Lead Generation: The Value of Referrals, Finder’s Fees and Affiliate Commissions

What’s a business referral really worth?

In the world of professional sales, a sophisticated organization knows exactly what a “lead” is worth. In fact, that’s one of the key building blocks for a big marketing budget.

In the world of smaller businesses, owners may or may not be so sure of the exact value of a lead. Still, everyone seems to agree that referrals are important to getting more customers.

How much are you willing to pay?

If you have ever bought real estate, you know that it is standard practice for a realtor to share the sales commission with others – the broker dealer and perhaps another broker who originated the lead. In California, even a 6% shared sales commission can be worth thousands of dollars!

In the world of investment capital, however, the SEC frowns very heavily on finders’ fees, and limits them to a very few, very registered and highly regulated people.

If you are in either of these fields, you probably need to turn to your registered broker/boss for details!

Finder’s fees or Affiliate Commissions in online business

Unlike the two examples above, in the world of internet marketing, the use of affiliates to help sell products is widespread and unregulated. (If you haven’t been in the habit of doing so, start looking for links reading “affiliate program” or something similar on the sites you visit regularly. These links are most often in the footer of the main page.)

Paying affiliates to increase sales is not only recommended for online businesses, but BEING an affiliate is a business model on its own.

Using affiliates to improve your online sales

The affiliate commission is paid when the buyer actually buys; it can be anywhere from 4% to 100%+ of the purchase price. Yes, sometimes the commission is MORE than the amount being brought in from the sale. Why is that? Because the name and address of the purchaser represent the real value in the equation. (“Building a list” is a whole other topic.)

A good affiliate program not only has a high payout, but also shares some of these characteristics:

  • High average order
  • Reliable monthly payments
  • Custom training for affiliates
  • Custom marketing materials for affiliates
  • Good affiliate support

If you are building your own affiliate team, you’ll need to include all these in your plan.

And if you are considering becoming an affiliate, and selling someone else’s product, look for all the characteristics listed. Above all, be sure that the product is one you would be proud to call your own.

In fact, the standard for online marketing is to actually buy and use a product before you promote it to others as an affiliate.

A poor or untested product may result in a lead, and even a sale, but the ultimate cost will be in the loss of the buyer’s confidence in doing business with you ever again.

Source by Virginia S Nicols

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