Affiliate marketing: When 20% is more than 50%
Let’s say you’re an affiliate marketer, and you want to choose which product you want to promote.
You’ve searched a lot and now you have to choose between two products, that sell both for $100.
The main visible difference is that product A has a 50% commission, and product B only 20%…
Which would YOU promote??
Most people would obviously answer product A… the commission rate is more than double the one product B gives - so why even bother asking?? Because a lot of times the commission rate has nothing to do with how much money you’re going to make… there’s a much more important factor to consider: Conversion Rate (CR).
The CR of a sales letter is a number that says how many visitors become customers. The average standard in offline direct marketing is 1%. On the internet it can easily be much more (a webpage can be far more effective than a paper letter ;)
The conversion rate depends mainly on how well the copywriter did his job. Good copy - high CR, bad copy - low CR.
That’s why copywriting is so important when you’re selling online.
So, let’s make an easy example to see how much difference a better CR can make…
I challenge a friend of mine to see who can make more money online.
We are promoting two products: both product A and B sell for $100.
Product A has a 50% commission and has a visitor/buyer Conversion Rate (CR) of 1%.
Product B instead has a 20% commission but a CR of 7%.
Who would promote A and who B?
Most people (without thinking about conversion rates) would jump on the product A train. 50% against 20%? Who are we kidding? Of course 50% is better, it’s more than twice the commision of B… but is it really that much better?? Let’s do some maths :)
Let’s say my friend spends $10 to send 100 visitors to the sales page of product A. One of them buys (1% CR) so he makes his first $40 of profits (50 minus 10 that he spent in advertising).
I instead spend $10 to send 100 visitors to the sales page of product B, and 7 of them buy (7% CR). With a 20% commission, I just made $130 (140 minus 10 for the ads).
Promoting a product that had less than half the commission of product A I made more than three times what my friend did - his $40 against my $130… and I sent the same number of visitors that he did.
Same effort, triple profits. With a product (B) that had less than half the commision of product A…
So is the commission rate value all that useful to decide what you should promote?
Not really… in my non-guru humble opinion!
Commission rates can be incredibly deceptive, so when you make your choices keep it in mind!
Cheers,
Saul