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5 Commission Structures to Incentivize Your Affiliates

Last Modified: February 8, 2023

With affiliate marketing experiencing exploding levels of growth in recent years, the need for brands to partner with the right affiliates and keep them incentivized and motivated has never been more important. 

According to a recent survey by Rakuten, affiliate marketing continues to be the go-to sales channel for more than 80% of brands. However, brands looking to maintain their success in the highly competitive affiliate marketing space need to keep their affiliates happy and constantly incentivized. 

As with their other marketing and sales channels, companies must regularly tend to their affiliate marketing programs to prevent them from stagnating and ultimately failing. The ideal way brands can grow their affiliate marketing programs is by managing their commission structures

Brands should offer unique commission structures and regularly update them with fresh incentives to keep their affiliates happy and motivated. Without routine oversight and management of their affiliate program’s commission structure, brands can suffer from stagnation and poor affiliate partner performance.

This article will cover five unique commission structures brands can effectively utilize for their affiliate marketing programs to keep their affiliate partners incentivized and maximize results. 

The Importance of Definitive Commission Structures

For brands to run a successful affiliate marketing program, they need to focus on their affiliates and offer a variety of definitive commission structures tailored to all the different affiliate partner types they partner with. Brands are diversifying their affiliate program strategy by using multiple affiliate types and networks to stay competitive. By diversifying, brands benefit from access to new niche audiences and brand awareness and sales growth. 

Brands should continually be reviewing their commission structures to see if it aligns with their current affiliate program goals and the affiliate partners that make up their program. To successfully maximize affiliate program ROI, brands should establish definitive and unique commission structures for the unique value each affiliate type is delivering. Additionally, the commission structures must be equally flexible as they are definitive to incentivize various affiliate types’ performance and motivate continued performance. 

Below, we’ll go through five unique commission structures for brands to implement in their affiliate marketing program to maximize results.

Commission Structure #1: Competitive Fixed Margin 

One of the best ways for brands to keep affiliates incentivized and even bring in new affiliate recruits is to implement a generous, industry-competitive fixed margin commission structure. Fixed margin commission structures involve using a predefined fixed commission for affiliate partners, regardless of the actual sale amount. For example, this can be a brand offering an affiliate a fixed 10% margin for sales of any of the brand’s products. This commission structure is simple to understand and track for both affiliates and brands while reducing discrepancy and incentivizing sales. 

A common mistake that brands make when setting their fixed margin commission structure is not offering competitive fixed margins for their industry. Affiliate partners are an extension of the brand’s salesforce, so they should always incentivize their affiliates with attractive commission margins. 

Commission Structure #2: Time Decay 

Time decay commission structures allow brands to reward affiliates that most-closely influence conversions to the desired event. For example, let’s say you have one affiliate partner that initially engages a consumer to learn more about a particular product. In contrast, another affiliate partner engages the same consumer right before purchasing. The latter affiliate partner will then receive the full commission, or the more significant portion depending on the time decay commission structure set by the brand. This structure works well for big brands that have suffered from over-saturation of their campaigns over time. It’s also great for brands that want to partner with multiple affiliate types across various traffic channels. 

Commission Structure #3: Position-Based

Position-based commission structures work by rewarding affiliates that influence consumers at crucial stages or positions of their buying journey. For example, a brand may offer a reward to an affiliate that initially engages the consumer while also offering a reward to an affiliate that influences their purchase. This commission structure considers today’s consumers’ mental process and buying practices and awards the affiliates that made key contributions to their overall buying journey accordingly. 

Commission Structure #4: Coupon Codes

Coupon codes commission structures are among the most popular and widely used commission tools. The commission structure works by rewarding affiliates for any sale that uses the affiliate’s unique coupon code, regardless of where the consumer picked up the coupon code. For example, a consumer may have seen the coupon code in an email, heard it on a podcast, or even heard it on the radio. Regardless of the coupon’s origin, the affiliate receives a reward for the purchase. This structure allows brands to partner with a large group of affiliates online or offline, as the coupon codes are easy to track.

Commission Structure #5: Cross-Platform Tracking

Cross-platform tracking commission structures are steadily becoming the norm, considering the buying journey of today’s consumers that involves the simultaneous use of multiple devices. For example, a consumer may find out about a product through an affiliate while scrolling through the social media feed on their mobile phone but purchase the product later while at home on their laptop. Cross-platform commission structures reward affiliates for actions even if buyers switch between devices before purchasing.

The Bottom Line

Maximizing your affiliate marketing program requires you to incentivize your affiliates by offering multiple commission structures. These are just some of the most common affiliate commission structures, but there are much more available. When partnering with multiple affiliate types, no single commission structure works best.

Incentivizing multiple affiliate types doesn’t have to be a painstaking task, and that’s why Refersion is here to help with Refersion Pay. Brands looking to take their affiliate program to the next level and develop incentivizing commission structures tailored to their business goals and their affiliate partners should contact a Refersion expert today.

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Written by

Ruthie Carey
Ruthie Carey