Time for more lifetime revenue shares?

[3wdl]

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I’ve worked in a few different industries, but it was only once I was in gaming that I saw affiliate marketing rewarding its affiliates on the lifetime basis of the customers.

So why do we not see this in more areas? Why, for example, do we not see DVD Rentals having a lower CPA and paying out based on the lifetime of the customer? Why are sites that offer a user registration form only paying out once?

Out of interest, as a question to affiliates (and merchants) on the board, would you prefer to have a lower initial CPA / % and earn an income on the lifetime of the customers – sure, there are a number of obstacles in the way (contracts, merchants actually sending the revenue share data, etc) and it would only work in specific sites / areas.

Maybe that’s a gap for an affiliate network to come along and have this as their niche. I’d be interested in hearing people’s thoughts on how this could work.

James

PS. This thread is not an attempt at getting in Moderators choice again

[Supercod]

PrezzyBox on Paid On Results was one of the very first to offer life time of commission on customer sales, more are doing it, however sadly sites that offer this are very much in the minority, lets see more

[Hero]

I think this very much depends on the sector, and it can't apply to all sectors, lifetime commissions. For gambling, as the customer is more prone to remain with the gambling site without having to search again and again, it makes sense to pay the last referring affiliate for however long that customer plays. In other sectors though, for instance electricals, where the customer will search in a variety of places for their next purchase, rather than go again directly to the shop they previously bought from, it would be unfair to other affiliates who have reconvinced the customer to buy from that merchant again. There is less and less brand loyalty nowadays, customers don't go directly to a shop any more, without having researched thoroughly, unless they have seen that after having researched for a number of different purchases, they always end up buying from the same place. Again, because of the price wars out there, and the customers being aware of them, that's not as usual either any more.

[Supercod]

Not an issue if you operate by checking for the cookie first before looking at the customer base, this way new sales by Affiliates who have “re-convinced” the person to buy again will be credited.

I agree some people do shop around however a lot of people just buy from who they are used to buying from and customer base true roots are based in partnerships of Affiliates giving preference to someone to help build there business in return for longer lasting benefits and not just flash in the pan money.

[Frostie]

PrezzyBox on Paid On Results was one of the very first to offer life time of commission on customer sales

Yup I remember the introduction of this and got extremely excited at the prospect. As Clarke says, since then not many have followed suit. I think on the POR front you also have Gadget Storm and Natural Instinct if I am correct?

I would love to see more and more of these programs being introduced, and I also believe that the merchant has to take some action to ensure Brand Loyalty and not just rely on being the cheapest in every area.

To answers Jim's original question, I would like to see options, like is currently available on St Min for example;
£10 CPA
£5 CPA + 24% Rev Share
£40% Rev Share

Everyone is different and has different ideas, so offering a selection which the affiliate can choose from, is ideal for all parties.

[3wdl]

I agree some people do shop around however a lot of people just buy from who they are used to buying from and customer base true roots are based in partnerships of Affiliates giving preference to someone to help build there business in return for longer lasting benefits and not just flash in the pan money.

Agree with Clarke a lot here - to give an example, I was with a family member on Sunday who needed to buy a new Wireless Access Point - he is very internet savvy but went straight to dabs.com to order is goods - before he hit the checkout point I asked if he would look around for the goods, as dabs is not always cheaper. He said that he had always had a good experience from them so would use them above other providers due to the level of experiences that he has had.

There are also, of course, plenty of other cases - I remember (when I had some spare cash) spending almost £1000 on play.com over a very short period of time after selling my house (I should have paid of my debts with that!) after finding out about the site.

Then look at other areas - maybe more niche programs where there is slightly less choice in the market place.

Seems POR have some good examples of this - out of interest Clarke, how do you define the lifetime of the customer? If the retailer was to leave the network, do they have any long term commitment at all?

[Supercod]

Seems POR have some good examples of this - out of interest Clarke, how do you define the lifetime of the customer? If the retailer was to leave the network, do they have any long term commitment at all?

Lifetime of the program with us, if the Merchant wanted to arrange something after they left than that's up to them.

[John]

Anyone who's ever spent time over a pint with me knows I've been banging on about lifetime commission since the year dot, and it's always my preferred choice, as long as the merchant doesn't take the pee with the option... remember one a few years ago offered a choice of £25CPA or a % revshare so low every customer would need to spend £3,500 just to match the CPA commission.

It's maybe not ideal for the PPC guys who need to see a quick return, but if you can build up a decent level of residual commish, it can pay dividends in the long run. It's certainly got us through some dark days over the years, and now that I'm back, increasing our lifetime commissions is the first thing I've been concentrating on.

[OLBG]

As has been alluded to above there are risks with lifetime commissions should a site decide to move networks, or even just change their commission structure.

Ladbrokes left BeFree for tradedoubler and my customer base there seems to have disappeared without a trace.

Im pretty sure the blackstar/sendit program ended in tears too - Nadeem as I remember was big on that one for some time.

The other issue is you are reliant on the merchant to market to the customer properly. Theres a big difference between the average income 25% profit share would be worth across different bookies for example, and in some cases a £20 or so upfront works out better whereas there are others (one in particular) where the residual is typically worth hundreds of pounds.

[Aceicol]

Just out of interest how do you see them working / or how do they currently work?

Say Affiliate A sends customer to the Merchant and they make the sale, they get their 10% commission, then in two months time say the customer searches again but clicks through from Affiliate B, do they then get there 10% commission? Do they both then get commissions for life? if not who does is Aff A or Aff B entitled to the commisson?

Surely they can't both get a commisson?

Not being funny, I just don't understand how the model works? Please explain.

[Shane]

The lifetime residual route is what has put me off pushing gambling in the past.

Not the fact that it's available, I love the idea of lifetime residual, it's the fact that gambling merchants, who you've spent thousands of pounds on driving traffic to and as a result have established a lovely £xk a month residual base, then leave a network and start at a new one and the slate is wiped clean, all existing users are "lost"

for that reason I've not really dabbled with gambling merchants, I think they are more stable now than before but still it's variable that needs taking into account.

The USA, once again, seems in front again with residual deals, take joebucks.com for instance

"Q: Do I get credit for re-orders? How much?
A: Yes. When a sale comes in with your affiliate code the customer now belongs to you in our database. Whenever this customer comes back to any of our sites you will get full credit for the sale. Re-Orders are paid the same commission as an initial sale...50%"

so not only do I get paid the same 50% rate, if they go via ANY of the 30 sites they run I get paid 50% of the sale. (ok haven't dug deep enough to see what the crack is for new sales via my code if the user is already a member.. but hey at 50% or residual, I'd be happy to lose some to other affs as I'm sure I'd gain some from others too if it's a "until resent via another affiliate" deal)

A uk site I use pays 20% commission on sales of a competition ticket, the tickets cost £20 to £60 ish, I send a sale in and earn 20%, the user plays the competition and that's that.

Next month we all get an email saying, new competition is almost ready for drawing, enter now, do it do it do it .. blah blah... I sometimes do and many many users referred by affiliates will no doubt do the same too, yet no affiliate is paid for anything for any of these sales which are directly as a result of being introduced to the merchant by an affiliate, sure the merchant emails users once a month but they wouldn't even be a user if it were not for the affiliate in most cases.

Some US merchants, whilst not residual, even pay 100% of the intital sale value as they obviously have confidence in their products and the fact they will go on to make more sales to that user, agreed that's not residual but it does show a forward movement I guess.

It's about time the UK woke up to affiliate marketing as a partnership deal where the affiliate is proportionately rewarded for the real value of a new user/customer for the duration of the relationship between the user and merchant.

[clehmann]

As an affiliate my experience with lifetime commissions is very good.
Those programs are the ones that I really earned good with.

As a consultant I found that merchants are extremly wary to even consider this model. They fear by offering a low percentage (which is lifetime) they can't match the offers of there competitors (even though these are normal cookie duration 30 or 60 days offers) because they don't think that affiliates will see that the lifetime deal is better
Furthermore it's harder to convince the management of long lasting commitments and relationsships when so far you are budget driven in marketing.

And - worse - some merchants simply argue that it's much cheaper for them not to pay lifetime. They argue - we know the repeat business value of our customers is very hight - but why pay affiliates lifetime if we don't have to and there are still enough affiliates using our program. They are right for the moment - but the lose out on the chance of having a USP. And once a major competitor of them goes for lifetime program - they will have to reconsider but then they are only "me too"

[clehmann]

Just out of interest how do you see them working / or how do they currently work?

Say Affiliate A sends customer to the Merchant and they make the sale, they get their 10% commission, then in two months time say the customer searches again but clicks through from Affiliate B, do they then get there 10% commission? Do they both then get commissions for life? if not who does is Aff A or Aff B entitled to the commisson?

Surely they can't both get a commisson?

Not being funny, I just don't understand how the model works? Please explain.

You have to define the rules and publish them in your affiliate program terms. I would say normally it would work this way.

Once a new customer has been referred by affiliate A it gets tagged in the merchant's customer data base as belonging to affiliate A.
In your example B would not profit from this customers.
Some affiliates argue they would not promote such a program for fear not being rewarded in instances were an existing customer tagged to another affiliate makes an impulse buy through their site.
But you have to rethink. Unless the program is of a very well established brand (like amazon or ebay) chances are good that a large portion of sales you refer are in fact new customers.

As said in the post above it is very profitable and I still earn from people I referred more then 5 years ago.

[drivetowin]

Personally I'm against lifetime commission programmes as in the long term it will stifle new entrants to the affiliate market space..the barriers to entry to the affiliate space are already far higher than they have ever been ..gone are the days when you could just knock up a site and make money...or run a ppc campaign starting with a £50 budget...if 90% of customers were signed up to key high street merchants for example through existing affiliates, where would be the incentive for anyone other than those existing affiliates to promote them.

Now as an established player why should that worry me - well with my 'self' hat on of course it doesn't but with my 'wider view' hat on I believe it is the 'churn' within the industry, new faces coming in, people giving up and the stalwarts who stick there no matter what, which give our industry its great vitality...and without that vitality in time the industry will wither and die.

Yes of course commissions should reflect lifetime value but only up to a point - we are competing against other routes to market and so we have to offer the same 'value' - shopping comparison sites don't charge a share of lifetime value, ppc doesn't cost a share of lifetime value, cpm advertising doesn't costs a share of lifetime value, nor come to that does even tv or press advertising - so yes we should be getting fair reward, but to the merchant we still need to represent value and not liability.

[Hero]

I was with a family member on Sunday who needed to buy a new Wireless Access Point - he is very internet savvy but went straight to dabs.com to order is goods - before he hit the checkout point I asked if he would look around for the goods, as dabs is not always cheaper. He said that he had always had a good experience from them so would use them above other providers due to the level of experiences that he has had.

There are also, of course, plenty of other cases - I remember (when I had some spare cash) spending almost £1000 on play.com over a very short period of time after selling my house (I should have paid of my debts with that!) after finding out about the site.

Then look at other areas - maybe more niche programs where there is slightly less choice in the market place.

I agree that with big merchants, where brand recognition is a fact and people are satisfied with the customer service as well (which is yet another factor to take under account for an affiliate program overall) then database tracking is a very good option. However, for SMEs and niche merchants, this is a double-edged knife. Yes, obviously it might give the affiliates a further incentive to take the risk in promoting something they are not sure is going to work, however the commission is lower and they might not make up for the cost in advertising that merchant till way too further down the line, as repeat orders might not be as frequent as they would expect. Furthermore, with niche merchants, where obviously demand from customers is more limited, if those customers have already been claimed by some affiliates, where does this leave any new affiliates wishing to take up on the program? And with SMEs another issue is time; we struggle to make the point across that AM will not work overnight for them, so if this is going to make it even harder for their program to start producing results, then it's understandable if it's not the first choice. Might be an idea for discussion when revising the program for upgrading it once it has reached maturity, I would be interested to see if that would be a good option then.

Personally, when doing a consultation call with a new merchant, and bearing in mind that we do target SMEs, I advise towards a combination of a healthy sector commission within the merchant's margins and a strong cookie, which I believe will comprise as a better incentive for affiliates to pick up the program and see good return on their investment in a more sustainable amount of time (plus obviously the prepayment).
We do offer the tracking option of tying a customer to a particular affiliate, so I would be very interested to hear whether affiliates would be more prone to pick an SME/niche merchant up if they offered it. And seeing how SMEs are the driving force of the market (and the economy overall), I think this would be a good debate to have.

But, and that's a personal thought, doesn't the lifetime commission defile the "last referrer gets the commission" axiom? And I always wondered how it is combined with the merchant's local tracking.