Residual income / lifetime ownership - good or bad

[drivetowin]

Tweet

Just thinking about setting up an affiliate scheme for a new site I'm developing - the scheme will be launching early in the new year and active members of this forum will be first to know and given preferential commission rates. I will be checking that active members have posted on the forum - no preferential rates for lurkers - don't expect to take out of life more than you're willing to put in.....

What are peoples thoughts on residual income schemes - personally I'm against them but would be interested to hear both sides of the argument...

Why am I against them? - because as a relatively new affiliate (well nearly two years now but I know thats new compared to some here) I want to maximise my chances of earning revenue by promoting merchants on my site - what I don't want is to promote a merchant and then find half the traffic I send to them is of no value to me as they are 'lifetime' customers of another affiliate - ok so that affiliate introduced them originally so they quite rightly got the commission (and maybe should now be entitled to a smaller percentage as a kind of second tier) but why should they get the commission at my expense when this time it is my work / editorial / advertising that has driven the customer to the merchant site.

[Rich]

To use Paid On Results' terminology: -
Residual Commission : Recuring commissions from monthly billing (e.g. an income each time a domain is renewed)
Customer Base : Receive commissions from future distict orders of a customer.

With Residual Commissions, once the user has ordered the service, the renewal is automatic so there isn't really a case for another affiliate to become invoved.

With Customer Base, which is probably what you mean, then I agree things are a bit more unclear. As far as I know the old Blackstar program ran as you outlined - the affiliate that introduces the first sale gets it all.

Paid On Results do things a bit differently and I only found out when Graeme posted details at the end of June: -

The affiliate who last sends the visitor to a merchant who then orders will receive the commission from that order and also "take over" that customer in their customer base. We thought this was a fair way of doing it, as if an affiliate is using PPC to gain visitors then they should be able to have the commission from the sales they refer and then future sales from that customer.

Of course, we can change that per merchant, so that the new affiliate just gets the commission from that single sale, and future sales goes to the existing affiliate who has the customer in their customer base.

But do remember that once a merchant gains a customer, they will build their brand name with that customer though mailings, so next time the customer wants to buy (for example) the latest gadget, they won't visit Google but go straight to there favourite gadget merchant, so that is how customer base programs are effective.

I'm not sure if the second affiliate should take over the customer or not, but its seems fair that they at least get the commission for that sale.

[Costades]

Hi,

Can understand what you are saying about lifetime ownership causing affiliates to avoid a program because someone else has already likely referred (thus owns) the lead.

However, let's assume that you are going to be a merchant for this product. If there is the opportunity for residual income then I assume that the customer re-orders the product or is tied into a membership.

As a merchant you would often work on your relationship with a customer so that they come back directly to you next time. This means that an affiliate does not benefit (unless there is a long cookie setting). If an affiliate referrs a customer who purchases a membership then that customer is lost to the affiliate anyway.

So, in some respects, by providing a residual income you could be giving the original referring affiliate something extra, that they would never have had. You may not be depriving future affiliates of an income, as there may not have been the opportunity for one anyway.

There are definately two sides to this debate and I would be inclined to think that it will rather depend on the particular product.

Cheers

Des

[Jean]

Tough one to answer. If you are part of one of these schemes and at the top, you are not going to turn down the income. However, like you say, if you have put a lot of effort into directing visitors to the merchant, it is only fair you get the commission.

How do we know which merchant's operate these schemes? Do the networks tell you up front. I haven't come across one yet!!

[drivetowin]

Des

I think you're right - it does depend on the product - if its a membership then yes residual / customer base is the way to go but if its CDs for example then I think lifetime ownership is a bad thing.

Thanks Rich for posting what POR do - must admit I hadn't realised that even with their lifetime schemes the last affiliate gets the sale and takes over the customer - not quite sure why they say lifetime in that case - I think the terminology is a bit misleading.

[graeme]

Originally posted by kbudden
Thanks Rich for posting what POR do - must admit I hadn't realised that even with their lifetime schemes the last affiliate gets the sale and takes over the customer - not quite sure why they say lifetime in that case - I think the terminology is a bit misleading.

This is something we thought long and hard about at Paid On Results, we did (as Rich posted) come to the conclusion that if a customer comes back to the merchant though another affiliate that affiliate should get the sale and future commissions.

Until that point though, you would earn commission from that customer if they were in your customer base. But by continuing to promote a merchant and of course the merchants own customer direct marketing, the chance of a customer finding its way to the merchant though another affiliate is slim.

Personally once I find a online store I will continue to check that store for the latest gadgets, dvds, music etc before I reach for Google or such like. Of course there are other ways it could be done.

1. If an affiliate refers a customer already on someone else's customer base that new affiliate just gets commission from that sale and all future sales still go to the original affiliate.

2. New affiliate gets the full commission for that sale, and the customer is then attached to both the new and old affiliate and future commission is shared between the 2 affiliates.

[justnozy]

How do we know which merchant's operate these schemes? Do the networks tell you up front. I haven't come across one yet!!

Jean!!!

The program I announced at the G2G is a residual / lifetime plan

I had to think about this hard & long when divising my scheme. In my case it is not simply one site but across all sites.
The main site ( competition site) is where the database is held.This is a membership site & because it relies heavily on co-reg commissions I felt it could only work if the original referal was tagged for life to the original aff.
The comp site will try to direct traffic to our other sites (eg widgets.com). If a favourable action is taken on widgets.com the introducing aff gets a further commission even though he/she did not send that traffic.
On the otherhand if a visitor finds widgets.com via a different aff link it will be the latest aff that receives the comm. At the same time our system will check back to see if this visitor is registered on the comp site & if they are not will be invited to join. If they take up this offer then they will be tagged for life to the aff that introduced them to widgets.com.

I felt this was the fairest way of doing it in that although it may not be feasible to use PPC (or whatever) to send traffic to the comp site cos original aff would be paid the com, it should still be worthwhile sending traffic to widgets.com cos the latest aff gets the com & may get additional com's if this is a new visitor to the comp site.

Hope you can understand that!!
( Mat I will PM you )

[purple]

I am not sure if life time comm / one off bounty is fair for betting sites.
Do any betting sites offer commission per bet.

It seems to me betting merchants affiliate schemes are geared up to get people signed up to their site.

There is no incentive as a affiliate to get people to bet on events, as you maybe attracting people who are already registered to a betting site.

I guess though once a person signs up to a betting site they are in their customer base email list for big events etc

what are peoples views on the betting site model.