Paying Affiliate Commissions

- from Commission Junction

How to Determine How Much You Should Pay in Affiliate Commissions

Let’s be honest – money talks. You can have the greatest relationship in the world with your publishers but if your commissions are not competitive, retention will be hard. Here are five steps to a payout structure that will keep your publishers happy:

1. Decide what you can offer – This should not be an arbitrary number. Start by calculating the lifetime value of a customer if you are running a leads-based program, or determine what your margin is on a sale. Use these figures to determine a benchmark commission rate. Pad your base commission estimates with some wiggle room for extra payouts in the form of performance incentives, contests and bonuses. A good rule of thumb is 20 percent extra.
2. Give publishers rewards they respond to – Analyst firm Jupiter Research did a study to find out what publishers respond to most. In order, the responses were:
   • Progressive commissions (payment per transaction increases with volume)
   • Cash bonuses
   • Contests with prizes to top publishers
   • Access to trademarked keywords
   • Custom creative and tools
3. Divide publishers into groups and set different goals for each – Each group should have something to aspire to. Set realistic goals, and reward them generously.
4. Keep your special promotions special – In our experience, contests or special incentives work optimally when used no more than quarterly or semi-annually.
5. Measure success – What types of results define successful incentives and contests? We find a 5 percent response rate is typical.

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