Network Charges Merchant 25% override on Affiliate Bonus, fair?

[jess1]

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I wonder how many merchants are dissuaded from giving their affiliates (whom they can’t even contact anyway with some networks) cash incentives and or bonuses because the affiliate network wants to slap a 25 or 30% override on them?

Scenario
Affiliate is told they will get xyz if they achieve abc (cash bonus added on top of affiliate generated commission, example affiliate 123 brought in 321 sales to say thanks we can add the cash bonus they get £x) When the time came to give the affiliates their hard earned bonuses, here are the hoops we had to jump through in order to allocate those bonuses.

Network X, don’t provide affiliate contact details, how ever we can request the winners email address, the onus now falls on the affiliate manager to contact the affiliates and ask them for their details (that’s if they read the email) to pass on to merchant x so he can cut the bonus cheque.

Affiliate manager and merchant discuss a good idea, why don’t we get the network to add the bonus funds to the affiliates account and deduct from the affiliate commission float , this then just gets included in the affiliate’s monthly pay out as normal. Simple, no mess all accountable and every one happy. So what could be an obstacle?

Affiliate network are delighted to accommodate, but… will cost us 25% override on the bonuses, in order to allocate a cash bonus of, a staggering £150, we have to add on a further 25% for it to go through the affiliate networks system.

When questioned, why?

The answer was confusing as they were talking about a referral fee and we were talking about a cash bonus, but ok moving along. The network said by doing this for us, they incurred bandwidth and additional resources. To quote “We charge for affiliate bonuses because if we didn’t we would loose money. For example any affiliate that refers an affiliate earns a 5% bonus of their earnings…no override means we loose that 5% straight away. Not to mention admin costs, payment costs, bandwidth etc.”

But we were talking about a one off cash bonus to a couple of affiliates? Not a referral based on sub affiliates earnings, I still don’t get that part unless they meant the affiliate would see their subaffiliate earnings and query why they did not get a part of it? Im a bit foggy there.

I really think this is a little mean that bonuses should have the 25% slapped on top, we all pay the % override on all the sales + VAT over everything and bandwidth?
Also how does this equate to bandwidth?

Perhaps Im old and cranky these days and just expect too much, are bonuses really that much of a financial loss that affiliate networks have to keep to the override on bonuses. I could understand if it was £1000’s but for £150?

Perhaps Im bang out of line and all networks should be slapping these charges on, would be great to get other networks perspective on this, perhaps Im missing something?

Do other merchants take the override in to account when putting promotions together re cash bonuses?

One last statement which came from the network was along the lines of, affiliate prefer physical bonuses rather then cash, is this true? Im my experience cash has always been king.

Thoughts?

[Maxafi]

One last statement which came from the network was along the lines of, affiliate prefer physical bonuses rather then cash, is this true? Im my experience cash has always been king.

I would say that when I first started out, cash was king. However, when you reach a certain level, a £150 bonus is neither here nor there and is nothing to get excited about (though welcome all the same).

A physical bonus however has a certain amount of excitement about it - receiving a parcel and opening up to find a snazzy freebie is always welcome. I'd say it generally has more of a 'personal' feeling about it to (if that makes sense?). Cash is just something that gets added to the accounts, a tangible gift is something you can use/play with.

Just my 2c anyway - physical bonuses all the way.

[freerock]

Mafamba is getting on quite well at the moment, and although a cash incentive would be great for me to receive, at the end of the day its like giving a kid another piece of candy when he has fifty. Most of the time cash goes in and out so fast you never see it, so I think with pyhsical gifts the value can be appreciated a lot more. And it is slightly more direct and valued if a merchant choses an affiliate a certain gift, as cash sometimes just seems the easy way out. Nonetheless cash bonuses would be great but usually go into the account and you never have the time to buy something with it. That is why I agree with Maxafi that physical bonuses are personalled more favourable.

[3wdl]

Not 100% sure on this one tbh, but I think it's fair enough for the network to charge override - I guess it's like saying that if an affiliate gets a cash bonus they should not have to pay tax on it.

In relation to what is better - I would say that real prizes are better than cash bonuses, especially if it's performance driven.

If you want to get the affiliates email address then why not just pay them via paypal?

[John]

Yup, physical bonuses are much more welcome than cash, particularly for small amounts like £150. I wouldn't bother doing anything for a promotion that offered a £150 bonus, but if was for a prize with similar value (gig/footie tickets, signed memorabilia, shopping spree at a merchant), I'm more likely to have a look.

And personally, I feel the network employee should be taken outside and shot, just for their persistent use of the word "loose" when they mean "lose" - only a small thing, but a real pet hate of mine grrr.

[graeme]

I think Dan summed up the gift vs money pretty well in his blog recently Morley Mouse » What do affiliates want? I would say offer a prize, but allow for a cash alternative of the same value and let the Affiliates choose when they win the prize or achieve the bonus.

[morleymouse]

Cheers Graeme

Basically from my experience it depends who your dealing with. As John said £150 to him is not going to make him really take an interest in a merchant, but a part time affiliate whos only just getting started making £50 a month from affiliate marketting, well £150 to them could quickly make them spend the majority of their time that they allocate to affiliate marketing on that merchant as long as its not a "most sales wins" incentive.

With regards to override on cash bonuses, its a bit annoying but a given I think (never used a network who dont charge it).

[Hero]

as with all incentives, you need to have different ones to motivate all various types of affiliates - obviously, a small cash bonus won't be such big motivation for bigger affiliates, but can work well for smaller guys.

In regard to override on cash bonuses, from a network perspective, the network offers the platform for this payment to go through and also be reported, will process the payment, might have to process referral payments from it as well, and lest we forget, there's a good possibility that the network recruited the affiliate on the merchant's program in the first place, speaking on a generic case.

[shyguy0507]

At the moment I would say cash, simply because I don't have very much lol but I can see why a prize would be better for more established affiliates.

So I would echo above, have a prize but also a cash alternative