The August 2009 issue of FeedFront Magazine (Issue 7) featured an article I wrote titled “Inside Information on Affiliate Classifying”.  Here is that article, in its entirety:

When my company takes over the management of an existing affiliate program or launches a new one, we do so using the Structured Diversity Method I have developed. Affiliates are categorized into three distinct classifications: Aggregate Volume, High Potential, and Premium Partners.

Each affiliate within any given classification is equally significant and must be treated with a high level of importance. This ensures that your affiliate partners are able to consistently improve their sales volume and helps your program become a significant portion of your overall online revenue.

Aggregate Volume affiliates comprise the foundation of your program. These affiliates are what most would consider rookies to affiliate marketing. They will likely have many questions and may need to be taught the basics of generating traffic and converting visitors. These affiliates typically generate a few orders each, per month.

Your program should be designed so that you have hundreds of converting affiliates at the foundation level who occasionally generate individual sales, but who, as the Aggregate Volume group, contribute a significant amount of monthly revenue.

High Potential affiliates are important both as a group and individually. This group does not typically make their living entirely from affiliate marketing, but they are generating consistent sales each month. Their commission earnings play a role in both their business and personal budgeting. High Potential affiliates are likely to increase their sales rapidly if they are given the right tools.

Premium Partner affiliates are your top performers. They may or may not be considered an industry Super Affiliate, but regardless are generating a significant amount of your monthly sales. These affiliates should be viewed as a method of “sharpening the tip” of your affiliate program. They have the ability to drive significant amounts of revenue, often in a very short period of time. More importantly, their high performance level is often sustainable over time.

You can build a significant revenue generating program through Aggregate Volume and High Potential affiliates alone, but overall growth will be inconsistent and slow. Likewise, a program built with Premium Partners alone may not be sustainable over time as any number of factors beyond your control could temporarily or permanently affect their sales volume. The loss of even a single Premium Partner in a program consisting only of this group will result in a significant decrease in overall revenue.

In utilizing the Structured Diversity Method for your affiliate program design, you will be able to reach profitability from the sales generated by Aggregate Volume and High Potential affiliates alone.
However, you must attract and recruit affiliates of all three classifications in order to realize the sharp growth curves you are looking for. You must manage your program under the assumption that each partner in each classification wants to earn more with your program and is actively working on improving their business. If you provide the tools and assistance needed, you will find a steady flow of affiliates advancing their performance level and generating more sales in your program.

Matt Enders is the CEO and Founder of mgecom, inc., a leading Outsourced Affiliate Program Management firm.

Issue 7 of FeedFront Magazine can be downloaded here.