If you utilize affiliates to grow your online sales, don't do what Staples does with its affiliate marketing channels. This one mistake will destroy the loyalty of affiliate marketers who promote your products or services.
What as an Affiliate Marketer and What Do they Do?
Affiliate marketers are independent commissioned salespeople. They generate leads, promote offers, and cultivate a community of buyers. This kind of marketing is expensive for affiliates, can be rewarding with good quality programs.
Bad enough, these affiliate marketers must deal with search engine algorithm changes, changes in marketing laws, and the increasing costs of hosting. If your program has even the slightest hiccup, they will run to the hills to offer product from someone else.
A good relationship with a network of affiliate marketers can mean volumes of new customers for better than breaking even. The better your program runs, including how accurate and timely you pay out commissions, the more likely your program will attract new marketers.
In May 2008, I received a letter from Staples about changes in their affiliate program. The letter states:
“Staples is experiencing short term budgeting constraints across all marketing programs for June and July. As a result, the affiliate channel will be affected and commissions will be reduced for the majority of our publishers over this short time frame.”— Clueless fool running Staples affiliate program
They are saying that while affiliates are helping them sell products, they are not going to pay you as they have in the past. It's like moving the goal post. Changing anything about your commissions, payment schedule, or promotions doesn't go over well.
The letter went on to say that “some commissions will be reduced to $0 until August to ensure the program stays within its extremely limited budget.“
If you were in the shoes of affiliate marketers, this kind of change would be frustrating. They spend hours updating websites, creating links, and putting your promotions in front of their visitors.
A Network of Commissioned Sales People is Not A Free Salesforce
Are you making this same mistake with your sales force? Affiliate marketers are helping you sell products; cutting their commission will cut their interest in your program. Just because you pay for performance doesn't mean these partners are not free.
An affiliate marketer doesn't care about your “short-term budget constraints.” Any commission cut reduces your value to them; many will move on to another program.
Instead of cutting commissions, find other areas to reduce costs. Never cut off those who generate revenue for your organization, even if temporarily. I'll follow up this story with tips on making your Internet sales channels more profitable.
It costs to recruit quality affiliate marketers. While most don't produce sales, the few who do are worth more than your marketing budget. Yet some sneaky marketing managers think the sales will keep coming because it's hard to change links.
The website maintenance side of affiliate marketing is difficult, but savvy marketers can swap out your promotion in minutes if you upset them. Some even run A/B splits to monitor the payout of individual programs. Cutting commissions destroys partner relationships.
If you have a funding problem, find ways to work with your affiliate marketing partners. Options include rerunning campaigns that are known to be profitable. Budget changes are why selling in any channel requires accurate marketing performance measures.
Have you seen this kind of mistake in managing marketing channels? If so, what do you think Staples could have done differently? It's certainly a last resort to short your marketing partners or affiliates.
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