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One size does not fit all – especially when it comes to affiliate commission rates. Get the scoop on optimizing your affiliate program with custom rates based on performance, product type and more! It's time to get strategic!
The traditional approach of a flat affiliate commission rate is straightforward. Your affiliates know exactly what to expect, and the strategy is as easy as they come.
But here's the dilemma with flat rates:
a) Offer a higher rate across the board and risk your profitability, or
b) Stick with a lower rate and potentially demotivate your top performers.
Womp womp.
Then there's also the issue of recurring commissions: with a flat recurring rate the costs can quickly add up. It's just not sustainable long term.
But here's the great news – there's a really easy way to make your affiliate program work harder for you.
With Easy Affiliate, you have the power to override generic rates and tailor commission structures based on:
- Affiliate performance
- Payment number (for recurring subscription payments)
- Product item
- Product type
- Price
- And more!
This not only incentivizes your affiliates to work harder and smarter but also ensures that your business reaps bigger rewards.
Which Businesses Should Set Custom Affiliate Commission Rates?
First, let's set the record straight – a flat affiliate commission rate is better than no affiliate program at all.
For some, it's even preferable. After all, it's straightforward, everyone knows where they stand and it's easy-peasy to implement.
So if you have a one-product site, you're dealing with a products of a similar value, and you're not trying to court competitive affiliates or influencers, flat fits just fine.
However, most businesses have a lot to gain from getting a bit more strategic with custom rates. This is especially the case if you have:
A Recurring Revenue Model
If your business thrives on subscriptions or ongoing services, there are plenty of opportunities to get strategic.
You probably don't want to fork out the same amount to your affiliates each time your customer renews their subscription.
Then again, offering recurring commissions can help you draw more affiliates to your program.
In this situation, custom affiliate commission rates are your friend. You can set up different commission rates for the initial acquisition, and decreasing commission rates with each renewal.
Custom rates help you balance initial acquisition costs with long-term customer value.
A Diverse Range of Products
Companies offering a wide range of products at different price points can also benefit.
For example, a business selling both low-cost accessories and high-end electronics can't effectively incentivize affiliates with a flat rate.
The profit margin on higher-priced items is usually greater, allowing for more generous commissions.
You use custom affiliate commission rates to set a higher commission on higher-priced items with lower turnover.
This will motivate affiliates to promote a broader range of products.
This also ensures that commissions paid out are in proportion to the value of the sale, maintaining profitability.
Seasonal or Limited-Edition Products
If your company deals with products that are available only for a certain period or produced in limited quantities, you'll want to use variable commission rates.
Examples include:
- Holiday-themed items
- Special edition collectibles
- Fashion items in line with current trends.
You can offer increased commission rates for targeted products, and encourage affiliates to promote them over other regular items.
Your aim is to drum up the hype for your products with unique appeal and create a sense of urgency among consumers.
Your affiliates will be vital in maximizing the impact of your marketing efforts within a limited time window.
If you operate with one of these business models, you should consider applying custom affiliate rates. As you'll discover later on, it's quick, easy, and could have a massive impact on the effectiveness of your affiliate program.
6 Ways to Optimize Your Affiliate Program with Custom Commissions
Whether or not your business falls into one of the above categories, the fact of the matter is, any business can benefit from custom affiliate rates. It's a key way to incentivize affiliate performance and optimize your affiliate program.
1. Drive Higher Sales Volume
Want to incentivize affiliates to push for more sales? You can increase commissions as the sales amount goes up.
Set as many tiers as you want. For example, you could pay affiliates 15% on sales below $200, 20% on sales between $200-$500 and 30% on sales totalling upwards of $500.
2. Highlight Specific Products
Sure, getting more sales across the board is great, but what if you want to target a specific product?
Let's say you want to incentivize your affiliates to push your latest product and get the word out there. In this instance, you can set a higher affiliate commission rate for your new product.
Targeting a specific product can help you balance your inventory or boost new launches.
3. Selective Commission Payments
Not all products are equal in terms of profitability. Custom rates allow you to choose which products warrant commissions, ensuring that your affiliate program remains cost-effective.
4. Attract High-Performing Affiliates
Top affiliates know their worth. Offering them higher rates for their superior performance not only attracts them to your program but also keeps them motivated.
5. Manage Recurring Sales
Paying the same rate on recurring subscriptions can quickly become expensive.
Custom rates enable you to adjust these commissions over time, maintaining profitability as customer relationships mature.
There are several ways you can manage your recurring subscription commissions, including:
- Paying commission for the initial payment only
- Paying a higher commission for the initial payment
- Decreasing and then stopping commissions after a set number of payments
6. Set a Limit on Total Commissions
Protect your profit margin, and manage your budget by setting a cap on total commission per affiliate.
Limiting the amount any one affiliate can make also ensures that you're not committing your whole budget on the same few high performers.
Ideally, you want to diversify your affiliates so that you're not too dependent on the same few individuals. This approach also gives newer or smaller affiliates a fair chance to earn.
How To Set Custom Commission Rates in Easy Affiliate
All of the above scenarios are not only possible, it's straightforward with Easy Affiliate.
Paying Affiliates Different Commission Rates (All Plans)
Just want to reward your highest-performing affiliates with a higher commission rate? Follow these steps to override your flat rate:
- Login to your WordPress dashboard and click Users.
- Search your affiliate's email address or username
- Hover over their username and click Edit
- Scroll right down to Affiliate Settings
- Click the Enable commission override for this user checkbox
This will reveal new options for you to set a specific rate for this affiliate.
Note: This affiliate override option will also override any rules you create with the Commission Rules add-on.
The Commission Rules Add-On: Expanding Your Possibilities (Pro)
The Easy Affiliate Commission Rules add-on (available with all Pro plans) gives you granular control over your commission structures.
It opens up a world of possibilities for you to automate custom affiliate rates based on rules you set up.
Here's how to get started:
- From your WordPress dashboard, navigate to Easy Affiliate > Add-ons.
- Find Commission Rules add-on and click Install add-on. This will create a new menu item from your WordPress Dashboard.
- Navigate to Easy Affiliate > Commission Rules
- Select the Priority you would like this rule to take. A lower number means a higher priority.
- Under Matches, it's time to get creative. Here is where you define your rule.
- If you select Affiliate in the first dropdown menu, you can set rules based on:
- Username
- Referrals (the number of users that signed up using the affiliate's unique link)
- Sales (the number of sales referred by the affiliate)
- Sales Amount (the financial sum of all sales referred by the affiliate)
- If you select Transaction in the first dropdown menu, you can set rules based on:
- Source (the eCommerce integration used to make the purchase, e.g. MemberPress, WooCommerce, etc.)
- Coupon
- Item Id
- Item Name
- Amount (the sale amount of the transaction (minus shipping and taxes)
- Payment # (in the event of recurring subscription payments)
Here's an example of a rule set up to reward affiliates with a higher commission rate after they refer more than 20 sales:
Check out this knowledge doc for more examples of how to set up specific rules, including those mentioned in this article.
Conclusion
Your affiliate program holds a lot more potential, ready for you to unleash with custom affiliate rates.
Key Takeaways:
- Incentivize for Impact: From driving sales volumes to highlighting specific products, custom rates direct your affiliates' efforts where they count the most.
- Smart Budgeting: Managing your budget effectively is crucial. Custom rates, especially with caps on total commissions, ensure that your affiliate program remains both profitable and sustainable.
- Attract and Retain Top Talent: By offering competitive, performance-based commissions, you not only attract high-performing affiliates but also foster a motivated and productive affiliate network.
- User-Friendly Tools: With Easy Affiliate, managing various commission structures is a breeze. The Commissions Rules add-on gives you unparalleled flexibility and control over your affiliate strategy.
Whether you're just starting out with an affiliate program, or you want to further improve the effectiveness of your existing program, we hope you feel inspired and empowered to make your next move.
Want advice on setting up a specific commission rule? Want to share your experience of optimizing your affiliate program with custom commission rates? Let us know in the comment section.
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