The Shocking Reason Why Cheating Your Affiliates Costs YOU Money!

Recently I stumbled across a Clickbank merchant who was using a very sneaky method to cheat his affiliates. The checkout on his main salesletter correctly linked to Clickbank, so affiliates got paid for people who bought on the first visit.

However, he was using several aggressive name capture techniques (which is great), but in his post opt-in autoresponder sequences he sent all of the traffic to a different sales letter with a 1shoppingcart checkout. (Thus avoiding paying affiliate commissions on sales generated by his follow up sequence.)

What this guy doesn’t understand is that he is not just cheating his affiliates… He’s cheating HIMSELF!

I’m always astounded by merchants, publishers and retailers who try and weasel out of paying their affiliates a fair commission. This is one of the dumbest and most shortsighted things that online merchants can do.

They are missing the most fundamental aspect of affiliate marketing… The more money your affiliates make, the more money you will make.

Why would a merchant try and cheat an affiliate out of commissions?

Simple. They are greedy.

Now don’t get me wrong. I’m a firm believer in “greed is good”. Most of the progress in human history has been the result of productively channeled greed.

But they are “dumb greedy”! You see… I’m greedy too, I’m just “smart greedy”.

If these short sighted merchants only realized how much more money they would make by being “smart greedy” rather than “dumb greedy” they would want to help their affiliates earn as much as humanly possible!

Cheating your affiliates is particularly short sited when you realize that typical online merchants and retailers generate the bulk of their affiliate sales from a handful of “super affiliates”.

BackCountry.com vice president of business development John Bresee recently said:
“Retailers believe they’re in the power situation because they are writing the check. But truth is, it’s the affiliate, so you need to treat that affiliate as you would anyone in the power situation,” Bresee says. “Treat them with kid gloves, and make sure they’re happy.”
So as you can see, the multi-million dollar ecommerce giants certainly understand the value of keeping “super-affiliates” happy.

Anik Singal of Affiliate Classroom gives some insight into what these super-affiliates look at when determining if they will promote your product.

Anik says, “Super-affiliates are very aggressive about their numbers, and are always looking to make a higher return on their traffic. If you don’t provide it, they’ll find a program that does. So what happens when your one magic affiliate decides to drop your program and promote a competitor? You can go from thousands of sales to zero overnight.”

Smart affiliates track their metrics and they know the exact visitor value and return on investment for every click and every visitor they send to your site.

If an affiliate can make more money promoting your competitor… Guess what? They will jump ship in a heartbeat!

So every time a merchant does anything that lowers the amount of money their affiliates are making from the program, the merchant is shooting themselves in the foot and only encouraging their affiliates to promote the competition.

Even if the affiliate never finds out that the merchant is stealing commissions, the low earnings numbers will simply make them abandon the campaign and move on to a different merchant.

This further hurts the merchant because of what I call the “me too” syndrome…
The more affiliates you have, the more you get.

If a prospective affiliate notices that many of the people in a particular niche are promoting a specific product, he or she automatically figures (usually correctly) that the product must be making affiliates pretty good money. So that affiliate decides to promote the product too.

Having your product or service promoted by dozens of affiliate in your niche doesn’t just improve your traffic, it can also improve your conversion rates. Because of the principle of social proof, if someone researching your product sees that many sites in your niche mention your product, they assume that it must be the best.

Personally, I absolutely LOVE writing big four and five figure checks to my affiliates, because it means that I made a ton of money too.

In fact, on my own affiliate program for my website evaluations and consulting services, I go so far as to offer my affiliate’s lifetime commissions on any client they refer to me. I actually add the affiliates name into my contact management software for each client, so even if that client hires me for more work over the phone two years later, the referring affiliate still gets a commission.

One of my affiliates signed up about 2 1/2 years ago, sent out one email to her list, made a handful of sales for my website evaluation service, and then did nothing else. One of the clients he referred me recently hired me to do an extended series of on-site workshops for his company. So, once I had been paid by the client, I sent the affiliate a VERY nice sized commission check (which she was of course not expecting.)

Can you imagine how enthusiastically that affiliate promotes me to her list and on her site now after getting that unexpected check? Since receiving that check she has sent me thousands of dollars in additional business.

What if I had decided to be “dumb greedy” like so many of the other online merchants that try and cheat their affiliates? I would have flushed thousands of dollars in additional sales right down the toilet!

The bottom line is this…

Merchants should do everything in their power to not only protect their affiliate’s commissions, but they should want their affiliates to make an absolute fortune! When a merchant goes that extra mile for their affiliates, the affiliates turn into passionate evangelists for the merchant’s products or services, and everybody wins.

UPDATE: 9/20/06Marketing great John Carlton just posted a great article to his blog where he further illustrates examples of individuals and companies that are “dumb greedy”. Give it a read here: Stupid, Foolish Greed

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About the Author

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