Ultimately, how attractive you look to a customer on a cashback site comes down to the commission you offer the affiliate. This is because this rate directly translates into money in the customer’s pocket.
It is important to sit down and take a good look at your margins. What can you offer that will make you more attractive than your competitors, yet still allow you to make a profit? It is also worth leaving yourself with some added breathing space to run tactical commission increases at key times to maximise your exposure levels.
To give you an example of a way this was done exceptionally well and had phenomenal results, we’ll give you a sneak peek into some of our own client success stories.
Our client was promoting an ISA product. For this, we implemented a tiered commission structure based on the monthly premium the customer decides. This structure also included different commission amounts if the customer decides to deposit a lump sum. Because of this, the customer has numerous options all with different cashback rates. The cashback rate increases as the premiums do. What this does is encourage customers to take out higher premiums, as opposed to if they offered a flat cashback rate that was the same no matter how much was deposited.
The smallest monthly premium that offers cashback is £30 – £49.99; this was the second-worst performer of all the premiums, driving only 14% of total premiums taken out via cashback sites. A breakdown of the performance can be seen in the graph below.
The graph clearly shows that by incentivising the higher premiums, the customer was more likely to opt for them. In fact, 65% of people who signed up for an ISA via cashback took out a premium of £100 per month or more.
“What about those sneaky people trying to just get some cashback and then cancel their policy?”, I hear you ask.
We’ve got it covered. For a merchant of this nature, there should always be at least a 90 day validations period, with 3 premiums of the same amount received, which should be clearly stated in the terms and conditions.
This means the provider will only approve cashback payment when they have received three premiums of the same amount. By doing this, it will help reduce the number of fraudulent claims.
In some cases, this validation period can even be extended to six months. It should be noted, however, that the longer a customer has to wait for their cashback, the less appealing the offer becomes.