Outsourced Program Manager Fees: Performance Bonus Basis

Out of all fee/payment-related questions asked by prospective clients (for outsourced affiliate program management) one of the most frequent ones that I have ever heard is this:

Would you work for performance bonus only?

This question is especially common with brand new affiliate programs which are being (or have been) launched to promote a new product or service (often by companies with tight budgets).

The short answer is “No”, and very rarely will a no-brand company be able to find a good OPM (outsourced program manager) who is willing to be compensated on performance-based model only. I fully appreciate the fact that merchants who are asking the above question are looking for a 100% performance-based affiliate program (where both affiliates and the program manager get remunerated only when there is performance). However, with affiliate programs, especially brand-new ones, and particularly those focused on brand-new products, there is a substantial investment of time and resources required to get the program off the ground.

Research shows that 75% of new products, services, and businesses fail (source: Doug Hall, “Jump Start Your Business Brain”, 2001, p. 3). I don’t have research data to back up my next statement with, but I am certain this percentage is even higher when we’re talking loosely managed affiliate programs for these new products, services, or businesses. The only way to avoid failure is to do a thorough market research, and if/when you decide to explore the exciting field of affiliate marketing, have a properly-structured, well-implemented, and competently-managed affiliate program in place. The latter component (competent management) is impossible without a well-motivated affiliate program manager at the helm of your program. By all means, do tie the manager’s compensation to the actual results (sales, leads, subscriptions, calls, whatever it is you’re looking for your affiliate program to generate). But unless you have a really strong brand, or a hot product/service where the manager is willing to take the risks (of time investment into a new product), do not expect a competent OPM to work for you “for performance bonus only”.

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