Saturday, December 02, 2006

Pay-per-lead or pay-per-sale?

Which one is better?

First a quick description of the two:

Pay-per-lead - you are paid a set amount for each visitor you send to the merchant's site that performs an action, such as joining their program, signing up for their newsletter, filling out a survey, etc.

Pay-per-sale - you are paid a commission when a visitor clicks on a link or banner on your site, and then purchases a product on the merchant's site.

For the most part you will find that per-sale programs will have higher payouts than per-lead programs. A big reason for this being that the merchant has actually brought in money from the sale so he gives you a cut.

Per-lead on the other hand is done to acquire new customers. This may or may not result in money changing hands at that point in time. The merchant with this type of program recognizes the importance of a customer's 'lifetime value', meaning that they hope to sell that customer something in the future to recoup the acquisition costs.

In a time when traditional advertising is so expensive, and in many cases not very effective, per-lead programs can be as rewarding for the merchant as per-sale programs.

As an affiliate you need to educate yourself on these two types of programs to know which programs to join and how to effectively promote them.

On one hand some affiliates will opt for the per-sale programs due to the higher payouts, while others will join only per-lead programs because they appear to be much easier to make money from.

But, if improperly executed, both of the above statements can quickly become false.

By execution I mean pre-selling. If you don't pre-sell your visitors you may have far fewer sales, and even though there is a higher payout, it won't add up very fast.

Why would you need to pre-sell your visitors on a per-lead type of program? Many of these are free to the visitor, so what gives?

This can be a BIG misconception. While many per-lead programs do offer your visitors something for free, there is always something required in return.

That something might be to fill out a survey, or to ask them to signup for an account, which will ask for personal information, or may even require a credit card for validation.

If you don't properly prepare your visitors for this, they may quickly move right on when they see this.

For many people giving out personal information on the Internet is viewed the same way as opening up their wallet.

Let me give you an example of this. ( ) is a new service that easily allows you to send money across the Internet. Their 'Refer a friend' program pays you $5 for referring others to sign up, and also starts that person out with $5 in their account!

This should be a no brainer, right? Who wouldn't jump at the chance to get $5 for FREE? So, I signed up and got my $5, emailed a few of my friends and they got their $5, and I got an extra $5 for each of them.

Then I put a simple blurb on one of my pages and sat back to see what would happen. Well, after a few days had gone by, I was quite shocked at how few of my visitors had taken advantage of this deal!

My actual sell-through wasn't that spectacular after all.

Why? I didn't think it took any pre-selling to give away $5 bills. So I went back through the entire signup process in my mind to determine what it might have been that scared away my unprepared visitors.

To qualify to get the $5, they not only have to open an account, but they also have to put in information for a valid credit card.

Even though their credit card will not be billed, and it won't cost them anything, it has now been put on the same level as going to a site and purchasing something.

That urge to keep the wallet closed can be more powerful than the lure of a free $5 bill.

So, what I will have to do now (yes I haven't changed it yet), is create a page that explains the benefits of what has to offer its customers, give some real world examples of how to use it, and throw the $5 in as a bonus instead of focusing on it being free.

If you have to trade personal information, then it isn't totally free is it?

Basically, the bottom line is that you should do your best to pre-sell your visitors no matter what type of program you have joined.

So many things can happen after that person leaves your site. So why would you want to leave that to chance? Don't trust the merchant to do all of the selling for you because you might find yourself quite disappointed on payday.

Another very important issue is to try to keep the same tempo as what they will face when they are transferred to the merchant's site.

What I mean is, what impact do you think it will have if you are trying the soft-sell, smooth subtle approach, then they click to the merchant, and BLAM they are blasted with hard sell and having the product forced down their throat at every turn.

If you know they use strong selling techniques, change your wording to set your visitors expectations a little before throwing them into the lion's den.

The best advice that I can leave you with is to really get to know the products and services that you are offering. Visit the site, even become a customer yourself so you can know firsthand what to expect.

Through this knowledge you can tailor your efforts to maximize your partnership with the merchant. And, through your testing and experimenting you will be the judge on which of the two types works best for your site.


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