What is a business recommendation 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 building blocks of a great marketing budget.

In the small business world, owners may or may not be so sure of the exact value of a potential customer. Still, everyone seems to agree that referrals are important to getting more clients.

How much are you willing to pay?

If you’ve ever bought real estate, you know it’s standard practice for a real estate agent to share the sales commission with others – the stockbroker and perhaps another broker who originated the prospect. In California, even a 6% shared sales commission can be worth thousands of dollars!

In the world of private equity, however, the SEC strongly disapproves of search engine fees and limits them to very few, highly registered, and highly regulated people.

If you are in any of these fields, you probably need to reach out to your registered broker / boss for more details.

Search engine fees or affiliate commissions in online businesses

Unlike the previous two examples, 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 this, start looking for links that say “affiliate program” or something similar on the sites you visit regularly. These links are usually in the footer of the home page.)

Paying affiliates to increase sales is not only recommended for online businesses, BEING an affiliate is a business model in itself.

Use affiliates to improve your online sales

The affiliate commission is paid when the buyer actually buys; it can be 4% to 100% + of the purchase price. Yes, sometimes the commission is MORE than the amount you get from the sale. Why is that? Because the buyer’s name and address represent the actual value in the equation. (“Create a list” is another topic).

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

• High average order

• Reliable monthly payments

• Personalized training for affiliates

• Personalized Affiliate Marketing Materials

• Good affiliate support

If you are creating your own affiliate team, you will need to include all of these in your plan.

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

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

A poor or untested product can result in an advantage and even a sale, but the ultimate cost will be the loss of the buyer’s confidence to do business with you again.