Which affiliate program is better
Lead or Sale - Which Compensation Method is Better?
In affiliate marketing there are mainly 2 payment methods: lead and sale.
What exactly distinguishes these two methods, whether one of them is better and which one can earn more with, I explain today in this article.
[This article is part of the Affiliate Basics article series]
Different compensation methods in affiliate marketing
In my Affiliate Basics article "Which commission models are there in affiliate marketing?" I have already presented the relevant remuneration models.
These differ mainly in the customer's action for which a commission is received. Lead and sale play an important role today.
The sale or the sale remuneration is the typical and best-known remuneration model in affiliate marketing.
The point of affiliate marketing is that the advertising expenditure is performance-oriented. The sale only incurs costs for the company if sales are generated. In this way, the company ensures that it does not have to spend on advertising that does not bring any benefits.
The sale is ideal for many companies because it means sales and thus income. In this way, companies can calculate this commission right from the start.
For the affiliate, however, this means that he only receives a commission if the visitor to his website not only clicks on the affiliate link or banner, but the visitor must then also go to the merchant's (online shop) page. to buy something.
A cookie, for example, ensures that purchases within a certain period of time after clicking on the affiliate link are attributed to the affiliate.
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One speaks of lead or lead generation when the goal is not the sale of a product, but a certain action.
Very often this consists of providing personal data. There are tons of raffle affiliate programs where you get remuneration when a person signs up for the raffle and is likely to receive advertising as a result. One reason I personally don't promote sweepstakes affiliate programs.
Lead remuneration is also available, for example, in the insurance sector, where the visitor only has to register for a non-binding insurance offer. In this case, you will receive the remuneration even if this person does not take out insurance in the end.
The voucher area can also be assigned to lead remuneration. If a visitor enters some data (after clicking on an affiliate link) to get a voucher, we get a commission for it. Even if this visitor may not use the voucher at all in the end.
For the merchant, lead remuneration is still very interesting because it usually gives them access to customer data and these are very valuable in today's economy.
In addition, the lead is often the preliminary stage to the sale. And that is of course interesting for companies.
Advantages and disadvantages of lead and sale
What are the advantages and disadvantages of lead and sale remuneration?
Advantages of lead generation
- At least in my experience, lead generation is easier because the hurdle is usually lower for the visitor. It's easier to enter some information instead of pulling out your wallet.
- Lead generation usually also means less trouble because you don't have to "sell" anything.
- There are many lead affiliate programs out there.
- When generating leads, the cancellation rate is often lower or nonexistent.
- The commissions are very good for insurance partner programs, for example.
Disadvantages of lead generation
- With many affiliate programs you usually get less commission per lead than per sale.
- Lifetime compensation is usually not possible with lead compensation.
Advantages of the sale remuneration
- The compensation for sales is relatively good.
- Many partner programs offer sale payments.
- You usually get sale payments not only for the product advertised with an affiliate link, but for everything that the referred visitor then buys in the online shop.
- Sales are often remunerated on a percentage basis. The higher the value of the products purchased, the higher the sale fee.
- There are a number of sale affiliate programs that combine lifetime compensation with them.
- In some cases, the percentage remuneration increases when you have generated a certain amount of sales. At Amazon, this is now the case in many categories.
Disadvantages of the sale remuneration
- At least in my experience it is harder to generate sales. Of course, that also depends on the respective partner program and the target group.
- Some partner programs cap the sale fee. Amazon used to only pay out a maximum of 10 euros, no matter how expensive the purchased products were. But that's no longer available at Amazon
Which is better, lead or sale?
That's a question you keep hearing. And of course, the advantages and disadvantages mentioned above result in certain application scenarios where one works better than the other. But it just depends on the situation.
The following factors (alphabetically) play a role when choosing between sale and lead:
- Affiliate program
Of course, the partner program itself plays a role first. On what topic would you like to publish an affiliate website? Do you have a certain amount of know-how or can you buy it externally? Do you have specific topics or do they fit into existing websites?
Since not every partner program offers both remuneration, this decision is partly unnecessary.
But don't forget the merchant's landing page. No matter how interesting the offers can be and the advertising material attractive. For example, if the merchant's online shop is just shitty, the conversion rate will be low and you won't earn much.
Of course, the commissions play an important role. However, one should not only consider the amount of the commission (which will usually be higher in the case of a sale), but also how "easy" it is to generate a lead or a sale (conversion rate).
As a rule, it is much easier to sell products with a price of 20-50 euros to men or women than products that cost 500 euros.
The following factor also plays an important role.
- Cancellation rate
The cancellation rate is an important point, especially when it comes to the sale remuneration. After all, many online shoppers send products back.
What good will it be for me if I get 20 euros for the sale and only 10 euros for the lead if I then have a very high cancellation rate for the sales?
When it comes to lead generation, the cancellation rate is often lower, which in total then leads to more income.
- Advertising Materials
Of course, the advertising material that is intended to induce visitors to come to the merchant site is also very important (click rate).
How many banner variants are there? Can you design text links freely? Are there advertising materials for current or seasonal offers? Etc.
Lead programs, e.g. from the insurance sector, often offer interactive advertising material. Such as e.g. comparison calculator, where the conversion then takes place on our own side (e.g. request for an insurance comparison) and not on the merchant side.
- target group
Of course, your own visitors are also very important. Do they really come to your site with the intention to buy or are they just looking for information?
With the former, generating sales would certainly be easier, with the latter, I would rather rely on lead generation. So it is up to the affiliate himself to attract the right visitors, namely those who are interested in buying.
As you can see, there are a lot of factors at play that make it impossible to give a simple and quick answer.
There are soft factors such as the type of target group and the quality of the advertising material, but the other factors can be included in a calculation.
Traffic * click rate * conversion rate * average commission - cancellation rate
10,000 visitors * 5% click rate * 10% conversion rate * 5 euro commission - 20% cancellation rate
Result of the example
10,000 visitors => 500 clicks => 50 conversions => 250 euros commission => 50 euros cancellation => 200 euros earnings
This example calculation shows that you can turn many screws to increase income. Then there are the soft factors, such as the wishes, needs and purchase intentions of the visitors.
Both lead and sale are established payment methods. Which one can use more profitably depends on many different factors.
For me, sales generation currently dominates my affiliate income. This makes up around 70%, while around 30% comes from lead generation. My board game blog in particular generates a lot of sales, but my niche websites are also primarily sale-oriented.
With other affiliates it looks completely different.
That's why it's called on the one hand Thinkbefore using certain affiliate programs and of course Testing. Often it is only through tests that you can really find out which compensation model works better in this particular case.
Do you have a question about affiliate marketing? Then mail them to [email protected] and I will answer them in a future article.
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