How much commission should you pay your affiliates?

Recently I read a rather pertinent and interesting article on how much commission you should be paying your affiliates. The increase of affiliate marketing has really changed the internet and the commissions you pay can greatly affect your campaign. It can motivate affiliates, make them lazy or all round increase your campaign performance.

The key point about setting an affiliate commission structure is that one size definitely does not fit all. A one size fits all strategy will result in a lack luster campaign.

The key to commission payments is to ensure they are competitive. What are you competitors charging? Why should an affiliate promote your product and not your competitors?

Affiliates look for strong EPC (earnings per click) – this gives them an understanding of what kind of conversion rate your campaign could generate for them. If your website converts visitors at a higher rate, you may not need to compete with your competitors and only pay a small commission as volume becomes the aim of the game.

Flat rate or percentage?

This can be tricky. Survey the market and check what the other players are doing. Most of the time finance clients opt for flat rate commissions as opposed to ecommerce websites and booking systems (such as travel) that go for a percentage. Why not shake it up a little bit and look to throw the market on its head? Offer a set fee and a percentage of the balance the user might transfer to his/her credit card (if you are in finance of course).

Super affiliates

Like everything in life, the Pareto Principle (known as the 80/20 rule) seems to ring true. 80% of your sales through an affiliate program will come from 20% of your affiliates. These are known as your ‘super affiliates’.

Look to work closely with these affiliates and negotiate private tiered rates. Treat your super affiliates like gods and watch the results fly.

Long tail affiliates

Don’t neglect your long tail affiliates but dedicate some extra budget to nurturing the relationship between you and your super affiliates.

Set realistic targets for the everyday publishers as they can make up a large part of your earnings if given the right incentives.

So how much commission should you pay?

The answer is unknown. Follow the steps above and you will have your head in a better place for making an informed decision about maximizing your return on investment in affiliate marketing.