One of the most effective types of affiliate incentives is commission increase.
There are two basic ways merchants increase affiliate commissions:
1. Based on Performance
Performance may be measured in the number of sales or the cumulative monetary value of affiliate-driven sales.
Example A: The default commission is set at 10%, but affiliates that refer 10 or more orders get 12%, 20 or more – 14%, 30 or more – 15%.
Example B: The default commission is 10%. Affiliates that generate $1,000 worth of orders get a bump to 12%; $1,500 or over – 14%, $2,000 or more – 15%.
Performance-based commission increases may be tied to a period of time (most frequently one month, automatically starting from the default level every next month), or be permanent. Naturally, the latter type attracts more affiliate attention (everyone wants stability).
It is important for me to note that when working out the tiers, you want to make sure you set realistic goals. There is a merchant on Commission Junction that offers the following commission increases (based on monthly performance):
Judging by the list of their bestsellers, their AOV (average order value) is somewhere around $300-340. This means that to get the 0.5% commission increase, an affiliate has to send them 115+ orders every month; while to get a bump from 6% to 7% in any given month you would have to refer 147-167 orders to this merchant. And we’re talking fairly high-priced purchases here!
2. Based on Merchant’s Decision
It is always sweet to receive an unexpected e-mail from a merchant that informs you that due to your hard work (or in an effort to motivate you to become more active with their program) your commission has been raised. It is, however, not as exciting if the commission increase is only temporary.
Example: “Until the end September 2009 we have raised your commission from 10% to 15% per sale”
The above “promo” is hardly worth running (unless you’re a highly seasonal merchant that historically experiences a drop in sales once September ends), because you are going to decrease affiliate commissions to the lower level right before the Q4 sales kick in.
Conclusion: Look at your incentive initiatives from your affiliates’ perspective. Achievable always beats the unrealistic, while permanent always overshadows the temporary.