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Feb 18, 2020 · 4 min read

Custom Commissions and Dynamic Commissioning

Using custom commissions has an infinite number of ways to reward affiliates automatically at the point of conversion. Effortlessly generate comprehensive reports using our state-of-the-art custom reporting technology.

Custom commissions workspace

When starting out in affiliate marketing, most advertisers set a flat commission rate across the board for their affiliates. This can be ideal for both the advertiser and the affiliates as it means that understanding commission rates is easy for the affiliate, plus reporting and cost analysis are simplified for the advertiser.

Depending on how complex your specific KPIs for the channel or margins across different products, marketers will require a deeper and well-thought-out strategy around how to reward and pay out affiliate partners. To help support this more advanced strategy for Advertisers, Commission Factory released Custom Commissions back in 2015 as the needs of our Advertisers increased and Affiliate Program Managers became more savvy when it came to creative ways to ensure a high ROI and incrementality.

To better understand the ways in which custom commissions can be implemented, let's look at the example of a marketplace retailer. They are selling thousands of different products from different retailers and verticals where the profit margins can vary so much that a flat commission rate is not tenable due to the potential loss on some conversions or even under-rewarding affiliates on others. Add in further site-wide or category-level discounting to that, and even more margin is being eroded.

As part of our standard tracking integration, Advertisers have the ability to send through their cart item or “product level” data, which is then used to:

  1. Track and report on products being sold in the affiliate channel, and
  2. Set specific commission values based on individual variables of the products.

Advertisers on Commission Factory are able to commission and report on limitless custom variables, including:

  • Individual SKU (very handy for commissioning or excluding items such as gift cards)
  • Product category and sub-category
  • Brand
  • Individual item sale value
  • Overall sale value of the order
  • Any other custom variable you require, for example - “Full price” or “Sale Price”

Another real-life example is that of a telecommunications company whose products vary so much that they need unique rates for each product variant. For example, a $10 PAYG SIM mobile product versus an 18-month phone-inclusive plan. The one-size-fits-all commissioning solution will never work in this vertical. A simple solution for this is to pass the product information in the tracking so specialised rates can be set per product or service. These can then be adapted for individual affiliate partners to incentivise their activity.

Some advertisers have a very clear new customer acquisition goal for their affiliate activity. Whilst we advocate that affiliates should be rewarded for all conversions they generate, we do understand that in some verticals, paying more for new customers makes sense. For example, in the meal delivery vertical, where weekly, fortnightly, or even monthly recurring purchases are being made. The ROI from these businesses can significantly increase by separating out existing customers from new ones. 

Commission Factory offers the flexibility that any retailer needs when it comes to setting commission rates that are in line with their business strategy. The use of coupon codes in online retailing is prevalent, and dynamic custom commissions can be used to ensure margin protection or as an incentivisation tool: setting higher or lower commission rates for specific coupons or setting exclusive or click-less tracked codes for individual affiliates.

Further incentivising your affiliates can be achieved by creating tiered sales targets; the more conversions or revenue driven, the higher the rate. Or, maybe you want to consider a subset of your affiliate base, such as content partnerships and rewarding them differently. All of this is possible on a program-wide basis, individual affiliate basis or by affiliate vertical.

The advantage of using Commission Factory for custom commissioning is the ease with which businesses can track and report on the impact of these custom commissions within the platform. With our advanced reporting technology, Advertisers can effortlessly pinpoint and evaluate the effectiveness of each unique custom commission, allowing them to accurately measure their impact.

When determining the commission rates for your program, it is crucial to take into account the objectives of your affiliate program, the specific KPIs you are aiming to achieve, and how you can motivate your affiliates to meet those KPIs while also attaining a positive return on ad spend (ROAS).

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