In our first post of this series, we discussed some of the more straightforward ways to align your affiliate programs with the larger business goals of your brand. This post focuses on more complex goals and how affiliate commissions can help your business achieve them.
Increasing Average AOV
Many companies hope to increase the average order size from existing and new buyers. You can easily develop robust commissioning programs that incent larger purchases.
Value-Triggered Commissioning compensates partners for purchases that are larger than a threshold value. You simply create offers that kick in above that threshold. Like $20 off orders of $75 or more.
Escalating Value Commissioning compensates partners for any order but delivers a larger cash or percentage incentive for larger purchases.
Limited-Time Commission Surges enable consumers to get a larger discount if they act quickly. This can increase urgency and significantly boost conversion rates.
Increasing LTV (Subscription Businesses)
Digital services companies make far more money from long-term customers than people who cancel quickly. Often, the costs of a new customer far exceed the profit from a single month or two of the subscription. To incent partners to drive long-term customers, you need to find a way to reward partners for customers that pay for more months of service.
Annuity Commissioning offers a small incentive for the first purchase and additional monthly rewards based on customer renewals. A couple of the leading platforms can do this – you’ll need to talk to your CS or Account Management lead to determine if this is feasible with your solution.
Multi-Month Deal Offers create commission structures for multi-month conversions. Instead of rewarding a partner for driving a one-month subscription, you structure the deal to pay when customers choose a multi-month package. You need to make the commission incentive reasonably large for such a program to get picked up by partners.
Escalating Offer Commissioning would reward partners that drive customers who buy higher value or multi-month bundles but get a smaller commission for base-level conversions. This ensures your partners make money for every sale but are incented to sell the more profitable offerings on your behalf.
There are approaches available for companies interested in increasing the number of purchasers who buy from multiple categories. Still, they tend to work better for companies with more limited product assortments than those with hundreds or thousands of items, like department stores.
Bundle Commissions can be effective for companies with limited SKUIs or if they feature broad appeal items. The offers can be easily understood by consumers and have broad enough appeal to make bundles appealing to many people.
If you want to cross-sell, consider creating dynamic programs with on-site conversion optimization partners. These tools are powered by business rules that dynamically make bundles when customers add items to their carts. Their sophistication ranges from very inexpensive Shopify and BigCommerce widgets to advanced platforms like UpSellIt and RevLifter.
Many companies must quickly sell inventory that has lost or is about to lose value to customers. The most extreme example here is unsold airline tickets and hotel nights because once their dates pass, their value drops to zero. For retailers, seasonal goods and trendy items like fast fashion leftovers also need to be liquidated. Affiliate commissions can be aligned to achieve those goals.
Distressed Inventory Commissioning assigns a high commission rate with a short expiry to incent partners to push the goods.
Not all partners have the team or infrastructure necessary to respond to short-time offers. They simply don't have the staff or tech to react quickly to commission changes. But some partners are well equipped to promote distressed inventory.
Lapsed Customer Reactivation
It can be frustrating for brands to win a first-time buyer who never returns to repurchase. Special commissioning programs can target offers to lapsed buyers.
Lapsed Customer Commissions can reward partners when they get a past buyer to return and make a purchase. These programs are best-offered to partners that can pinpoint these people for outreach.
Email partners are great for this tactic. By creating an audience of their subscribers that are also on your customer list, you can leverage their strong customer relationships to stimulate more purchases than you might with your email programs.
The possibilities for advanced commissioning strategies are constantly increasing.
As you consider your options, it’s helpful to remember that any program you field needs to be manageable by your existing team and lucrative enough for it to interest partners. Only by aligning your overall company goals with these two constraints can you create an aligned commissioning strategy that is successful and sustainable.
As you and your company set brand goals, book time with your network or platform and your largest partners to discuss approaches that could help you deliver on the business objectives.