Generating income online is my number one source of passive income. And within that income stream, affiliate earnings are my largest income source.
Affiliate earnings result from selling products and services that I do not own, but maintain a relationship with the owner of the offering who pays me a percentage of each sale I generate on their behalf. Many companies maintain their own in-house affiliate programs, while others join networks such as Commission Junction.
If your online business model relies heavily on affiliate earnings, you will want to read this post in its entirety.
Most of us blindly trust companies, big and small when it comes to joining affiliate programs and promoting their products and services in terms of receiving the correct amount of payment we are due. We do this because because we don’t know how to track affiliate earnings, or don’t want to because it takes time and effort.
Many of us simply give the vendor the benefit of the doubt. The rationale goes something like this: “if they have an affiliate program, they must have the sophisticated systems in place to track and remit commissions accurately and timely”.
If you are nodding your head to that, stop nodding because I just found out that one of my sources of affiliate earnings did not pay me over $3,000 in affiliate commissions over a 3 month span.
These results are preliminary and my VA is currently working through the past 18 months to determine whether a larger issue exists here. What’s worse is that this company is a well known company, certainly not one that I’d expect to encounter hiccups in its affiliate earning tracking, accounting and distribution process.
I first realized there may be something going on a couple months back when my payment was significantly delayed. Each month, my VA sends me a spreadsheet detailing all my online earnings broken down by website and earning source. When I received the spreadsheet last month, I noticed a familiar number was missing.
When I looked into it further, I realized that I wasn’t being paid timely the last several months. I dug further and found several discrepancies in what my analytics were showing as sales conversions compared to what this company’s affiliate reports were showing as earned affiliate earnings. Very strange. I never would have thought. The company is currently looking into my account in detail to determine what exactly happened, how and why.
Tracking affiliate income can be a difficult task if we attempt to do it manually. In order to track conversions on our end as internet entrepreneurs, we need some sort of script or code that the company we are promoting puts on their sales confirmation page.
We then input the same script or code in our analytics software so that our systems can “talk” to theirs. Even a free solution like Google Analytics enables you to track sales conversions if you can provide a mechanism by which the analytics system can identify whether a sale has been made.
While smaller companies may not have the sophistication in the systems to manage large volumes of affiliate activity, I’ve realized that even big shops are no different in this case. You can find a discrepancy in your affiliate earnings just as likely with a big name as you are with a smaller business.
So what’s the moral of the story? Be careful. Similar to how retail organizations factor in a shrink percentage (due to product breakage, theft, etc) in their income projections, you can also factor in a loss percentage in your income projection and accept the fact that glitches will happen (especially undetected ones as you grow larger), or make a commitment to be on top of it periodically by engaging in spot checks and monthly reconciliations. This can be a big commitment.
How? You can do it yourself, which will take valuable time away from building your business, or you can hire a virtual assistant to help you with the chore. I have done the latter. But even if you engage a VA to help you out with reconciling affiliate earnings, you will have to work with the vendor you are promoting to obtain and set up sales conversion scripts in your analytics tool.
The issue you will likely run into is that not all vendors are willing to provide such script. Many simply don’t have the time or the willingness to create one for you. Others are even worse in that they won’t even take a script that you have developed and simply paste it on their product sale confirmation page. I have run into this quite a bit. If you have any suggestions for me, I am all ears?
If you are doing business online, affiliate relationships are something you are likely already in, or will be either as an affiliate or as a vendor that manages an affiliate program. Affiliate relationships are a critical part of online business. As we have seen however, the accounting and payment remittance aspect of it can be a bit dicey.
What’s my advice for what its worth? If your online business model solely reliant on affiliate earnings, start thinking about how you can diversify. Affiliate commissions, although a lucrative income stream, should not be your only income stream.
Has this happened to you? If not, are you concerned at all? Why or why not? How do we get comfortable that we are getting paid what we have earned?
Business Idea: For all the programmers out there, how about a software that tracks affiliate earnings and makes the accounting easier for internet business owners? Is there already such a tool out there?Previous: 10 Easy Tips For Cutting Household Bills & Expedite Wealth Building