Affiliate Profit: Are you losing money?

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Affiliate Profit: Are you losing money?
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Transcript of Affiliate Profit: Are you losing money?

  • 1. Affiliate Profit: Are you losingmoney?

2. Dear Affiliate, 3. I have bad news for you: You are probably losing money and you didnt pay attention to it! Let me explain... 4. When you joined affiliate programs you probablyconsidered the following factors: 5. - The commission 6. - The conversion rate 7. The profit formula looks like a child play: Commission xConversion Rate = Your Profit 8. In fact there are three big pitfalls here and if you dontmanage them properly, your profit is at risk. Let consider them: 9. - Refund Rate: Refunds can kill your marketing efforts! What are worth the sales you see in your account ifcustomers request their money back? A lot of sales meannothing unless you keep the money! 10. This is the whole responsibility of the merchant to keep refunds as low as possible. A site that sells well is good. Asite that also keeps refunds very low is much better! Thereis only one way to keep refunds very low: To deliver very high quality services meeting customers expectations or going beyond what they could expect! 11. - Product Quality: Quality is king! Quality makes superiorconversion rates! Quality enables higher prices and bettercommissions! Quality keeps refunds as low as possible! In a word: Quality should be your compass. Dont associateyour business with low quality products or services. Onthe top of your list, promote only the very best. It will also keep your profit on top. 12. How much money are you losing today? 13. The money you earn and lose is significantly determinedby the quality of the affiliate program you have selected asyour top pick. 14. The question is: How do you measure what is more qualitative and what is less? 15. There is an objective criterion to use for answering thisquestion and for optimizing your profit: The refund rate of your top affiliate program! 16. A high refund rate express clearly that lots of customersare not satisfied with what they get and that affiliates lose money on their sales. On the contrary, a low refund ratesindicates a high level of satisfaction among customers andsafe earning for affiliates. 17. What are good, medium and poor refund rates? 18. Refunds cant be totally avoided. There will always becustomers that are not satisfied even for the mostqualitative product or service. So, expecting a zero refundrate on the long run is not realistic. You should wish arefund rate as low as possible in your industry. Itsimportant to consider that there can be significant variations from one industry to another but as a rule ofthumb you can use the following scale: 19. 2% or less: Excellent 20. 3% - 5%: Good 21. 6% - 10%: Medium 22. 11% - 15%: Poor 23. 16% - 20%: Very Poor 24. 21% or higher: Run away! 25. With a 5% or less refund rate you can be happy. Youraffiliate program is reliable and your profit is secured.With a 6%-10% refund rate, you should monitor closelyyour merchant performance to ensure it doesnt get worst.It would be advised to scan the market for a better alternative if you can find one. With an 11%-20% (orhigher) refund rate you should be very concerned with your profit. Whatever your industry is, you are bleeding and there is probably a better affiliate program topromote. 26. What is the refund rate of your top affiliate program? 27. There are two ways to find the refund rate of an affiliate program: 28. 1) Look at the stats supplied by your affiliate program 29. Do your math as following: Refunds / Sales = Refund Rate 30. Let say you make 1000 sales per month, you get a $23.50commission per sale and about 160 customers request their money back every month. Your refund rate is 160 /1000 = 16%. In that case it means that you should haveearned $23,500 for your sales but you will get only$19,740 because of the refunds. You lost here 16% of your profit or $3,760! 31. You can ask yourself: Is it only I or all affiliates for thisprogram get similar numbers? If you use Clickbank to promote affiliate programs, you can get the big pictureabout the whole community of affiliates that promote anaffiliate program. 32. 2) Using Clickbank payout stats to calculate the average refund rate of an affiliate program 33. In its marketplace, Clickbank publishes payout stats for affiliate programs. The $Earned/Sale factor gives usexactly what we need to calculate the average refund rate of a program. 34. The $Earned/Sale is the average net amount earned peraffiliate per referred sale. This number is mainly impacted by refunds and it reveals the real commission earned byaffiliates. With this number, you can have an inner look at the real performance of affiliates programs. 35. The average refund rate of an affiliate program is: 36. (Commission - $Earned)/Commission = Average Refund Rate 37. What is the refund rate of popular affiliate programs atClickbank? 38. As an example, we have looked at three affiliate programsselling paid surveys databases. We have found theirrefund rates very high! You will be surprised at discovering how much money affiliates can lose when promotingthese programs: 39. - SurveyScout: 16.2% refund rate! 40. - Survey Platinum: 20.9% refund rate! 41. - My Consumer Survey: 35.2% refund rate! 42. To get into the details, on November 29th 2005 figures were as following: 43. SurveyScout 44. Affiliate Commission: $23.50 45. Average $Earned/Sale: $19.69 46. Refund Rate: (23.50 - 19.69) / 23.50 = 16.2% 47. Example: For 100 referred sales you should earn $2,350. In fact you will get only $1,969 because 16 customers out of100 have requested their money back! 48. Survey Platinum 49. Affiliate Commission: $23.50 50. Average $Earned/Sale: $18.58 51. Refund Rate: (23.50 - 18.58) / 23.50 = 20.9% 52. Example: For 100 referred sales you should earn $2,350. In fact you will get only $1,858 because 21 customers out of100 have requested their money back! 53. My Consumer Survey 54. Affiliate Commission: $40.84 55. Average $Earned/Sale: $26.43 56. Refund Rate: (40.84 - 26.43) / 40.84 = 35.2% 57. Example: For 100 referred sales you should earn $4,084. In fact you will get only $2,643 because 35 customers out of100 have requested their money back! 58. Remark: My Consumer Survey has a poorly designed site and a high price for buyers. We estimate its conversionrate to be significantly lower than other paid surveysprograms. Despite its high commission, affiliates will lose the most money with this program. 59. We learn three lessons about these paid surveys affiliate programs: 60. - A lot of customers are dissatisfied. 61. - Affiliates lose big money. 62. - The quality of these programs is very questionable. 63. What should you do to stop the bleeding? 64. You have no influence on the quality of the affiliateprograms you promote. Your only real influence is on the quality of your recommendation! 65. Giving your top recommendation to a very professionalaffiliate program that delivers the utmost quality services to customers will keep your profit as high and as safe as possible. 66. In the field of paid surveys and mystery shopping jobs, themost professional program available today is 67. Maximum Paid Surveys is a premium database of paid surveys and mystery shopping jobs. It delivers a superiorvalue to both registered users and affiliate partners due toits very high quality. 68. How to identify quality in affiliate programs? 69. Defining quality is a difficult job. In general, people cantdefine clearly what quality is but they recognize it when they see it. So what should you look at in affiliate programs? 70. The most qualitative affiliate programs find the rightbalance between the value they offer to customers and the value they generate to affiliates: 71. - Rich content 72. - Good looking website 73. - State-of-the-art organization 74. - Friendly functionality 75. - Affordable Price for most visitors 76. - Bonuses strengthening the main offer 77. - Timely Customer Support 78. - High conversion rate 79. - High commission 80. - Low refund rate 81. - Commission paid on time 82. - Good affiliate support 83. Please visit: for more info