Success with nutra products starts with two important elements: promotion and distribution. After creating an affiliate program or using a partner network, the product owner needs to choose a suitable billing model.
So far, there are three payment models available on the market — COD, SS, and Trials. Let’s cover what each payment model is in a nutshell.
COD (Cash On Delivery)
COD is a method that allows consumers to pay for the advertised product upon delivery.
How it works is that a customer leaves their contact details on a landing page, and then, a call center contacts them to confirm the purchase. Payment is received only after the product has been shipped and the customer has paid the amount due on delivery.
This model has a good conversion level, with an opportunity to upsell extra products, during the purchase confirmation.
On the other hand, there is a chance that customers provide incorrect contact information, and a sale is lost with no way to contact them.
Another problem with this model is that you rely heavily on a call center, and there is a chance of losing conversions.
Also, profits are postponed until the item is delivered, and you run the risk that the customer has changed their mind regarding their order.
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SS (Straight Sales)
In the SS model, a consumer pays for the product on the landing page. Once a customer submits their credit card information, the purchase is complete and the product owner receives their money immediately.
The big advantage to this model is that trash orders, multi-orders or unpaid orders are impossible. Conversion is going right on the landing page and each order ensures profit.
Consequently, commissions are quite high. In addition, there is an opportunity to upsell to the consumer.
A customer can be offered, on the landing page, to purchase a larger quantity of the initial product at a discounted price, incentivizing purchasing more goods at once.
Cons of this model are traffic cost is usually higher, and it is not an effective model within developing countries where online ordering is not as common.
Also, testing this model is more expensive than others.
Trials is the payment model that offers customers to engage with the product on a trial basis, meaning they will receive the first product unit for free. Customers pay only for the cost of delivery for the first unit and must agree to receive and pay for the next product unit.
It works like a freemium subscription that the client can cancel.
This allows consumers the opportunity to decide if the product is right for them and whether to continue or cancel the subscription.
The percentage of customers who continue their subscription is called a rebill rate. The higher the rate is, the better the quality of your leads is. Normally, it should be higher than 60%.
Affiliate marketers need around two weeks after they begin this payment model to check the traffic quality. That is because usually the second delivery, or rebill, happens 14 days after the trial has begun.
The rebill rate will allow you to see if this payment model works for you.
Which Payment Model Suits You?
SS model will work the best for the U.S., the UK, Canada, France, Germany, and other Tier 1 countries.
It is successful in places where online ordering has been popularized and is an integral part of the consumer market, and in countries where making a large purchase online is customary for consumers.
If you have good results with the SS model, there is no need to adjust your payment model, unless you know how to promote your product and simply want to scale your business to increase the current profit margins. Then, you can implement the Trials model.
If you don’t feel confident on a particular vertical, we suggest using another model than the SS, as it requires more advertising spending.
COD model works better for Asia, Latin America and CIS countries. People there are anxious about sharing their credit card information online, so they prefer to speak with a call center to make a purchase.
The Trials model can be implemented for countries that are suitable for the SS model.
Also, it’s recommended to use the Trials payment model, if you are unsure about the success of using the SS model because it requires less spending.
However, a good idea may be to test the Trials payment model in developing markets. It costs more, and users haven’t gotten used to it yet. However, competition will be very low.
Currently, there are three main payment models on the market: COD, SS, and Trials.
COD means that a call center contacts the customer to confirm the landing page order, and the customer pays for the product upon delivery.
SS means a direct sale on the main page with a direct payment.
Trials mean the client doesn’t pay for the first unit and pays only for the delivery.
However, the client is required to enter his credit card details and to agree to the purchase of a second item, following a subscription model.
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Evgeny leads MGID's team of account managers. He has over 6 years of experience managing relations with key strategic clients, as well as training and overseeing the work of account managers in his team. His primary focus is helping MGID clients grow and expand into new GEOs.
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