This is the third post in my series on providing a Beginner’s Guide to the Affiliate Sales Process. If you haven’t already, you should read the first post on types of customers and the post the first affiliate sales rule before proceeding.
Now that you know the importance of distinguishing between the customer acquisition process and customer retention process, and understand that affiliates fall into the customer acquisition side of the equation, it’s time to look at affiliate sales rule #2.
Affiliate Sales Rule #2: The Value is in Repeat Conversion
Converting a new customer into a habitual customer is the most valuable action you can accomplish.
Let’s think about the implications of this for a moment. In the last post we already saw how brands will often lose money to get a new customer in the door. That’s because customer acquisition is the first and hardest part of the sales process.
Once a customer has begun to interact with a brand, however, the focus shifts to trying to retain that customer over time. The good news is that as an affiliate, it usually is NOT your job to convert a customer in the long run. That’s up to the individual brand’s on-site marketing and product teams, to ensure the customer is satisfied enough to provide repeat business.
Look for Recurring Streams
What this rule implies, however, is that as an affiliate, you will be able to get the most value out of your readers if you can find products that provide a recurring source of income.
Usually in the online world this refers to finding subscription based products.
Subscription products are your best friend. Imagine the following scenario, in which 50% of your sales re-convert for longer term revenue potential. Assume for this example, you sell a consistent 2 readers per month, at a $20 commission each:
- Month 1: 2 Users. Total income: $40. (new revenue: $40, no recurring revenue)
- Month 2: 3 Users. Total income: $60. (new revenue: $40, recurring revenue: $20)
- Month 3: 4 Users. Total income: $80. (new revenue: $40, recurring revenue: $40)
- Month 4: 5 Users. Total income: $100. (new revenue: $40, recurring revenue $60)
- Month 5: 6 Users. Total income: $120. (new revenue: $40, no recurring revenue $80)
- Month 6: 7 Users. Total income: $140. (new revenue: $40, no recurring revenue $100)
The important point to note in this example is that the number of new sales stayed the same from month to month, but the revenue quadrupled over a period of only 6 months!
Evaluate Brand Retention Rates
In order to be successful converting initial sales into long term recurring revenue, you need to be careful about which brands you’re promoting. The unfortunate fact is that many brands do not convert new users into recurring users well.
As an affiliate, it’s extremely important you find products that convert users at a high customer retention rate. For subscription products, you want to look for a retention rate of at least 10%, with an average of no less than 4-6 months.
The ability to find brands that retain the customers you refer is essential, but equally important is your own ability to retain users over time. Continue on to read affiliate sales rule #3.