Q: Any ecommerce store whose checkout includes a coupon prompt will have the issue of paying out affiliate commissions for sales that were already in their shopping carts.
Many merchants consider affiliates who focus on offering coupons poachers because it is the merchant’s coupon prompt that caused their buyers who came in through ppc or organic listings to click on an affiliate link.
Merchants are reluctant to remove the coupon prompt because they use it to generate repeat sales from their in-house mailing lists.
What is the best solution for removing the coupon prompt from the shopping cart while still being able to offer discounts to newsletter subscribers?
We hate to decline all affiliates who offer coupons because many quality affiliates do generate sales AND offer coupons? What should a merchant do who already has affiliates whose sales are all coupon related? Should we lower the commission – maybe cut it in half – or eliminate that affiliate?
There is some concern that taking either action might cause those affiliates to retaliate with negative reviews or publicity for the merchant. We look forward to your expert advice on this serious issue for merchants and affiliates alike.
To clarify for those who don’t know why this is a huge issue: if a merchant is buying traffic and then ends up taking both a discount off the retail price and paying affiliate commissions on the same sale those sales my cease to be profitable. They could even end up losing money on them.
A: I think one problem here is that you’re looking at your affiliates as some sort of adversaries, rather than partners.
It’s you’re own setup that is causing the conflict… not the affiliates.
The simple answer is that any affiliate that doesn’t provide a net gain for you in your transactions shouldn’t be in your affiliate program.
In this case, I don’t think you should assign blame to these coupon affiliates, as they’re performing as they are supposed to by delivering targeted leads.
I would sugggest either revising your payout structure immediately or reaching out to these particular affiliates and explaining the situation.
Then, you may be able to come up with a creative solution.
I don’t think any affiliates will be particularly excited about slashing their commissions, but it comes down to the EPCs they can generate, and if those numbers are working for them, they’ll continue working with you.
In the end, if it doesn’t work out for either you or the affiliates, just end the relationship and move on.
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I suspect that many merchants are not aware that coupon sites are subscribing to their mailings and gathering coupon codes from other sites. They don’t realize just how many coupons end up on some coupon sites.
Kellie’s suggestion number 2 is interesting; however, without details on how that could be accomplished in a Yahoo Store we have no way forward with implementing it.Perhaps Rob Snell is the person I should be asking.
Personally, I do not feel getting rid of affiliates or arbitrarily cutting the commissions they expect to receive should ever be taken lightly. We recognize they have invested time and money and should be compensated.
The bottom line is when a merchant uses shopping sites, affiliates and ppc it is not a simple thing to determine which of those is directly generating sales and which are cannibalizing each other. The only way to know for sure is to be able to track ALL visits to an ecommerce site and most analytics programs including Google Analytics only track last click.
Thank you, Shawn, for taking the time to answer. I asked this question on behalf of an ecommerce store I work with and want to clarify that we aren’t blaming the affiliates. It is not surprising that they choose to focus on coupons because there is huge interest. We accept that our having the coupon prompt in the check out process is the cause.
I would disagree with Brook that if someone does a search for a coupon when they have already invested their time in putting purchases in the cart that they are unlikely to NOT then checkout if they don’t find a coupon. Have we not all searched for a coupon just in case there was one?
I admit I had not thought about someone searching, finding the coupon code and NOT clicking on the affiliate link on the coupon code site. Good point and probably some percentage of times that is true.
Durk’s suggestions are noted and his expertise in this area recognized and the idea of stronger coupon offerings has potential. The drawback is that any coupon prompt triggers those searches and even if they don’t find a usable coupon they could click on an affiliate link and the merchant will pay the commission.
Suppose we only have a coupon good for $10 off orders of $100 or more. Our buyer has less than $100 in merchandise in their shopping cart, does the coupon search, visits the coupon site. What percentage of people who visit that site will click on an affiliate link even if they do not end up using the coupon?
It is obvious we need to know whether that click will generate an affiliate commission for that sale even if the buyer returns to the tab containing the original cart and continues to check out. Does anyone know?
I suspect that many merchants are not aware that coupon sites are subscribing to their mailings and gathering coupon codes from other sites. They don’t realize just how many coupons end up on some coupon sites.
Kellie’s suggestion number 2 is interesting; however, without details on how that could be accomplished in a Yahoo Store we have no way forward with implementing it. Perhaps Rob Snell is the person I should be asking.
Personally, I do not feel getting rid of affiliates or arbitrarily cutting the commissions they expect to receive should ever be taken lightly. We recognize they have invested time and money and should be compensated.
The bottom line is when a merchant uses shopping sites, affiliates and ppc it is not a simple thing to determine which of those is directly generating sales and which are cannibalizing each other. The only way to know for sure is to be able to track ALL visits to an ecommerce site and most analytics programs including Google Analytics only track last click.
This is an important topic and coupon affiliates often lose out unfairly. Two other points worth considering:
1. The visitor left the merchant site of his or her own accord but came back so the affiliate made some contribution to the sale. Unfortunately, it is not possible to reliably determine which orders “would have been made anyway.”
2. In order for the coupon site to get credit, the visitor must click through on a tracking link. I think that in most circumstances this does not happen, i.e. the visitor opens the coupon site in another tab or window, makes sure he or she is getting the best deal, then closes the window. My guess is that the coupon affiliate has made this type of assist in several orders for every order that is credited to the affiliate.
Merchants who don’t work with coupon sites are also penalizing affiliates for getting high rankings on Google, Google loves coupon sites.
Sugestions I have provided to my clients include:
1. Don’t deep discount if you don’t have the margin.
2. Let the coupon drive acceptable consumer behavior: If your average order size is $75, give $10 off orders of $100 or more.
3. Give coupons out that you don’t mind seeing everywhere. Back to #1
We are discussing reducing affiliate fees with several of our merchants, but when queried our merchants admit that the affiliate channel brings in at least 50% new customers… so they are reluctrant to cut this channel off.
The coupon sites that are working right now are very well done, well designed and have true followings.
Google loves them.
Figure out how to work wth them not eliminate them- that is my advice.
Totally agree with your points on adversary vs partner Shawn. Well said.
A couple of possible solutions…
1. If coupons referral by affiliates is an issue for a merchant, then don’t provide coupons to your affiliates. Be sure your TOS reflect the fact that you do not allow coupons within your affiliate program. If an affiliate promotes them anyway, then take action based on a TOS violation. This is done by some merchants.
2. Supress the coupon box in the cart except for instances where the traffic originates from approved sources, such as merchant internal newsletters promoting a coupon offer. This is technically possible to do and is done by some merchants for a variety of reasons.
That’s 2 possibilites, there are no doubt more.
To avoid possible bad PR and ill will with affiliates, don’t do the following:
1. Blame affiliates for promoting you in a way you provide for them (as in providing a coupon code through the affiliate channel)
2. Not making it clear to your affiliates what is acceptable promotion within your program.
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