Commission Tools

The basis for affiliate marketing is that your affiliates sell your product or service in order to earn a commission. To keep your affiliates productive, you need flexible commission tools that will help keep them motivated. It is important that you have these tools because other merchant affiliates may have them and you certainly don't want to lose your affiliate base to your competitors..

The following checkpoints will help make your mega affiliates happy or they may even help you win over those from your competitors.

Are your commission management tools flexible enough?

Flexibility of commission management tools is a must for affiliate marketing success. It is not possible to satisfy all of your affiliates with one single commission structure. As the needs and demands of each affiliate are different, you must provide a solution for them. You need a tool that will work to motivate your affiliates so that they will promote your product aggressively.

With a flexible commission management tool, you can group certain requirements and set up commission schemes for different affiliate groups and product lines. For extraordinary affiliates, you can also set up special commission structures.

All this can be accomplished with the correct tool that can be accessed through the admin panel. Without it, your affiliate marketing business could reach a dead end.

Can the tool set special commission structures for a group of affiliates?

You'll find that the demands of two different affiliates are never exactly the same; however, with the right tool their individual needs can be grouped together based on similar demands.
It may not make sense to spend a lot of time managing affiliates' commissions when there is a 95 percent chance that they will never bring in any sales. But you cannot ignore them either because 5 percent of them will account for 90 percent of all your affiliate sales.  A proactive approach is vital to satisfy these high producers. 

With a flexible commission tool, you can set special commission structures for any group.

For example, the groups can be classified as:

• general (default)
• high traffic news/community sites (will demand high amount of tier 1 commissions)
• affiliate Network and Forum sites (will demand high amount tier-2 commission)
• active affiliates (may need special attention)

Does the tool allow for special commissions to current or prospective mega affiliates?

You will find that 70 percent of your affiliates will never qualify for a payment. Approximately, 10 to 20 percent of your affiliates will qualify for payment maybe once every three months or once a year. An important 5 to 10 percent of your affiliates will account for 90 percent of your affiliate sales. These 90 percenters are your mega affiliates.

It is hard to create a mega affiliate automatically unless you motivate them. High traffic on their site will not help you unless they promote your product aggressively. For this to occur, they have to be satisfied with their affiliate deal. They must be made aware that they are getting special deals from you. However, you will not be able sign a special deal with your cash-cow affiliates if your affiliate software does not have the option of setting special commissions for a specific product line.
A flexible commission tool will allow you to do this.

Is the tool able to set up different sets of commission structures for different products lines?

It is quite likely that you are selling multiple product lines with different profit margins. Let's say you are selling e-books and printed books from the same website. You have a 90 percent profit margin selling e-books but only a 20 percent profit margin from selling printed books. You can probably give a 60 percent commission on an e-book sale but you cannot give more than a 10 percent commission for a printed book sale.

If your affiliate software does not allow setting parallel differential commission structures for both product lines, you have to set up and manage another affiliate system to sell the other product line. This method is impractical and cumbersome for you and your affiliates.

Does this tool support at least a second tier commission structure?

Ninety-five percent of your affiliates will never bother about second tier commissions (commissions earned by first affiliate for a sale made by a customer referred by a second affiliate who is in turn was referred by the first affiliate). However, presenting this option to your affiliates can be a major motivating factor to the network site and to forum site owners. 

A third or higher-level commission structure has little practical value; rather it works more as a sales gimmick for the affiliate software vendors.