Are Your Affiliate Commissions Competitive?
A guest article by Brett Owens of LeadDyno team. He hosts webcasts about affiliate and influencer recruitment most business days, which are free for Shopify users.
Posted 5 years ago by Jonathan Kennedy
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Want to know the “going rate” for affiliate commissions in your industry?
We surveyed 210 of the top affiliate programs in eCommerce, across a range of 21 product categories. From clothing to jewelry to health products and beyond, we’ll discuss the specific commissions these merchants are offering to drive successful affiliate and influencer marketing programs.
But first, let me explain how these leading merchants decide what to offer their referral partners.
How to Set Your Affiliate Commission Rate
If you spend money with Google, or Facebook, or anyone else online, you should know how much you’re willing to spend to acquire a new customer.
The big sites, like Google and Facebook, make you buy traffic up front. This means that you pay for clicks without any guarantee that they will convert.
After the fact, these sites will show you your “cost per conversion.” (Facebook will do everything it can to show you cheerier – and meaningless – metrics such as costs per interaction or whatever. Don’t pay attention to those, it’s conversions that matter).
The ultimate conversion is a sale. And you should know how much you’re willing to pay for a new purchase. Remember, it goes beyond that single transaction. You now have a new customer, who you can sell more things to in the future, and get referrals from. So the value may extend beyond the profit margin on that first purchase.
Let’s say you believe a new customer is worth $20 to you. Great – this is what you can spend “per conversion” in any online campaign.
You may want to represent this as a percentage of the sale. If you have multiple items at different price points, you may instead be willing to spend 10% or 20% of the sale total to seal the deal.
I believe in extending this “revenue share” to affiliate partners. My thinking is that those who are able to bring us, new customers, are as valuable as our other marketing cogs – and they deserve a similar rate. Plus, I want to make my affiliate program more compelling than my competitors’. So I want to pay as much as I can to my affiliates.
What Others in Your Industry are Paying Today
Now, you take that number – either what you are paying today, or what you should be paying – and compare it to your competitors who are running successful affiliate programs.
A great way to do this is to join an affiliate network as an affiliate and browse merchant offers to see what they are paying. This is exactly what I did with our eCommerce Affiliate Network, the leading affiliate and influencer platform for Shopify stores.
You can click here to join for free as an affiliate if you want to. But you don’t have to – I crunched the numbers for you below. Here are the average affiliate commissions that Top 10 merchants are paying in the following categories (displayed as percentages of the sale):
Ready to launch your affiliate program? Here’s the 1-2 combination of Shopify apps that’ll do everything you need: