Determine commission/referral fee?

energizedit

energizedit

Member
How would you determine a fair commission to pay someone who will be sending clients to your company?

Would you base this on the sales the customer generates?
A flat fee?

What are your thoughts?

Thanks

Mark
 
This is entirely something to decide on your end. What is a customer worth to you? Some places give a 500% comission. Others give up to $125 per sale. Places like ours, we have a sliding scale from 10% to 20% monthly.

It really all depends on the types of clients you're after, the type of people that will be recommending your business, and how much coaxing you have to do to get someone else to refer your business.
 
Here's another angle to consider.

If you want to attract serious and successful sales people, give careful thought to "lifetime commissions". That is, the referrer continues to make a little bit each month, for as long as the clients they refer keep their accounts with you open.

This turns the referrer in to a real partner, and gives them a reason to make the investments that are necessary to be an effective rep for you.

I know of one hosting company (sitebuildit.com) that was built in to many thousands of users specifically by this method.

I've known one of the leading affiliates for that company for ten years, and he worked his butt off for them, specifically because of the lifetime commission. He is now semi-retired, living comfortably on these earnings, because the many accounts he sold are still open generating revenue for both host and salesman.

Here's the real deal. 10% of your affiliates will produce 90% of the sales. The top people are the ones that matter, and you really want to give some thought to what it will take to attract them, and keep them happy.

The great majority of your affiliates will never produce any significant sales, no matter what you pay them.
 
I agree, it depends on the type of products/services you are selling. If you are selling a one-time item, you may consider to give a big commission to your affiliates, say 50% or even 75%, especially if it is a digital product.
 
Engage-Engine, you make an excellent point! We have been experimenting with the lifetime commission model with a few of our top affiliates. So far, it's working out nicely It's a great business model from the service-provider's perspective because there is zero risk. Money you would otherwise spend on advertising you pay your affiliates who not only advertise for you but actively pursue the sales.
 
I have seen around the %20 a month recurring for as long as they stay with the host. This ensures you still receive a small amount and don't get screwed if they leave you ending up a with a higher commission fee.

I was thinking of an affiliate program starting of at %15 and for each referrer they give us we give them an extra %1 capped at %30. This way it give them enthusiasm to find more customers and you still make more for the bulk they provide.
 
Sounds interesting. As if making money wasn't enough-- earning a higher commission on top of it. Incentives are always good ;)
 
It depends on how much your actual shared or dedicated hosting accounts are going to cost and how your website already is performing on the net. If you are receiving lots of signups per day through traffic originating from the search engines, you may start from lower amounts but for new sites and firms with no traffic, some attractive affiliate and commission packages could do pretty well over the net.
 
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