads as if being entirely out of place.

In my opinion, there is one main lesson for every affiliate manager to learn here: when an error has been committed (as is obvious in the Puma case) you want correct it, and do it in a way that leaves no further open questions.

Affiliates of Puma.com who haven’t generated a sale in 2010 have just received an email from the program’s manager. Here’s an excerpt from it:

I’ve checked my records, and it looks like I personally applied (and got approved) into this particular affiliate program 2 months and 1 week ago:

Looking at the dates, it is clear that they’re giving me 4 full months to generate a sale, or I “may be removed” from the program.

One would’ve thought that after all that has been written about the ineffectiveness of affiliate manager ultimatums and get-active-or-we’ll-kick-you-out emails to affiliates, at least managers of the larger affiliate programs would’ve learned something. Alas! Apparently some still believe in motivation by threat (which never works!) and do not know what it is to genuinely care for “the little guy”.

Dear Puma affiliate program manager, read these articles. I hope they will help you rethink your strategy and become a better motivator than this.

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):

Have you ever wondered if there are any other motivators available to affiliate program managers besides cash bonuses, prizes, and other extrinsic means of affiliate motivation?

There are!

It has also been proven that the more cash bonuses you give out, the more the per-bonus amount is expected to increase to create the same drive next time you decide to motivate by cash.

Super affiliates, who are also in this business for the money, are not picking affiliate programs based on the amount of an activation bonus, or even performance bonuses interwoven into the payment structure. Most of the time they have a longer term plan on how to succeed with this or that affiliate program, and their motivation comes from the challenge, the interesting work they’re getting themselves involved in, and the opportunity for further learning and advancement.

Read more in my newest article on affiliate motivation in the April 2010 issue of the FeedFront magazine, which may be read online or downloaded here.

See also the post on how the CSN Stores’ affiliate program manager uses some of the principles I’ve written about in the above-quoted article. Whether they are doing it intuitively or not, I certainly applaud the approach.

Earlier this week I have received a newsletter geared at CSN Stores’ affiliates that have generated some traffic for their affiliate program, but no sales. The opening text of the newsletter read:

Congratulations! You have been chosen as a CSN Stores Affiliate Program Rising Star. All the members of this group have been able to bring in a significant amount of traffic to our sites over the last few month. We want to help you make sure those visits lead to sales and commissions! For the next month, April 1st- May 1st, the CSN Stores Affiliate program will be offering an exclusive promotion to the members of this Rising Stars group.

If in the month of April you can convert just 10 sales you will receive an additional $150 bonus on top of your commissions!

I’ve generated 14 clicks for them (some by myself, some my friends), and not one sale. So while the “significant amount of traffic” part constitutes quite a bit of an exaggeration, I can’t help but love the “Rising Star” hyperbole. This beautiful technique, and the whole text of this affiliate newsletter, reminded me of Bronwyn Fryer’s “Moving Mountains” article in a 2003 issue of Harvard Business Review where the author wrote that to motivate others effectively managers must have “a clear, unbiased understanding of the situation at hand, deep insights into the vagaries of human nature.., the establishment of appropriate and reasonable expectations and goals, and the constructions of a balance set of… incentives.” Fryer also proposed several practical techniques to make one a better motivator. Out of the ones that she listed I thought that immediately relevant ones for affiliate program managers are:

• Start with the truth
• Appeal to greatness
• Make them proud
• Stick to your values
• Provide constant and consistent communication channel
• Build trust
• Care for the little guy
• Set different incentive levels

It seems that the CSN Stores’ affililiate program manager has hit at least half of the above nails right on the head.

I am signed up with a number of affiliate programs for the purpose of monitoring their promotions and affiliate motivation methods; and the day before yesterday (on March 17 at 2:05 pm) one program manager has sent me a newsletter which started with the following text:

I wanted to follow-up with you regarding the Tractor Supply Activation Campaign as our reports show your site has not yet generated any sales with our program for the past 6 months.   We want to help you make the most of our partnership and begin generating steady revenue.

Exclusive One Time Offer!
We have extended you a 7% Private offer now through March 31st as an incentive to become active in the [Merchant's Name] program.  Please log into your [Affiliate Network's Name] account to accept this offer to take advantage.

AND, as an extra incentive…

Generate $500 sales during this time frame and we will extend the 7% private offer through April 30th.

I am not mentioning the name of the company, because it is really irrelevant here. I will use them as an example of how this could have been handled better.

The default affiliate commission in this program is 5%. They have raised it to 7% for me for 14.5 days in March, and are telling me that if I generate $500 in sales during these 14.5 days, they “will extend the 7% private offer through April 30th”. And then what? Then it’ll drop back to 5%. Well… Maybe not. Maybe it will stay at the 7% mark through the end of the next month if I generate $500 (or will it be $1000 for the full month) in April too, and so on.

Here’s why I do not believe it’s a good incentive:

Anything that involves a commission drop isn’t a good idea. It just doesn’t go down very well with affiliates. Once you’ve raised that commission for them, either keep it at that level, or at the very least, give them a longer-term perspective (e.g.: keep generating $500 in sales every month, and we will keep you at the “private offer” level). Another option, which may even be more attractive (as dollar amounts are generally much more enticing than percentages), is offering your affiliates a cash bonus for performance.

For example, if $500 in sales over 14.5 days makes economic sense for you to give affiliates extra 2% in commissions, they why not offer them an automatic $10 bonus on every batch of $500 in sales sent in? After all, it is a fairly small gratitude as it is; so why cut it back at any time?

Also, when bonuses are tied to a time period (say, all sales through the end of Spring will qualify you for a $20 bonus per every $1000 sales sent in), it comes across much better than a temporarily raised commission level.

Affiliates reading this, I would also appreciate your input if you want to post it in the “Comments” area below.

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!

Some time ago I joined an affiliate program. I do this frequently — to analyze the styles and approaches of various affiliate program managers. I am not doing this to make money on (or promote) the merchants who run these affiliate programs. However, out of hundreds of affiliate programs who have me (an “affiliate” that sends zero clicks and refers zero sales/leads) on board, this is the first one that has asked me how they can help, and did it in a very interesting way. Here’s the text that I have received in my email two days ago:

Hi Geno,

I want to touch base with you to divulge October information as well as obtain feedback. First, let me give you the numbers for October:

- Your earned $0 in October from 0 clicks
- Eight affiliates made their first sale with us last month and earned an additional $20 bonus
- Bonus payments made up over 12% of the regular commissions paid in October

For the feedback, anything and everything is welcome; from questions to criticism. My role as affiliate manager is to make you more money. If there is something I am not doing that you want me to start doing, let me know. If I am doing something you want me to stop, tell me.

Basically, give me any feedback you want. If you respond with quality feedback for me or the program by Friday, November 6th, I will give you $5 cash! I want to encourage well-thought out feedback and not one line answers just to get the cash. This is meant to help me improve the program so you can be more successful.

Here is how you can reach me:

[contact info and the rest of the message]

This came from Patrick Vesperman of MagnetStreet.com.

I always say that I am not a fan of extrinsic rewards, but there is time and place for them. This is certainly one of those cases! The only thing that I would have changed in his promo is the deadline (giving people a few more days would’ve been nice). Other than that, it’s brilliant!

No, five bucks isn’t a lot of money, but fair enough for a one-liner, right? Also, it is important to mention that the MagnetStreet’s affiliate program (no, I never promote an affiliate program without a good reason, and Patrick has certainly earned this link!) is already one of the top wedding-related affiliate programs at ShareASale. However, this program manager keeps pressing on, and believes that affiliates are not making money with his affiliate program, there is something he may be doing wrong, or isn’t doing something he should be doing. Wow. Simply exemplary. Hundreds (if not thousands) of other affiliate program managers should learn from Patrick.