Commission driven sales people and affiliates

Paying for sales on commission, whether base-plus-commission, or commission-only is often promoted as a simple, no-risk, cost-effective solution for marketing. It was quite refreshing to read an alternate view.

Last trip, I bought two books at the airport, the best of the two was “The Knack” by Norm Brodsky and Bo Burlingham. You can see an extract The Sales Commission Dilemma here. While this article discusses the problems of commission-driven salespeople as employees, I think the model of commission-driven affiliates can be even more problematic.

First, you need to decide whether you consider your affiliates to be like commission-driven employees, or whether they are more like businesses acting as distributors on a commission basis for mutual benefit.

If you think they are like commission-driven employees, read the article, add the fact that they are unsupervised, often anonymous, and have no interest in your business other than today’s commission, and then perhaps it’s time to reconsider.

The second option is the way we operate. Affiliate or performance marketing is a fabulous model if you get the right fit and make sure that it works for both parties but just like any business relationship, it requires ongoing management and negotiation to ensure that the mutual benefit remains.

Merchants/advertisers can drop affiliates who damage their brands, or use their resources (datafeeds, bandwidth etc) without creating value in return. Likewise, we can drop merchants who damage our brand by giving poor service to our readers, whose tracking and websites are unreliable, or who provide less value to us than their competitors.

These old-fashioned business ideas - choose your suppliers and distributors carefully, create and nurture long-term business relationships for mutual benefit, stay alert to changes in your marketplace - are just as relevant for internet businesses as any other.

The payment model, set-price or commission-based, then becomes a secondary issue. Commission-based works well when there is mutual risk and benefit. Commission-based provides more flexibility and greater innovation. But commission-based also means less control and more risk which needs to be acknowledged and dealt with.