Commission Structures to Incentivize Your Affiliates

It is more crucial than ever for companies to work with the proper affiliates and maintain their motivation and incentives, as affiliate marketing has seen explosive growth in recent years. 

More than 80% of brands still use affiliate marketing as their primary sales channel, per a recent Rakuten poll. But in order to stay successful in the very competitive affiliate marketing business, firms must continue to provide their affiliates with incentives and satisfaction. 

Companies must continually maintain their affiliate marketing programs to keep them from stagnating and eventually failing, just like they do with their other marketing and sales channels. Ideally, commission structures should be managed by brands in order to expand their affiliate marketing programs. 

To maintain the satisfaction and motivation of their affiliates, brands must to provide distinctive commission structures and periodically refresh them with new incentives. Brands risk stagnation and subpar performance from their affiliate partners if they don't regularly monitor and manage the commission structure of their affiliate program.

This article will cover five unique commission structures brands can effectively utilize for their affiliate marketing programs to keep their affiliate partners incentivized and maximize results. 

The Importance of Definitive Commission Structures

For brands to run a successful affiliate marketing program, they need to focus on their affiliates and offer a variety of definitive commission structures tailored to all the different affiliate partner types they partner with. Brands are diversifying their affiliate program strategy by using multiple affiliate types and networks to stay competitive. By diversifying, brands benefit from access to new niche audiences and brand awareness and sales growth. 

Brands should continually be reviewing their commission structures to see if it aligns with their current affiliate program goals and the affiliate partners that make up their program. To successfully maximize affiliate program ROI, brands should establish definitive and unique commission structures for the unique value each affiliate type is delivering. Additionally, the commission structures must be equally flexible as they are definitive to incentivize various affiliate types’ performance and motivate continued performance. 

Below, we’ll go through five unique commission structures for brands to implement in their affiliate marketing program to maximize results.

Commission Structure #1: Competitive Fixed Margin 

One of the best ways for brands to keep affiliates incentivized and even bring in new affiliate recruits is to implement a generous, industry-competitive fixed margin commission structure. Fixed margin commission structures involve using a predefined fixed commission for affiliate partners, regardless of the actual sale amount. For example, this can be a brand offering an affiliate a fixed 10% margin for sales of any of the brand’s products. This commission structure is simple to understand and track for both affiliates and brands while reducing discrepancy and incentivizing sales. 

A common mistake that brands make when setting their fixed margin commission structure is not offering competitive fixed margins for their industry. Affiliate partners are an extension of the brand’s salesforce, so they should always incentivize their affiliates with attractive commission margins. 

Commission Structure #2: Time Decay 

Time decay commission structures allow brands to reward affiliates that most-closely influence conversions to the desired event. For example, let’s say you have one affiliate partner that initially engages a consumer to learn more about a particular product. In contrast, another affiliate partner engages the same consumer right before purchasing. The latter affiliate partner will then receive the full commission, or the more significant portion depending on the time decay commission structure set by the brand. This structure works well for big brands that have suffered from over-saturation of their campaigns over time. It’s also great for brands that want to partner with multiple affiliate types across various traffic channels. 

Commission Structure #3: Position-Based

Position-based commission structures work by rewarding affiliates that influence consumers at crucial stages or positions of their buying journey. For example, a brand may offer a reward to an affiliate that initially engages the consumer while also offering a reward to an affiliate that influences their purchase. This commission structure considers today’s consumers’ mental process and buying practices and awards the affiliates that made key contributions to their overall buying journey accordingly. 

Commission Structure #4: Coupon Codes

Coupon codes commission structures are among the most popular and widely used commission tools. The commission structure works by rewarding affiliates for any sale that uses the affiliate’s unique coupon code, regardless of where the consumer picked up the coupon code. For example, a consumer may have seen the coupon code in an email, heard it on a podcast, or even heard it on the radio. Regardless of the coupon’s origin, the affiliate receives a reward for the purchase. This structure allows brands to partner with a large group of affiliates online or offline, as the coupon codes are easy to track.

Commission Structure #5: Cross-Platform Tracking

Given that today's consumers must use numerous devices at once during their purchasing process, cross-platform tracking commission systems are gradually taking over. For instance, a customer might come into a product through an affiliate while perusing their mobile device's social media page, but they might decide to buy it later on their laptop at home. Cross-platform commission schemes give affiliates credit for activities even when customers transfer between devices prior to making a purchase.

You must provide your affiliates with a variety of commission structures in order to maximize the potential of your affiliate marketing program. There are many more affiliate commission models available; these are just some of the more popular ones. It is never ideal to use a single compensation structure when working with different kinds of affiliates.

Refersion is here to assist with Refersion Pay so that rewarding various affiliate kinds doesn't have to be a laborious undertaking. Companies should get in touch with a Refersion specialist right away if they want to grow their affiliate program and create commission structures that are both enticing to their affiliate partners and suited to their corporate objectives.