DISQUS

juliebarile · 10 months ago

Hey Jamie - thank you for addressing this subject so thoughtfully and helpful to both sides of the affiliate fence. I have worked on the merchant side for two big brands over the past seven years, and this is one of those ongoing issues that always seems to be a source of great frustration for everyone. In addition to the (very important) point of clean data, merchants generally view the affiliate channel as a primary source of new customer recruitment. Affiliates have spent their time and resources building loyal audiences by providing something relevant and useful, and gaining exposure in search listings. Merchants partner with (and that is the perfect way to describe it) affiliates to gain exposure to disparate audiences that they wouldn’t be able to reach otherwise. They have spent a lot of marketing dollars to build their internal customer databases and are sending segmented communications with targeted offers just as you discussed. These are different from those that are made available to affiliates for the obvious reason – internal database offers use retention tactics, and affiliate offers are proven recruitment offers.

I have had to do my fair share of defending the affiliate channel to top management because things seemingly became “out of control” – and trust me, to someone who has never lived on the front lines of the industry, it does not take much at all. They have a brand to protect, and at the end of the day that is their number one concern. Affiliates need to do their part and make sure they aren’t fueling the fire. Mutual communication and diligence are the keys to this.

Hopefully more people (affiliates and merchants alike) will buy into the idea of the mutually beneficial partnership – we need each other, one no more than the other.

JEBCommerce · 10 months ago

You bring up a very good point, and one I hope to elaborate on and get your input in as well - that of new customer acquisition. I remember working at Coldwater Creek, that was a metric we looked at by affiliate by day. But there was never a way to coordinate our goals, more new customers, with incentives for affiliates. I think that may be a very big change coming in the future - the ability to reward base on customer status and provide bigger bounties for those customers.

I can't agree more about the defense of the channel. I have been walked out of executive meetings after trying to defend why we are working with affiliate XX.

BigAlRap · 10 months ago

As a coupon affiliate, I appreciate your thoughtful article. Not much I can disagree with here. I agree we need to be ‘partners’ and it is so important to keep a level playing field; which means merchants policing this activity so I am not at a disadvantage just because I am following the rules and not posting coupons others are posting. Other then that, just like you said it is all about communication. A quick way for a merchant to gauge which affiliates are taking the partnership seriously is communicating and see what affiliate are reading and responding.

JEBCommerce · 10 months ago

BigAlRap, can you elaborate on your final point?

lisariolo · 10 months ago

Jamie: This is a topic of growing importance, especially given our current economic conditions.

There are a lot of issues around the pros and cons of "coupons"--for both Merchants and Affiliates. What you illustrate so well is that coupons are not always intended as a basic consumer discount. Which is why the conversation between Merchant and Affiliate is so important. Both partners need to share and understand the other's objectives and objections. If Merchants and Affiliates would cooperate, the "black hats" in the crowd would stand out more than they do today.

Another tip for merchants is that they should spend more time showing affiliates what they are doing to improve the conversions of the visitors that are being sent over by their performance partners. One reason affiliates tend to grab and promote a coupon code is because it might help improve conversion rates. If the merchant has other programs designed to help convert new visitors--the coupon code would seem less important.

JEBCommerce · 10 months ago

You make some very good points, ones I hope that more merchants get to see and more affiliates understand what they should be pushing towards - stronger relationships with more give an take. Thanks for commenting!

Merchants, many of them, don't look at affiliates as partners. Mainly because of these type of problems. They should though, the affiliates that are doing this well are getting that information. I've also found that it is a function of time. An overworked AM at the merchant can't respond or be proactive with everything.

Wade Tonkin · 10 months ago

Jamie, this is good stuff and I hope a few select affiliates either read it or read it and actually care. Like you, I consider some of the top coupon affiliates among my best friends in the business. I enjoy connecting them with my merchants because I know that they will promote the coupons that they are supposed to and because of this, I'll get them exclusive codes when I can. There are definitely others who are less scrupulous and really make it difficult to convince some of our more "margin sensitive" clients to roll out a well conceived coupon program.

This is definitely a two way street where merchants need to have a policy and enforce it and have strict repercussions for violations, while affiliates need to make sure that they use what is theirs to use and don't succumb to greed or tough economic times to use an advantage that isn't rightfully "theirs" to use.

And remember - if you are a merchant, it's easier to have control over coupons with affiliates that you are engaged with than to shake your fist at violators that you have no arrangement with.

JEBCommerce · 10 months ago

Your last point is spot on. Engage with them and you'll earn their trust and they'll earn yours. It also helps identify the ones that won't abide.

Mike Allen · 10 months ago

Great article, Jamie. I have a few things to add having been in this industry 10 years now.

1. Merchants would be wise to work with and not against human nature. If they are doing a test of their catalog channel, it would be helpful to offer an equally valuable coupon through the affiliate channel. That is especially true given the fact that user-input coupon sites exist where no one will edit the coupon codes posted. From a human nature point of view, though, it is very tempting to dishonestly post a better coupon when you know you have only been authorized to offer an inferior one and your customers are expecting you to deliver the best. Remember, we don't want to lose our customers, especially our repeat customers, to a less than reputable coupon site.

2. Use coupon links instead of coupon codes. Coupon codes can be copied, scraped, republished and so much more. They are fluid and difficult to track. Coupon links or coupons embedded in a specific URL are fixed and easy for merchants to manage. They track well and can be authorized to specific affiliates. They give the merchant control over the landing page and provide very specific data that can enhance decision-making for merchants.

3. Police and communicate. You said it above but I must restate how very important this is. It is unfair to play by the rules and watch others abuse them and get away with it. Even user-generated sites should comply with coupon guidelines. I also like the idea of sending a list of forbidden coupon codes so affiliates can confidently know they are in compliance. That is a great feeling since the waters can appear muddy when managing hundreds of programs with varying terms and conditions.

4. Build personal relationships with your top players. People are less likely to mistreat those they have a professional relationship with. Reward transparency and compliance with better and exclusive offers. Take care of those who take care of you. It's a win-win situation that way.

Thank you for this article, Jamie. We take great care to follow coupon policies and promptly remove when asked (which is very rare). I would also suggest that merchants verify their coupon codes or links before sending out and re-verify frequently because there are a surprising number of errors in this space. Coupons should be verified after every site or server change. Also, be sure to submit exclusions, expiration dates (and the applicable time zone) and any other terms and conditions. Early submission is a real plus as well and can even get premium placement before our space becomes crowded.

JEBCommerce · 10 months ago

Thanks for stopping by again Mike! To your first point, when managing FactoryCard's program, we did a lot of that. Unfortunately, some of the coupons we weren't allowing affiliates to use were friends and family coupons. These were large discounts that the client could never afford to be out there widely used. It was a coupon intended for a small audience. What do you suggest in that instance?

Your second point is a huge one. Often times, the networks' or the merchants own resources and technology keep them from doing the appropriate things, things like coupon links. I'm not sure many merchants use them at all, or know how to. Even with some coupon links though, the code is shown in the checkout, it would have to be around that. Anyone know technology that merchants could use?

Thanks for your comments Mike. We've talked about the merchants side a bit, but what is a better way to get affiliates to comply. You and I have worked together for a long time and you definitely are one I am proud to discuss with any executive.

Mike Allen · 10 months ago

Friend and Family coupons are fine for small groups but they are often sent out to a broad base of potential customers. (From an affiliate's perspective, we know the merchant can offer a bigger discounts directly when they don't have to pay us commission and also pay affiliate network fees.) For true Friend and Family coupons, I would suggest single use individualized coupon codes sent to a small group of people. That protects the merchant from them being spread around. If the F&F base is small, it doesn't discourage affiliates as much.

Coupons are marketing tools and should be creative and sophisticated to maximize their effectiveness. They should be somewhat limited or else customers think "ah, they just raised their prices so they could offer us a coupon discount." True, coupon links do require some sophistication on the merchant side of things but the improvement in sales and prevention of tracking leakages would probably more than make up for the development costs. For starters, coupon code boxes should be intelligently displayed and hidden when a coupon link is used. Obviously the discount should be highlighted in the shopping cart but there is no need for a code to appear.

As for compliance, nothing seems to beat policing and following up threats with real action. Three strikes and you're out or some policy even more aggressive will get attention. The death penalty (permanent removal) is needed sometimes but temporary removal can also be very effective. Of course, any action should be preceded with clear policy and communication which is why transparency of affiliates is so important because it enables merchants can know who they are dealing with. I think long-term transparent relationships should be rewarded on both sides (affiliates offering better placements and merchants offering better commissions and/or exclusive coupons). And one final thought -- about exclusive coupons, if a merchant makes a policy that only the affiliate the exclusive coupon was issued to will receive commission for sales that used that coupon then they remove incentives for other sites to scrape and republish that exclusive coupon as their own.

JEBCommerce · 10 months ago

Right on the money Mike!

Rick Renaud · 10 months ago

Jamie - thanks for putting this post out there. I think we've all heard the broad strokes a hundred times, but in fleshing this out as you have, perhaps it will gain some more traction. The more our affiliates are a true value add to us, the more we can afford to reward them. The more we are motivated to work with them and build relationships and incentives. At the same time, we merchants can do a better job providing the information affiliates need to work within our guidelines.

Cheers!

JEBCommerce · 10 months ago

I try Rick :) I just hate having these same conversations over and over again about value. I know affiliates add value, but when there are more than a few bad apples, it sure makes it difficult over and over again and we spend most of our time defending or policing don't we? I hope affiliates read this and get a better feel for the perception of the industry from the other side, the merchant side and maybe make some changes to how they do business. I keep thinking of the Jerry McQuire - "Help me help you!"

Denver · 10 months ago

Totally agree! As a merchant, we ended up turning off all our affiliate programs. At the beginning, we weren't clear enough with our policies and our program was picked up by several opportunistic affiliates. When we realized that we needed to tighten up our policies, it was too late and most of our time was spent policing affiliates. Next time we have a go at it, we'll do a much better job at being clear with our policies.

JEBCommerce · 10 months ago

Thanks for commenting Denver, see you on Friday!

I'd love to chat with you more, offline, about turning off your program. I think affiliates need to know why merchants do this and how this effects what other merchants are doing. It's a domino effect. One merchant pulls the program because of these issues and others feel justified in doing the same.

SteamDonkeyMedia · 10 months ago

Now more than ever, online shoppers are becoming much more savvy when it comes to finding the best prices on the products they're looking for. At the same time, margins across the world are shrinking and merchants are having a harder time turning stale inventory into back into working capital.

At the core, coupons serve two purposes, customer acquisition and liquidation(turning inventory back into working capital). In all honesty, coupon affiliates need to realize merchants do not want that customer to return to that coupon site(or another) ever again. At the same time, if this is the merchant's goal, they need to be perfecting their customer retention models. The easiest way for a merchant to retain a customer is offer them a good deal, or a better deal than the affiliate coupon sites have. If a merchant's average margin is 20%, they're paying the affiliate 10% and offering a 10% coupon, they're running at break even. If the merchant offers a 15% off coupon via a channel that doesn't incur any other spend(internal email campaigns), that coupon is actually more profitable than the affiliate channel coupon is. In many cases, affiliates do a much better job at customer retention than the merchants do. This almost always puts the merchant between a rock and a hard place.

I think in the coming years, coupon index type sites are going to take a big hit. As merchants continue to further refine their internal analytics, they're going to start looking more at the lifetime value of customers. The reality is, most savvy coupon shoppers end up making purchases that run at a loss for the merchant. If you have a site that repeatedly sends the same customers that continue to make purchases that are in the red, merchants will eventually realize they need to take action to prevent this.

There are two things that can be done to address this situation. First, offer coupon codes that have characters specific to the various marketing channels that are being used. If every affiliate coupon code starts or ends with AFF, then it's easy for the affiliate to determine which coupons are approved and which ones are not. If the merchant's coupon system doesn't have a feature to append specific characters to the coupon code, thats their problem and they need to fix it. I also realize this doesn't address coupons that are links rather than codes, which is something I'm going to leave for another discussion. Next, the merchant needs sophisticated internal analytics that can instantly notify them(or the program manager) if an order comes in with a non affiliate coupon code with the affiliate spend also attached. If this system can work in real time, it will be easy to check and see if the affiliate is promoting that coupon. If the affiliate is caught promoting a non affiliate code, they're cut. In the end, it's all about refining the systems that run the show.

Coupon sites need to be watching their instruments and taking note of where their traffic is coming from. If a coupon sites traffic is solely based on serp placement for "merchant name coupon", they need to start refining their marketing tactics. Most coupon sites are just big indexes of all the same exact content. Google or yahoo could easily destroy the coupon site industry in a heartbeat, creating their own coupon indexes without affiliate links. This would erase the network spend and the affiliate spend and merchants would be singing their praises for days. Google is most likely watching the bounce rates on these sites and they're probably well aware of how easy it would be to dominate the coupon game. In the end, if the coupon affiliates don't want to get pushed out of the race, they need to work together to honor the terms and conditions set forth by the merchant's affiliate program.

Stephen Robinson · 10 months ago

Jamie, great article here. As an affiliate manager for nearly 4 years, I understand the value of affiliate partners that add value when they promote authorized coupons. This gives further credibility to your statement, "Programs are becoming more restrictive in who the let in as they are looking for more “partners” and less opportunists. Often times merchants are willing to provide exclusive offers to trusted partners.

I know that in the 20+ programs I've managed, merchants get very frustrated when they've taken the time to create exclusive coupons, only to have them "scraped" and re-posted by another affiliate. This is very discouraging to merchants and AM's alike as it reduces their overall willingness to create these codes in the future.

The best way around this scenario is to offer exclusive offers to trusted partners that have been around for awhile and understand how to do things the right way. This also allows merchants the opportunity to test offers through the affiliate channel and they are able to rely on clean data.

A big issue I've seen are sites that allow users to post offers, without providing any moderation. An example of this would be www.retailmenot.com, I don't know how many times merchants have been frustrated by their lack of willingness to moderate their site to be sure that unauthorized or occasionally, fake coupons are posted. Some sites such as www.dealtaker.com allow users to post offers in their forums, while moderating the coupons posted by their users.

Thanks for shedding light on this issue.