Tuesday, 13 March 2007

Affiliates are bad... hmmmkay?

UPDATE: Ok so i have revised the wording on this one as I upset a few sensibilities with speculation.
I still stand by my opinion that their are dubious relationships between cause and effect derived from some affiliate sales.

Interesting post about ASOS affiliates over at e-consultancy...

The ASOS co-founder said: "I'm not saying we couldn't do more in the online marketing space. Next year we'll reintroduce affiliate marketing, but as it should be. No silly commissions being paid to grubby little people in grubby studios growing income at our expense, getting in the way of genuine sales."

Perhaps harshly worded, but as someone who has spent a lot of time staring at Web analytics- affiliate-reports I actually sympathise with comments like this..

Potentially there are a bunch of regular customers who casually or incidentally visited certain "dodgy" affiliate sites or affiliates not behaving in the spirit of true value. Meaning that these existing customers regularly pickup a 30 day affiliate cookie. And as a result these regular customers generate a continuous stream of commission payouts to affiliate sites; simply as they frequent sites that just happen to have an affiliate relationship with the merchant.

Fundamental question is whether those affiliate sites were actually delivering 'genuine value' (in the form of new customers with high lifetime value) or just managing to intercept a robotic bunch of high value customers who coincidentally visited an affiliate site every 30 days.

This concept of affiliates getting "in between" regular customers and the retailer is a real headache. Web analytics people have coined this phenomenon "non linear conversion funnels"...

Ecommerce managers must ask the question - if that affiliate did not exist - would I have still made that conversion?

The right sort of customer?

I am becoming increasingly convinced that small business's should avoid signing with big suppliers and conversely small suppliers should not take on big business clients..

In a world where the squeaky wheel gets the kick - why should a big vendor care how much pain and poor service levels they give a small client?
A vendor only has finite amounts of resources and personell to commit to keeping customers happy.
It makes sense that these resources would be allocated according to:
- budget/value of the client
- visibility of the relationship
- long term value of the client

So if you are a little customer - why would big supplier want to keep you happy?
There is always going to be an element of "keep all your customers happy all of the time"... but is this realistically achieveable? I think not.

On the client side - signing with a supplier your own size (or close to) you are more like to be heard and actioned on when you need service.. particularly in a market place where word of mouth referrals are critical to growing the supplier's business.
When a client is on a level pegging with the vendor in terms of size and value... then your "customer voice" is more likely to be heard is it not?

On the vendors side - making sure you CAN keep them happy is paramount to retaining customers and growing your client list... so signing someone you know you have the sufficient processes and staff in place is equally important. Beware of biting off more than you can chew.