To anyone at the beginning of their trading career, partnership programmes seem something that will solve all their life problems. It usually starts the same way. Someone comes up with the idea “let’s give up 5 percent and they will be selling for us1”. It usually ends the same way too – with a failure.
Why it doesn’t work?
Especially in the case of B2B commerce, the company and the sales department have their sales targets. The targets include mainly the company’s services. Every trader will eagerly embrace an additional 5 percent from services from added partners, but he can be fired if he doesn’t realize the target. Our own services will always be a priority.
Knowledge of the product
Another example from the world of B2B. Whenever the situation becomes tense, people return to their habitual attitudes. It works the same for the sales. When a trader wants to sell new services at a meeting and hears difficult questions, he returns to what he knows best – his basic offer. As long as he has somewhere to retreat to, he will choose a safe solution. This is why our foreign sales department is banned from selling in Poland. And this is why selling someone else’s services will always lose with our own well-known offer.
As for B2C commerce, on the other hand, the biggest problem in partnership programmes is the lack of a strong brand1. Sellers with weak brands are eager to participate in partnership programmes and they even offer high commissions, but the customers are distrustful. In practice, it turns out that you are going to earn more by selling for €20 the accounts of a bank advertising itself in the TV, than by selling for €50 the accounts of a cooperative bank from a little-known municipality.
Models of pricing
In mass partnership programmes, the model of pricing is usually the key issue. A while ago, as the owner of an internet shop, there were many far-fetched pricing models I saw. For example, a model can look like this: CPC+CPS (cost per click + commission per sale). With the hypothetical parameters of CPC=0,10, CPS=10%, it may turn out that the partner throws into our shop a lot of low-quality traffic (even from another country) and earns good money only from CPC, whereas we naively believed we would split the commission.
Someone who has a high-quality movement on their website, first of all will try to prove it and to sell golden shares, native advertising, run-on-site and CPM advertising. They don’t want to be responsible for converting their movement by a third party. They can be convinced, of course, but only by having a good brand, a good offer and by giving up a good percentage.
Some of desperate publishers and partnership programmes will offer you very good conditions and sales with them will have, theoretically, a high ROI. Unfortunately, their desperation usually derives from a small range or a low quality traffic. Even an advantageous model of cooperation won’t help if there won’t be enough sales. It may turn out that accounting of this cooperation (as a fixed cost) will cost more than profits from a few transactions that were generated.
What to do to make it work?
If you have a strong brand, potential affiliates are probably already knocking on your door. With the super-strong brands, it can even be profitable to build your own partnership programme.
If you don’t have a strong brand, I suggest to create an offer based rather on acquiring new customers than on selling. It could be more beneficial for you and your partner to use the CPL pricing model, that is to say for one lead (for example a customer subscribed to the newsletter).
You can begin to build a market with your service as a base. For example, consulting and implementation companies are often created around software. For them, a share in license sales is only an add-on, but their entire business is based on the sale of these licenses (which is followed by implementation and consulting).
You can also work like Divante. We don’t want commissions from our partners, what we want in return is the access to their customer base – in fact, we work by exchanging leads. Then, both parties are appropriately motivated and we don’t have to train the traders of the other party.