Lammo.net: Affiliate Marketing Blog

I received the following email yesterday, regarding the Next Affiliate program on Affiliate Window:

Dear John,

The Next.co.uk transactional affiliate programme is a great success and the EPC remains higher than many of our key competitors, despite their higher commission rates!

To accommodate elements such as returns and cancelled orders the commission is being changed to 3% from Saturday 29th September 2007. Whilst the new commission would appear lower than other programmes please consider the high Conversion Rate & EPC and daily validation.

Affiliate marketing is a great success for Next and is supported by a much wider communications programme such as high profile TV adverts. All communications work very hard together and result in higher sales and conversions. We anticipate the programme will be one of the biggest on the network on the run up to Christmas.

Please note that The Directory Request programme is not affected by this change.

We value your support and wish you good luck in your Next campaigns.

If you have any questions please contact ##staff email removed##

Kind regards

Next

Of course, when any email starts with “the program is a great success”, you know it can only mean one thing - Someone is about to meddle with that successful program, and that usually means finding some way of paying less commission to affiliates.

Which is exactly what Next have done, by giving only 48 hours notice of their intention to reduce the headline commission rate by a massive 25%, meaning they now pay a meagre 3% on sales.

Now, Next can dress it up however they want, but sending an email full of spin about returns policy, EPC, TV adverts, etc is merely an attempt to deflect your attention from the fact that they have taken what was (in their words) “a great success”, and found a way to pay you 25% less.

I particularly like the notion that they are so proud of the fact they are spending lots of money on “high profile TV ads” - a medium that offers no guarantee of sales, and is not accountable in the slightest, and they use this as justification to swipe money away from the most cost-effective source of sales (not forgetting free branding of course).

You simply can’t tell people what a great success the program is (twice in their email), and then go on to say we’re cutting your commission by 25% - If you do that, affiliates are going to say “Hang on, that’s not right!”, and fairly so - The affiliates are indeed revolting! It’s easy to come to the assumption that they’ve just lowered the commissions to take advantage of the busy Christmas period, because it happens every bloomin year!

It has been further explained on the a4uforum that return rates on some products can be as high as 50%, and as they pay out on returns, that is the real reason they have decided to drop the commission rate. I agree fully that a program should be judged by its EPC, and not just the headline commission rate, but many people don’t look much further than that.

I think rather than getting Alastair Campbell to write their notices, they would have upset a lot less people had they written:

Dear John,

You may not be aware of this, but Next have a very high ratio of returned orders (some as high as 50%) due to the nature of their business. Up to this point, they have always paid out on returned orders, meaning in some cases they were actually losing money on affiliate sales.

This is something they need to address, and rejecting commissions (or part thereof) on those returned items is not something they wish to do, as they know that Affiliates need to know where they stand with regards to actual earnings, EPC, cashflow etc.

For this reason, they have taken the difficult decision to reduce the headline commission rate to 3%. All returned orders will continue to be approved as before, and I should also point out that they have a deletion rate of practically zero, and their EPC is currently higher than most of their competitors. Even with the lower commissions, they should still remain one of the highest EPCs in the sector.

Of course, we appreciate that this is not good news, but it is action that is necessary to take to ensure the long-term profitability of the program. We are aware that affiliates should have sufficient notice of this important change, so the commission rate will not change until 30 days time.

Please note that the Directory program is not affected by this change. Should you have any questions at all about this, or any other program, please feel free to email me at myemail@network.com, or you can call me on my direct dial number 01234 567890.

Yours,

Account Manager’s name (not faceless entity)

Actually, reading that back maybe I’m a better spin doctor than I thought.. Any networks wanting me to write their “we’re dropping our commissions” emails, I only charge £500 each - Much cheaper than Alastair!

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