Next - Commission changes - Is There Any Irony

**KevinEdwards** · 21-12-07

Hi Fraser,

Have to disagree, anyone making a business decision has to find an acceptable CPA. I'm not talking specifically about Next here but generally.

When asked by a new merchant what commission rate they should pay it should always be benchmarked against conversion, % of sales validated etc. Any network not doing this in my opinion isn't doing their job properly. It's the approach I've had for the last four years I've worked in the industry and is shared by others.

A merchant can pay less than a competitor but be far more rewarding for an affiliate.

**Fraser** · 21-12-07

Hi Kevin

Totally agree that a merchant can have a lower commission rate but still be more rewarding but it's just the practice of looking at the competitors and then justifying the decision to lower commission rates because they feel they are paying more than competitors that I think hurts both affiliate & merchant in the long run. I'm sure you would agree that you would prefer Next not to be taking this action too.

IMO The merchants that have made a big success of affiliate marketing are the ones that have looked at how much they can afford to pay affiliates and not how little they can get away with.

Anyway I don't want to hijack the thread as it's something I personally feel is a more general issue that is creeping in and not just in the case of Next.

**Elaine** · 21-12-07

just wonder if the time and money saved by not having to validate and cross check sales for returns and online fraud is factored into the decision on how much commision to pay ....

I should imagine that the amount of time saved for an outfit the size of Next is quite colossol, and

correct me if I'm wrong but don't the Otto group - Freemans of London, Grattans, Kaleidoscope etc promote 'no claw backs for returns'? (and yes I do know that they also make you wait for a while before paying out, but if you're that desperate for the cash you shouldn't be dependant on AM)

**Qui Gon Jinn** · 21-12-07

Hi Kevin,

I am only having a bit of light hearted fun with next comment, but will that mean that Dixons qualify for next years competition becuase they introduced new commission bands of 0% when previously there were not any. Whether paying lead or cpa, it's still a commission level and in my opinion shouldn't have qualified, though voting suggests I am disagreed with. So "Dixonitus" for the 2008 awards .. woohoo .. I'll drink to that. But I will be having a word with Existim on what ought qualify.

Whilst I see the logic, for a flat % taking into account there will no reversals, this will need to be revisited regularly to ensure it truly reflects the hooded claw-back rate on the channel. However in this day and age why can we not deal with commissions to .1 % accuracy. Also, as some affiliate may have had lower reversal ratess than others, if networks can do tiered commisions on products, why can't the main affiliates on the program have a flat rate which is individually reflective of them & not an aggregation of all.

PS I have to back Fraser's comments, but Kevin much appreciated you responded to the thread.

**Rachel Humphreys** · 21-12-07

Hi Purple

In response to you're question about earnings on Next Retail and Next Directory, we have joined the two programmes so that affiliates can earn commissions on both directory applications and retail purchases regardless of which programme tracker link was clicked on by the user.

So, if you are promoting Next Directories using the tracker link from this account and the customer orders a directory and continues on to purchase from the retail site, you will earn commission on both.

The only case where this does not apply is if an affiliate is not joined to both programmes. In October we had to 'hide' the retail programme and as a result, any affiliate who has joined the Directory programme since then will not be earning commissions on retail.

Thanks

**Elaine** · 21-12-07

Hi Rachel - sent you (and Kevin) an email - any chance of a reply before the 1% commission rate kicks in?

cheers

**adamski** · 21-12-07

Hi Elaine

Our email server is currently being transported to our new office. Your best bet is to email their hotmail address:

Kevin - kedwards100@hotmail.com
Rachel - rachelhumphreys2@hotmail.com

Adam

**Rachel Humphreys** · 21-12-07

Whilst I see the logic, for a flat % taking into account there will no reversals, this will need to be revisited regularly to ensure it truly reflects the hooded claw-back rate on the channel. However in this day and age why can we not deal with commissions to .1 % accuracy. Also, as some affiliate may have had lower reversal ratess than others, if networks can do tiered commisions on products, why can't the main affiliates on the program have a flat rate which is individually reflective of them & not an aggregation of all.

When we're talking about reversals, we're largely talking about returns and it is unlikely that the percentage of returns will vary that much between affiliates due to the nature of the Next customer and how they typically order ie) Purchasing a size 10 and size 12, keeping one and returning the other because it is so easy to return in store.

I also want to stress that we are looking to optimize the programme in the New Year so that it can work succesfully for merchant and affiliate. Just one of the initiatives is to implement Commission Groups and factor in different return rates per product area into the commissions that we offer.

**Qui Gon Jinn** · 21-12-07

A £100 item at 2% generates £2 commission.

An item reduced to £50 in a sale at 2% generates £1 commission, thus the commission received proportionally reduces.

I am just sensing a bit of blag & spin from the merchant

So will it say on their website, "courtesy of spinning our affiliates we can now save you an extra £1 on this item?"

Networks have a hard job sometimes, if they are not the buffer they get sometimes pummeled instead. Still like you guys

**Elaine** · 21-12-07

Happy to say that Rachel responded to my email with a telephone call - and her feeling poorly as well so it was much appreciated - it is nice when Networks are that proactive.

Thanks Rachel

**renegade** · 21-12-07

Does the network, in this case AW, also take a hit?
If we're taking less commission what happens to the network override commission?
As Paul already pointed out a percentage commission already means less commission on sale items so it seems ridiculous to also lower the commission.

**drivetowin** · 21-12-07

Must admit the bit that bugs me is the reduction in standard commission to 2% - when it went from 4% to 3% we were told this was to factor in reversals - now we're told it's going to 2% to factor in reversals - now I can't believe the reversal percentage has gone up - so who got their sums wrong the first time round?

**KevinEdwards** · 22-12-07

Hi,

Next is aware of this thread and the issues raised.

I'll be keeping an eye on the stats and benchmarking them for Next so they're aware of the landscape.

I'm replying on my PDA so will send a fuller response when I'm on my laptop.

Thanks,