Affiliate commissions - discuss

alento · November 2022

I really really suck at marketing. Really. But unfortunately marketing is a necessary evil. So it dawned on me that I could implement a affiliate program to encourage word of mouth advertising.

Some providers here are actively doing this, while some have in the past and have stopped. I'd like to know why? Why are you offering it and does it help, or why have you stopped offering it?

From the user/client side, what in an affiliate program do you like and dislike the most?

Discuss please LESbians.

skorupion · November 2022

Affiliate marketing as a low-end host can be challenging. Most people flock to companies like HostGator where they can get a 50% commission instead of a 5% one. Also on the low end, the only companies usually advertised via affiliate are the extremely low-end (Virmach).

At most on forums like this people will just put their aff link in their signature and hope that it will make some cents/dollars

MichaelCee · November 2022

I set up affiliates in Blesta from the get go. I haven’t actively pushed it but with less than 50 clients there are 0 affiliates in the system. The commission amount is 15%. I might raise it and push it some more but so far no benefits.

bikegremlin · November 2022

I like ~ 10% recurring commissions.

Compared to (big) one-time payouts, that means I have zero incentive to recommend a service that isn't a good fit for the potential clients. And it can provide a steady stream of income a lot of sales for the provider until they deadpool and take all the money.

alento · November 2022

@MichaelCee said: I set up affiliates in Blesta from the get go. I haven’t actively pushed it but with less than 50 clients there are 0 affiliates in the system. The commission amount is 15%. I might raise it and push it some more but so far no benefits.

You've got at least one now. Honestly, I think that 15% is the sweet spot. I do hope to hear the opinion of others though.

@bikegremlin said: I like ~ 10% recurring commissions.

Compared to (big) one-time payouts, that means I have zero incentive to recommend a service that isn't a good fit for the potential clients. And it can provide a steady stream of income a lot of sales for the provider until they deadpool and take all the money.

Yes, in my opinion, a one time payout is a waste of time. My goal as a client receiving referral income would be to build a stream of passive income. You can't do that with a one time payment. Sure, make a quick buck, but there is no staying power in that.

ralf · November 2022

Personally, when I see someone posting an affiliate link to me it cheapens the brand. Worse still, you have limited control on who you've given the link too, and if they turn out to be obnoxious and you see a hate filled message followed by an affiliate link to your company, I'd say that's worse than no link at all.

I'm going to pay the same whether I use the link or not, so I'd rather not use an affiliate link either. Even worse when people game it to get people to click on a link by accident, and then you send them a cookie to remember the affiliation and they independently find your company months later but they still get the money that should really be your profit. In fact, the only time I have used an affiliate link out of choice is when both proposer and purchaser share in the discount, although I've never seen this in hosting.

Even better is just to lower your prices a bit, and get a reputation for being both cheap and good quality. If you're going to give away 10% of your revenue, that's a much larger chunk of your profits to be giving away, and if you can afford to do that, you might as well just reduce your price instead.

But especially if you have a presence on the forum where your users will be posting their affiliate links, then what's the point?

fluttershy · November 2022

I try to avoid using affiliate links. I feel like it cheapens the brand, and if I recommend something to someone, my sending of an aff link cheapens my recommendation since I now get financial gain from it. I prefer to recommend providers based off of my own experiences with them, as opposed to spamming aff links hoping for a few bucks.

bikegremlin · November 2022

@ralf said:
Personally, when I see someone posting an affiliate link to me it cheapens the brand. Worse still, you have limited control on who you've given the link too, and if they turn out to be obnoxious and you see a hate filled message followed by an affiliate link to your company, I'd say that's worse than no link at all.

I'm going to pay the same whether I use the link or not, so I'd rather not use an affiliate link either. Even worse when people game it to get people to click on a link by accident, and then you send them a cookie to remember the affiliation and they independently find your company months later but they still get the money that should really be your profit. In fact, the only time I have used an affiliate link out of choice is when both proposer and purchaser share in the discount, although I've never seen this in hosting.

Even better is just to lower your prices a bit, and get a reputation for being both cheap and good quality. If you're going to give away 10% of your revenue, that's a much larger chunk of your profits to be giving away, and if you can afford to do that, you might as well just reduce your price instead.

But especially if you have a presence on the forum where your users will be posting their affiliate links, then what's the point?

I think you're missing an important point.
Affiliate is paid only for purchases (that have matured past the money-back refund period).

I.e. instead of paying for advertising (with hit-and-miss percentages), affiliate payments bring you revenue 100% (i.e. you pay them only for done & confirmed purchases).

With that in mind, I think they are fair. You pay people for bringing you business & revenue.

Like everything else, affiliate has its pros and cons. Some companies do fine without it. Some do fine with it.
It depends on the service type, business model, brand etc.

For example:
I don't let affiliate programs affect my product and service recommendations.
But, if I'm going to bring in thousands in sales, I sure let the affiliate program affect my shop link (if they sell the product I recommend).

ralf · November 2022

@bikegremlin said:

But especially if you have a presence on the forum where your users will be posting their affiliate links, then what's the point?

I think you're missing an important point.
Affiliate is paid only for purchases (that have matured past the money-back refund period).

I.e. instead of paying for advertising (with hit-and-miss percentages), affiliate payments bring you revenue 100% (i.e. you pay them only for done & confirmed purchases).

With that in mind, I think they are fair. You pay people for bringing you business & revenue.

This is the point I disagree with. If the provider is on LES and some random user on LES posts an affiliate link, then it's not really adding anything unless the provider is truly abysmal at promotion.

And with LET (I've seen aff links there more than here), every time I see an aff link on someone's signature, it really does cheapen the brand for me.

I don't let affiliate programs affect my product and service recommendations.
But, if I'm going to bring in thousands in sales, I sure let the affiliate program affect my shop link (if they sell the product I recommend).

I guess you are the type of person affiliate links are useful for - as you have your own website that's widely read, and by a very different readership that the provider wouldn't normally see. Maybe you do actually legitimately drive some sales.

But for random people who are just going to use the links in the same places the provider makes offers - it really doesn't add value.

And if a provider can do $5 with an affiliate link, they can also do $4.50 without. The latter should lead to more sales overall, IMHO.

MikeA · November 2022

Some people don't like smaller recurring commission, but I've paid out around $30K in recurring affiliate commission, with some individuals having thousands of dollars. If you have websites that have genuinely good/useful content you can get a lot if you refer people who sign up, who end up keeping the service long term because they like the recommendation.

jarland · November 2022

@MikeA said:
Some people don't like smaller recurring commission, but I've paid out around $30K in recurring affiliate commission, with some individuals having thousands of dollars. If you have websites that have genuinely good/useful content you can get a lot if you refer people who sign up, who end up keeping the service long term because they like the recommendation.

Interesting note from my perspective. I never noticed a drop in revenue or referrals from switching off my affiliate system. It was a huge mess, and I hope I did right by everyone when sorting through it, but damn am I glad that's over.

bikegremlin · November 2022

@MichaelCee said:
I set up affiliates in Blesta from the get go. I haven’t actively pushed it but with less than 50 clients there are 0 affiliates in the system. The commission amount is 15%. I might raise it and push it some more but so far no benefits.

I think it's fair to offer affiliate comissions.
I recommend services which are good - regardless of the affiliate option's existance (Winscribe and MXroute come to mind first) - but of course I'd prefer to get a comission and would consider it to be more fair (affiliate means I'm bringing in a customer afterall).

But, high comissions mean that customers are being ripped off - because they are the ones who are basically paying for those - service provider has to work with profits. So, I think ~10% is the sweet spot. Not too low, but not too high either, IMO. Unless we are talking about one-time payouts (i.e. not recurring affiliate commissions). For those, I think a min. of 20% is a must (if not higher).

I'm curious about how good Blesta is with tracking all the commissions. Keeping a track of those and making sure everyone gets paid is my main concern and reason for not having implemented any affiliate system for my services (edit: well, that and the fact I don't plan on doing any advertising in the foreseeable future).

alento · November 2022

@bikegremlin said:

@MichaelCee said:
I set up affiliates in Blesta from the get go. I haven’t actively pushed it but with less than 50 clients there are 0 affiliates in the system. The commission amount is 15%. I might raise it and push it some more but so far no benefits.

I think it's fair to offer affiliate comissions.
I recommend services which are good - regardless of the affiliate option's existance (Winscribe and MXroute come to mind first) - but of course I'd prefer to get a comission and would consider it to be more fair (affiliate means I'm bringing in a customer afterall).

This is my line of thinking as well as my modus operandi. I do not and will not recommend someone just because there is a commission involved, but rather because the service/product is good. Period. Unfortunately, I think that people who just look to make a quick buck on affilliate commissions hurt it for everyone and lead to images such as the one @ralf and @fluttershy share.

But, high comissions mean that customers are being ripped off - because they are the ones who are basically paying for those - service provider has to work with profits. So, I think ~10% is the sweet spot. Not too low, but not too high either, IMO. Unless we are talking about one-time payouts (i.e. not recurring affiliate commissions). For those, I think a min. of 20% is a must (if not higher).

I am thinking 15% is a good number as it is enough to make a difference and is not really all that much in the end. It is the amount that @Francisco at BuyShared/BuyVM pays. I as a client appreciate that I get a small token of appreciation for my loyalty to a provider.

I'm curious about how good Blesta is with tracking all the commissions. Keeping a track of those and making sure everyone gets paid is my main concern and reason for not having implemented any affiliate system for my services (edit: well, that and the fact I don't plan on doing any advertising in the foreseeable future).

I suspect based on conversations with Paul from Blesta on Discord, that it sucks. There is no real tracking involved other than a monthly affiliate report as I understand at this moment. I have just onboarded my first affiliate and will see, but being a numbers guy I know that I am going to hate it. If commissions are calculated daily in a cron run, then the merchant needs to know daily what amount he is responsible for as financial accounting demands it. We will see....

Affiliate commissions - discuss

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