If you are new to doing a product launch, there are a lot of “little things” that you may not know about.
Chief among these little things are payment options for the buyer, and payout plans for your affiliate or JV partners. We’ll take a look at both of these today.
How to get paid more up front
Most of the time when you initially launch a product, you want to just offer a one-time payment option. And you will likely end up with a lot of people who immediately decide that they can’t, or won’t, pay that price.
You don’t want them to disengage from the whole launch though, before you roll out the payment plan.
So then two or three days after the start of the launch, you can roll out the payment plan.
If you roll out the product on a Monday, then on Wednesday you will want to roll out the payment plan. That payment plan is intended to accommodate the folks that just can’t afford the single pay.
Now let’s fast forward to an advanced lesson as it relates to this.
Let’s say you end up taking this launch and you turn it into an evergreen funnel, which is how you should be thinking.
You start to have data and numbers on the percentage of payments that are completed. There will be people who default on the payments, or their credit card is declined or expired or maxed out.
Over time, as you see your numbers, you can make decisions about offering a prepaid discount for the folks that take the payment plan.
For example, let’s say you had a six-pay option. And you know that, on average, most people only pay three months. Some people will only pay one month, some will pay two, some will pay all six. You are able to look at your numbers and you are able to see that the average is three, hypothetically.
Once you know this from your data, you can offer a special option to someone when they click on the payment plan option. After they enter their credit card information, right then you can offer them the opportunity to prepay.
Even though they took the payment option, you can offer them the chance to pay for four months up front. Essentially, it is a discount on what would be the total cost of the payment plan.
You can say to them “If you prepay right now you’ll save the last two payments. You won’t be charged for months 5 and 6.”
Because you know that the average collected is typically three months, if you are able to get paid four months in advance up front, then it’s worth it for you. The customer feels like they got a special deal and it’s a way for you to bump off those payment plans and get prepaid up front.
How to handle payouts to your partners
Partners like to get paid right away, but you also want to protect yourself from overpaying when there are refunds.
What we typically do is to pay out 70% to the partners right away, and hold 30% until after the refund period. This means you are assuming a 30% refund rate.
The key is to make sure the way you process refunds is – as it’s called – a “plow back” on commission.
Let’s say a partner generates $1000 in commissions. As the dust settles on launch week you immediately pay them 70%, or in this case, $700. You are withholding $300 until after the refund period.
Now if a refund goes through, you process it, and there should be this “plow back” – it gets removed from the balance.
For example, if they lose $100 in commissions, it’s removed from the $300 balance, and then you just pay out the last $200.
These are the sorts of tips that experienced marketers know in order to make more money and be equitable to their partners. Now you know them too!