I’m getting closer to launching my start up and one of my main forms of traffic will be through affiliate marketing (Instagram / podcasts / YouTube). My product sells for $30 and is in the health and wellness space (very broad both female and male audience). My plan was to offer affiliates $10 for every sale they bring. The product is subscription and the max quantity is 1 so every sale will be $30.
My question is - is this an attractive rate in the industry? I’ve never played in the affiliate space and am trying to figure out if this will excite the affiliates. The brand itself is very high end and it’s not some sh*t product.
Would love any advice from those who have experience in this space. The margins are very strong on this product and even with a $10 payout, I’m still making 20% margin (it’s a subscription product so my hope is to capture the full margin on the second and further sale).
thats crappy payout no one will want to promote your product .
first you will need to figure out your LTV ( lifetime customer value)
then you will want to go from there to determine your payout so if your LTV is $200 you can afford to pay $50-$70 theres no way someone will bring you leads for $10 because it will probably cost them $20-$40 per lead so you will need to sit down and go over your numbers and be reasonable and dont get greedy because affiliates arent dumb and they hate to be taken advantage hope this helps
Got it - appreciate the honesty. In that case it’ll be entirely built on social media ads. Based on testing / other similar products in the market, I’m looking at close to a $20 CAC. No reason to spend way more on affiliates.
Also, I wanted to ask, where are you getting a $20 to $40 cost for the affiliate per lead? They already have a standing audience. There is zero cost to them. For the “team” members of Alani Nutrition (Whitney Simmons and some other extremely large fitness influencers) the commission rate is 4-5% of total order. I’m pretty shocked $10 is viewed so negatively as someone would need to purchase $200 worth of supplements to generate the same $10.
im speaking for affiliate marketing in general and you dont need to look at CAC in this scenerio but look at your lifetime customer value ( how much is this customer worth to you ? ) if this customer will spend $500 in their lifetime with your brand why would you pay your affiliates only $10 commission ? this is just an example and it wont make financial sense from the affiliate side unless you’re the amazon then you can pay $3-$10 for the aff lead payout hope this makes sense
bonus : seems like this is a subscription based business you need to find out how long your customers will stick around with you ( churn rate ) and you can go by that to determine your payout so if youre customers stick around fro 6 months maying you $30/mo thats $180 LVT then you can go by that number to determine your payout
This is great insight. My overall view was to pay as low as possible to the affiliate - if my LTV is $180 (obviously still to be determined as haven’t launched yet), it would make sense to offer as low an affiliate payout as acceptable.
I always assumed the affiliates would look at it relative to any other product in the market they’re offered to do affiliates for. For example, if Alani approached them versus mine - regardless of anything, my offer would still look way better than their 4% commission. They can choose one or the other or none at all. But many are choosing Alani
You’re approaching this the wrong way. I think you should give as much to your affiliates as you can afford when you start off.
This will help incentivise your launch. And get you some real data for how long your LVC will be and then you can reiterate from there.
If your goal is a quick buck, then give as little to your affiliates… If you want something long term, I suggest giving a lot to your affiliates
Wouldn’t you want your first batch of affiliates to rave about you? And not just in the launch, but further down the line?
If possible, consider breaking even for the first launch period, just to get the data for your LVC, and churn rate, figure out what ppl actually love about the product, and what they hate about it, and what makes a good or bad affiliate.
^^ that info, as fast as possible, will be way more valuable in the long term than just money in the bank cuz you paid less to your affiliates - in my opinion.
Basically, use this launch to wow your affiliates, know your customers deeper, and it will help you find the kinks in your machine to optimize for next time around.
My 2 cents. Regardless, Wish you a good launch man. Keep us posted brother.
Edit: I come from a background of mostly JVs, not affiliates though. So my wording may not be perfectly appropriate for affiliates. @HenryCooper articulated it perfectly below
Make the incentive for your affiliates as good as you can and , later on, adjust based on that data. Affiliate “leads” might not provide the same CLV (Customer Lifetime Value) that you are used to when you generate your own leads. Mainly because your style of marketing (if it is your own business) focuses on CLV while your affiliate just wants to get that first sale done to get their commission.
Thank you @tripleyourtribe and @HenryCooper
The answer is clear from both of you. I can go up to almost $20 per sale and will start here in the beginning.
you can join jvzoo or check muncheye to see how brands lanch their product to a real sense of the thing and you can send out your product for free to influencers for a review or just pay a shout out there’s more than one way to approach this you just need to make sure what fits you best and the to be honest the launch is the most important part of your biz to create that hype around your brand , you can also make guest posts for a backlink to your product site as i said there are many ways you just need to find the best one for you its just like sports if you wanna practice one all sports are good for health but which one wil make stick around and never quit
Being an affiliate marketer who makes between $1,000 - $2,000 / month off of affiliate marketing from Youtube and Facebook (which isn’t much but its for work i did months/years ago) as well as having a software with ~ 1/3 of the sales coming through affiliates, I disagree with many of the statements above.
33% or 1/3 s by no means a “bad” commission…
However, if you want people to promote your product and rely heavily on affiliate marketing then I would consider upping it to 40% or even 50% and making it a lifetime recurring offer.
As an affiliate, I only promote lifetime offers and I honestly don’t mess with anything else unless I think it is unique and provides value that other products lack.
Hope that helps and feel free to ask me any questions!
lol careful who you take advice from on this forum ^ 1k-2k / mo is nothing in affiliate world although i do agree with the reoccurring concept but then you would have to have a product and service that is 10/10 and you would need to have a 3rd party affiliate software integrated in your website and you will need a little bit of capital upfront but use my metrics if you want to scale fast and get traction coming from someone that did 10x more revenue
The product sells for $30 and $15 is a the max I can give at this point. It won’t be recurring as I’ll never make a profit. Going to test the waters with $15 and go from there.
A small portion of my monthly income comes from affiliate marketing other peoples products dude
If you’re interested in helping the OP, then feel free to tell him your story/experience with affiliate marketing and more about the type of products you promote.
I have never claimed to be an affiliate marketing guru or expert. It’s literally a side thing I do, and it has been one of the most passive ways to make monthly recurring commissions for ME…
The best money made is money you don’t have to work for
The OP above has a physical product and IMO 30% isn’t a bad commission by any means as most digital products I promote have commissions between 20% - 50%. These are niched softwares with higher margins than the physical products as well.
The OP said the industry average for commissions on similar/competitor products is 5% so that makes his offer pretty generous if that info is accurate/
Integrating a 3rd party affiliate plugin is pretty straightforward on a Wordpress website, Shopify store, ect.
I just don’t like the mindset of paying the affiliates as little as possible as I have my own software where ~1/3 of the revenue comes from affiliates and since the cost of running another user is pretty much negligible it’s FREE money, so I always try to pay them as soon as they request a withdrawal and just be a nice person to keep them happy
I personally only promote recurring monthly income products I would promote a recurring $10 a month
A one off $10 no chance