Long Term Value of the Affiliate and Customer Acquisition

Many affiliate networks accumulate great numbers of sites without helping them do anything to sell. In the early days, it seems to be a game of numbers that is quickly passing onto a new way of looking at the entire industry.

One question came up during a discussion about the long term value of a customer. It is still too early for most affiliate networks to really define what this value is. The long term value of a customer is the amount of purchases they make for the lifetime of buying from you.

This may seem to be an obvious question, but it becomes tricky when you don't know how the visitor gets back to your site, if they buy from a different affiliate site, or basically if you even track the record of your customer's buying behavior. Buying behavior is the key; most affiliate networks still focus on the first sale and ignore the residual sale, likely undermining the value of what they are offering.

Still the numbers coming up at this conference indicate that repeat business comes from the visitor coming to the actual Web Site instead of through the affiliate. While the determination of the long term value of a customer may be tricky to evaluate, what about the long term value of the affiliate?

How many sales do your affiliates generate in a year? How much per month? How many visitors do they send to your site in a year? In a month?

The long term value of an affiliate is a mixture of leads and sales generated. This value you can quantify, and if you find an affiliate who generates repeat business for you, it might be advantageous to encourage them to participate a bit more.

Most affiliate networks don't seem to mind the fact that most of their affiliates simply send them customers once, and the customer comes back to their Web Site the second time. Still the question of loyalty and of having a certain number of affiliates generate repeat business is important.

The long term value of an affiliate is part of your customer acquisition; in fact, if they do not generate sales (as likely 80% or more of your affiliates will not), why can't you turn them into customers as well, instead of ignoring them?

The numbers claimed by many affiliate networks are huge compared to the actual responses and sales they generate. Part of that is good for an affiliate network, a cheap form of advertising. Long term, however, we need to look at this issue and how it impacts the effectiveness of your sales force.

Be careful of looking at the short term benefit and ignoring the lack of interest people may give to your network in the future. It's all about making money, and in many cases saving money. If your affiliates fail to make sales for you, can they at least save money buying from you?

A simple question, and one not often considered; some might suggest that this would be abusing the affiliate process. But no matter what you do, the 80/20 rule applies; if you leave the 80 percent who don't sell alone, you are missing out on a possible customer. After all, they should sign up for your program because of some interest in what you sell.