Lead generation: the value of referrals, finder fees and affiliate commissions
Real EstateHow much is a trade recommendation really worth?
In the world of professional sales, a sophisticated organization knows exactly what a “lead” is worth. In fact, that’s one of the key components of a great marketing budget.
In the world of smaller businesses, owners may or may not be so sure of the exact value of a potential customer. Still, everyone seems to agree that referrals are important to getting more clients.
How much are you willing to pay?
If you’ve ever bought real estate, you know that it’s standard practice for a real estate agent to share the sales commission with others: the stockbroker and perhaps another broker who originated the lead. In California, even a 6% shared sales commission can be worth thousands of dollars!
However, in the world of private equity, the SEC strongly disapproves of search engine fees and limits them to a few, highly registered and highly regulated individuals.
If you are in any of these fields, you should probably go to your registered broker/boss for more details!
Finder Fees or Affiliate Commissions in Online Businesses
Unlike the two examples above, in the world of internet marketing, the use of affiliates to help sell products is widespread and unregulated. (If you’re not in the habit of doing this, start looking for links that say “affiliate program” or something similar on sites you visit regularly. These links are most often found in the footer of the home page.)
Paying affiliates to increase sales is not only recommended for online businesses, but BEING an affiliate is a business model unto itself.
Using affiliates to improve your online sales
The affiliate commission is paid when the buyer actually buys; It can be anywhere from 4% to 100% or more of the purchase price. Yeah, sometimes the commission is MORE than the amount you get from the sale. Why is that? Because the buyer’s name and address represent the real value in the equation. (“Building a list” is another topic.)
A good affiliate program not only has a high payout, but also shares some of these characteristics:
- high average order
- Reliable monthly payments
- Personalized affiliate training
- Personalized Affiliate Marketing Materials
- Good affiliate support
If you’re building your own team of affiliates, you’ll need to include all of these in your plan.
And if you’re considering becoming an affiliate and selling someone else’s product, look for all the features listed. Above all, make sure that the product is one that you would be proud to call your own.
In fact, the standard for online marketing is actually buy and use a product before promoting it to others as an affiliate.
A poor quality or untested product may result in a sales opportunity, and even a sale, but the ultimate cost will be the buyer’s loss of confidence to do business with you again.