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Affiliates – Part 2

In my last post I debated whether or not affiliates are worth it for merchant’s, or in my particular case an ISVs (Independent Software Vendor). I personally believe that they’re worth it, but it takes time and effort to nurture for affiliates to be worthwhile. In any case, I promised I would write a follow-up with more detailed metrics, so here goes.

And for those of you who haven’t read the last post, I concluded with the following tip: If you do decide to go the affiliate route, you’ll find that almost all of your affiliates will fit into two main categories. Those that have 0-1 sales and those that have many sales. To maximize your results from your affiliates I recommend you increase the commissions of your higher performing affiliates, those that prove themselves. This will make them happy and work even harder to get you more customers.

To give you an idea of just how true that is, here’s our sales graph from ShareASale listing our affiliate sales distribution. You’ll find that 86% of our sales went to our Top 10 affiliates as illustrated in the graph below. That’s a whopping majority of the sales!!!

top-10-producers

I apologize if the graph isn’t as clear as it can be, but the key thing to note is that the blue signifies the percentage of sales going to the Top 10 affiliates. It obviously dwarfs the rest.

Which made me think, can we get even more detailed metrics? Of course I could look at the raw data, filter it, and then generate my own chart, but luckily ShareASale offers a Bubble Chart of the top affiliates, which you can find below (I have left out the numbers and names of our affiliates for their privacy).

LandlordMax Affiliate Sales To Hit Ratio

Looking at the above graph, it’s obvious that there are two super affiliates that bring in the majority of affiliate sales! I haven’t looked at the numbers in details, but I suspect they could count for half of all the affiliate sales. Following them there are two medium scale affiliates, and then everyone else. Therefore if we really want to maximize our results from our Affiliate program, we want to work closely with the top 2-4 affiliates. The others almost become noise. Not quite, you can obviously see that there are a number of affiliates getting some sales, but nothing in comparison to the super affiliates.

Which leads me to a bonus and unrelated last chart. I’m mainly posting it because I found it personally very interesting. But before I post it let me give you some context as to why I find it so interesting.

Before you purchase LandlordMax, you can try it for free for 30 days. And then, even after you purchase LandlordMax, you still have 30 days to get a refund if you’re not completely satisfied (for any reason). What does this all mean? Generally our customers have tried it before they decided to buy it, which is great (and I strongly recommend it). In other words they’re already comfortable with the software and know what they’re getting. They’re happy before they bought it. It also means we also rarely need to give out refunds. No company will ever not give out any refunds, but what I’m saying is that our number of refunds is almost non-existent.

That being said, when someone clicks on a link from our affiliates, they have 60 days within which to buy the software for our affiliates to collect their commissions. This gives them time to try the software for 30 days, as well as giving the purchaser time to ask for a refund (to protect us from fraudulent affiliates). Although rare, it balances out everything.

With that in context, below is the graph showing “Return days by gross sale amount”:

LandlordMax affiliate return days by gross sale amount

Notice anything? The majority of affiliate purchases happen on the same day that they clicked on the affiliate link! But what’s really astounding is that so far we’ve only had one affiliate refund (we actually had two but the second one was because someone accidentally purchased the software twice within 15 minutes). These are people who are buying LandlordMax the same day and not even trying it (sight unseen). This is very different than our internal sales cycle. I wish I could explain this but I just discovered it today when I was looking into the stats for this post. In either case, it’s very interesting and I plan to investigate it some more.

In any case, you now have an idea of what our affiliate sales metrics are like. Hopefully this will give you a better idea of whether it’s worth it or not for your company/website. Just remember that getting those super affiliates does take time, but when you find them they can make it all worth the effort.



 
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Comments:

  •     Andy Brice
    · June 6th, 2008  · 8:16 am  · Permalink

    Last time I surveyed my customers about this it turns out that 25% of them bought the software without trying the free trial. Often because it had been recommended by a friend/colleague.

  •     Steph
    · June 8th, 2008  · 3:00 pm  · Permalink

    Hi Andy,

    That’s a very interesting metric! I didn’t realize it was so high for your product. I suspected it got great word of mouth, but 25% is still pretty high.

    We definitely get a much lower same day sales ratio. Which is also why I’m surprised by that metric for our affiliates. The good news is that I know why one of our top affiliates gets so many sales, and why a lot are the same day, but it’s not our normal metrics.

    I always learn something when I analyze metrics.

  •     Trevor Mauch
    · June 30th, 2008  · 5:22 pm  · Permalink

    Hey Steph,

    Great post… that’s the prototypical Pareto Principle (80/20 rule) in affect. 86% of your affiliate sales come from the top 20% (or less) affiliates. Crazy how that principle is soooooo right in almost any situation.

    I’m working on optimizing some things and we’ll hopefully see results climb up for LLM next month like they did this month… I’d be curious to see which dot I am on that affiliate bubble chart ;-).

    Chat w/ ya soon,

    – Trevor

  •     Stephane Grenier
    · July 4th, 2008  · 2:42 pm  · Permalink

    Hi Trevor,

    I absolutely agree with you on the 80/20 rule. It’s applicable to almost everything!!!

  •     Walter Price
    · April 3rd, 2009  · 9:02 am  · Permalink

    I’m 20th century, never used a computer. I bought a laptop and Landlord max software. It is very user friendly. It’s AWESOME! I was able to add my 50 rental properties, invoices by myself. However, I ran into a license issue and the support was phenomenial. I received prompt responses. I love Landlordmax.

  •     Steph
    · April 3rd, 2009  · 1:22 pm  · Permalink

    Hi Walter,

    Thank you so much for great compliments. I will definitely include your comment on our testimonials page for LandlordMax

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