I had one other thought this morning about affiliate programs while I was eating breakfast. They require 3 conversion steps while other product sales only require 2. That may not seem like a big deal but let’s look at an example and I think you’ll see the problem.
Example 1: You sell a product on your site.
Let’s assume you get a 1% conversion rate at each point during the sales process. In this scenario we’ll use pay-per-click advertising to drive traffic to the site. Your ad shows to 10,000 people. At a 1% conversion rate, 100 people click on your advertisement. If your site has a 1% conversion rate you’ll sell 1 product.
Impressions to sales ratio: 10,000 to 1
Example 2: You promote an affiliate partner’s product.
In this scenario, your has to show to 1,000,000 people. Why? Because you have to fill the sales funnel with a lot more names because there’s an additional conversion point in this sales model. So you show your ad to 1 million people. At a 1% conversion rate, you get 10,000 people to click through to your site. If your site still converts 1% of all people, 100 people will click through to your affiliate partner’s site. Of those 100 people, 1 is likely to buy the product if they have a 1% sales conversion rate on their site.
Impressions to sales ratio: 1,000,000 to 1
You see, by adding the additional step of making people click through to the partner’s site, you increase the number of leads required by 100 times, just to make 1 sale. So if you show your ad to 1,000,000 people, you could sell 100 products through your site, or get a commission for one product sold through another site. That’s a huge difference in website traffic. I’d always opt for the solution that requires less traffic. Hope that helps.