Most affiliate networks think affiliates are completely dependent on them. They are dead wrong.
Smart affiliates know the game and adapt, becoming hybrid affiliates who sell their own products as well as products for others.
Paul Colligan decided that if the affiliate programs weren’t going to treat him right, he’d just become the merchant.
It isn’t that hard anymore. It took him two weeks.
Paul runs a number of Web sites related to Microsoft FrontPage. Until recently, Paul generated 100 percent of his site revenue through affiliate programs.
He has switched over to the other side. He is now a merchant.
Not only does Paul make more money, but other affiliate programs will likely make more money, too. Here’s why:
- Smart affiliates figure out that to run a long-term business, you need to have customers loyal to you. If they buy from you and you treat them right, they will likely buy from you again.
- Smart affiliates become resellers of their own products.
- If you don’t sell people something, you can’t build loyalty. Affiliates who only sell other products have trouble unless they have a huge email list or loyal daily visitors.
- Smart affiliates know that to really thrive, they have to own a product or service to complement the affiliate programs they offer.
The change intrigues me. Being both a merchant and an affiliate is smart, because you acquire customers yourself, not just for others.
In a sense, everyone is an affiliate and everyone is a merchant, with a bigger pool of customers to endorse.
Paul is taking that next step right now, and his income will likely dramatically increase.
Here’s a transcript of a conversation between us:
COLLIGAN: FrontPageWorld.com was, and still is, an online resource for building business Web sites with FrontPage. It has information and tips, drawing people to look and possibly buy affiliate products.
FrontPageTools.com is a new site that sells FrontPage tools for small businesses. Everything can be downloaded immediately after purchase. I’ve added many of my own products, including templates and training.
Being an affiliate inspired me to go to the next step — being a merchant.
DUNN: You removed your affiliate links and start selling your own product instead?
COLLIGAN: They aren’t all gone. There are a few key ones where they should be. Heck, I still link to your stuff, and you still send me checks. It just isn’t the focus anymore.
DUNN: If you were seeing good money from your affiliate relationships, why reinvent the wheel?
COLLIGAN: Well, first of all, it isn’t as hard as a lot of people like to make it. I built the whole thing in a few weeks. It is really not rocket science anymore.
The first reason was confusion. People wanted to know where I ended and where the other guy began — a common affiliate problem. People wanted to know who to email if there were problems. People wanted to know where the buck stopped. And, unfortunately, it stopped in a number of different places.
In addition to this problem, my affiliate partners, and they were all great people, simply didn’t have the infrastructure or desire to include me in the process as much as I felt I needed to be included.
I’d get emails saying that “Joe” bought product X, but I’d get no information on Joe’s email address, whether or not he liked the product, etc. I’m not trying to violate privacy policies, I’m just trying to run a business, and many times I answered questions better than the merchant did! That’s crazy. And, obviously, the value of me bringing Joe to company X was always a subject for debate — but I’m sure that issue isn’t unique to my situation.
Honestly, had a few people upped my commission and shared information with me so I could help the customers I sent them, FrontPageTools.com would have remained the batch of affiliate links it was 100 days ago.
DUNN: I don’t care how fast you built them, e-commerce sites are a lot of work. Is it worth it?
COLLIGAN: After you subtract all of the costs associated with FrontPageTools.com, I’m making twice what I was making before — and the site is only 100 days old.
I also now own the relationships. I own the names; I own the email address; I own it all. That is where the value is.
Over a month ago, I sent out a mailing to everyone who had previously purchased from me updating them about what was new at the site and, get this, 5 percent of them bought something else. That’s a 5 percent conversion rate. I never had that before. I did it again, just to see if it was a fluke, and guess what — 6.5 percent bought. And that list keeps growing — fast!
In the short time the site has been up, I [have been] writing myself a check for three times as much as the affiliates ever did. And I own the names and contact information. This is a win/win [situation] for me.
I’m adding about 500 names a month to the database. With a 5 percent conversion rate after 12 months and an average ticket price of $25, I should see $7,500 in sales every time I do a mailing. I like those numbers. Who wouldn’t?
DUNN: So, what next?
COLLIGAN: I’ve got some really interesting information on what sells well and what doesn’t and, more importantly, why. I’ll be putting that data to good use. I also am going to streamline the support process and make sure the customers are being as well served as possible. We also might hire someone to run the day-to-day stuff. I have some other things unrelated to FrontPage in the hopper. This should help pay for their development.
DUNN: What would you say you’ve learned from this process?
COLLIGAN: Honestly, if a few key affiliate programs had treated me just slightly better, they’d be getting some great business that they are no longer getting. It is that simple.
It wasn’t that they were purposely deceiving me or trying to keep me out of the loop — the issue is that they simply didn’t have the infrastructure to keep me happy.
And now I’m gone. And I’ll bet I’m not the only one to go. I won’t make the same mistakes with my affiliates.
DUNN: Thanks for sharing your insight, Paul.
This is part of a new trend, the hybrid affiliate, part affiliate and part merchant. Watch for these folks rising up out of the early days of affiliate programs.
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