It’s not about the label, it’s about the behaviors!
This issue we are launching a new department, Insights from the Outside. In each issue, Direct Selling News will ask a leading industry consultant, advisor or advocate to share their perspective on the channel’s most pressing issues and opportunities.
Having been involved in a significant amount of research over the past three years relative to the phenomenal growth of the gig economy and the changes in marketplace behavior, we have not found one common definition of an Affiliate Program. The Amazon definition is very different from how a direct selling company might embrace the concept.
Recent observations reveal that the label “Affiliate” is critiqued and discussed as if there is a common definition applicable to all who embrace its use. Our caution—and the motivation for this article—is to be careful about critiquing or praising any label that cannot be described with one universal description.
For example, we as direct sellers have witnessed the hijacking of the label MLM by adversaries who applied it to all companies who embraced a tiered compensation architecture as if tiered compensation was a new evil. To explain further, the label MLM became identified as the architecture of a pyramid scheme. One can easily say that we have never recovered from the impact of using a label which has many nuanced definitions and applications.
All MLM compensation plans are not the same. Some are intentionally designed to focus on income possibilities while most are designed to focus on rewarding positive behaviors which are duplicated by others, ensuring that brand awareness is enhanced and real consumers are engaged.
The Amazon Blueprint
Amazon might have the most successful Affiliate Program of any type of business. The commission available to Amazon Affiliates is between one percent and 20 percent depending upon the criteria applied to Affiliates. Based upon available literature, we can hypothesize that the average Amazon Affiliate earns between five to ten percent, although we do not have data on the hypothesis.
Amazon Affiliates are expected to influence purchasing from the Amazon digital platform through promotion initiated by Affiliates on their personal websites, blogs and social media. Amazon provides their Affiliates with excellent support—perhaps, the finest digital platform, support and service created by a business model in our lifetime. Amazon appears to ensure that the relationship with Affiliates is focused on customer acquisition. Amazon does not appear to pay Affiliates on customer retention and repurchase activity which is an attribute of most direct selling models.
Direct selling companies certainly reward their independent contractors for their customers’ ongoing purchases. During the last round of research we conducted on the gig economy, we did find that Simplicity vs. Complexity is a viable strategy, and therefore, an attribute of gig-providing models. We did not find a viable Affiliate Program of any type to be based upon commissions only. Amazon rewards its Affiliates with what might be considered a modest commission. However, Amazon can boast a very successful Affiliate Program.
Our Opportunity
Direct selling companies have the opportunity to design their programs to be very rewarding and encouraging, supporting a focus on customer acquisition, retention and frequent ordering. The label should not be the focus. Behavior is the focus supported by simplicity in how the behavior is rewarded.
Offering and encouraging the development of 20, 25, 50 or more customers purchasing frequently without time zone or geographic restriction is a very exciting opportunity for many who seek the freedom and flexibility associated with any form of micro entrepreneurship.
A direct seller who adds their personal experience and passion to how they share the products/services and opportunity for someone else to also engage in affiliating with the brand, adds a powerful ingredient to their personal marketing and business building efforts. Using the previous example of 20, 25, 50 customers purchasing frequently at an average order of close to $100 creates an exciting, duplicable opportunity, regardless of the label used.
If the label used is “Come Fly with Us” we must simply ensure that the marketplace of potential new participants understands what we are saying. Why should we simply adopt a label created by someone else that has many different definitions?
Excellent Affiliate Programs are supported by companies who offer stellar products, exciting marketing, creative communications and promotions as well as flawless customer service and support. The companies that create such programs are not relying upon each individual participant to create their own marketing and support. The new direct seller is more of an intermediary dependent upon a company to provide them with excellent products, services and support. These new intermediaries are motivated differently.
When we respect the differences by simply realizing that everyone will not engage for the same reason, we simplify our approach to attracting and engaging more market share. In my many years of observation, I have never experienced a marketplace as favorable as the one we now find ourselves in. This marketplace purchases their products and services differently and seeks to better utilize their underutilized assets including time, knowledge, skill, passion and purpose to enhance their incomes.
So remember, the labels you use to grow market share are not as important as the behaviors you attract, encourage and reward!
John T. Fleming is the author of Ultimate Gig: Flexibility, Freedom & Rewards which provides an in-depth glimpse of the future of work and how the gig economy has fueled the growth and appeal of flexible work opportunities. John is principal of Ideas and Design Group, LLC and in both the DSA Hall of Fame and DSEF Circle of Honor. John is also a recipient of the DSN Bravo Lifetime Achievement Award.
From the January/February 2025 issue of Direct Selling News magazine.
