Chris @ Olstrom (.com)

When a client signs up for service without a referral, it’s more profitable. Whatever would have been paid out in incentive pay stays in the company’s pockets.

Affiliate programs provide a fair mechanism for profit-sharing, to the benefit of all. Referrers and the company itself benefit in the most direct sense: revenue; and the benefit extends beyond that. Increased income means more reliability for the users. It facilitates the purchase of new hardware, covers unexpected expenses, and allows for growth benefitting every client, regardless of their involvement in referring new signups.

At EclipseHosters.com, we’re taking that added revenue, and giving it back to the community. Effective immediately, every new client that signs up without a referral will have that referral randomly assigned to someone on the same plan that they are signing up for.

Example

Lisa is looking for hosting, and finds EclipseHosters.com on Google. After reviewing the available options, she picks out a Full plan ($15.00/mo, referal credit of $1.50). Since the referral is not assigned, the system selects someone else with a Full plan, and attributes the credit to Dave. He now earns $1.50 monthly for that referral.

In this example, Dave was not required to do any work. He was rewarded (on an ongoing basis, no less) simply for having chosen EclipseHosters.com as his hosting provider.

That is the EclipseHosters difference.

In response to a several inquiries regarding the EclipseHosters.com Sales Program, and why it was implemented, the simple answer is effectiveness. The initial motivation of the incentive program was to provide an economically viable way to pay back the community that made WhatTheFork.org what it is. Help us grow this as a business, and we’ll put some money in your pockets (proportional to what you contribute).

In addition, an affiliate campaign such as this is probably the safest (in terms of risk vs reward) single investment we could undertake in regards to marketing. It offers us the assurance that we do not throw away money on ads that may not pan out, and it frees us from the ancient marketing formula of X sales from Y visitors who clicked on Y out of Z ads that were paid for.

Let’s assume some optimistic numbers here, to illustrate the point. 1 in 20 visitors makes a purchase of $8 (5% conversion rate), and 1 in 100 ‘impressions’ clicks an ad (1% click-thru rate), and the cost of the ads is $5 per 1000 impressions…

Based on these numbers, a $50 advertising budget should result in 50,000 ads, or 500 visitors. 1 in 20 buys, which should mean 25 sales. At $8 each, $200 in revenue has been generated from $50 in advertising. A 4:1 return, which (depending on the market) can be good, or not so hot. Viewed from slightly different angle, it cost 25% of the value of each sale to acquire it.

That is assuming good results, which would require a solid ad with highly visible placement on the right site. It can go a lot worse: At a conversion rate of 1%, $40 in revenue is generated from $50 in advertising. A loss, even before processing fees.

Pay-Per-Impression and Pay-Per-Click models are a crapshoot because of this. The amount of resources invested into devising the right ads, and finding the right sites for them (this step is largely automated by most of todays popular advertising systems), not to mention the series of trial runs that need to be done to learn what works, and what doesn’t (for each product, no less)… all of this translates into risk, and potentially unrecoverable expense.

An affiliate campaign offers a different approach. On the surface, it is a way to Pay-Per-Result. Any leads that do not result in sales, cost nothing. Affiliates assume the risks of advertising, and are free to exercise creativity with little to no restraint.

The only expense occurs when a sale is made, effectively increasing the price of a given transaction. Additionally, there is the cost of tracking and managing affiliates, their payouts, and details such as conversion rates, and average revenue per unit sold. This is a management expense, which is not directly recoverable.

To simplify, affiliate programs require expenditure to build and maintain, but allow for a very predictable Cost-Per-Sale. PPC or PPI advertising requires similar costs (though more controllable), but Cost-Per-Sale can be difficult to accurately determine beforehand, and may vary greatly during multiple runs of the same ad.

It would seem that a number of billing-related annoyances are due to amounts of $0.00. Invoices are being sent for $0.00 amounts, accounts suspended for $0.00 past due, billing cycles are not being set up properly when the amount is $0.00, and payment frequency options are not showing up for selection when ordering.

The problem? 0 is the ‘disabled’ option in our billing system. So a $0.00 price disables the payment frequency. Since the frequency is disabled, it doesn’t apply a billing cycle.

As for the invoices, billing software is designed to do just that, bill. When the amount of an invoice is $0.00, it assumes that it is a temporary thing (due to overpayment, credits on the account, etc), and generates an invoice with the details. There is an option for ‘Free Account’, which prevents this. However, if this is selected, it sets the payment frequency to ‘never’. So when a client upgrades to a paid package, it never bills for it.

How to fix these problems? Change disabled to -1, instead of 0. Or add a flag somewhere. That solves the first two. Add a configuration option for ‘Do not generate invoice for $0.00′, or again, set a conditional flag somewhere.

Is this a bug or programming error in any way? I don’t believe so. I think it reflects a design decision, and a conflict between that design, and how the software is being used. Most commercial billing systems are not intended to support transactions of less than $0.01.

At the beginning of June, EclipseHosters.com essentially ‘acquired’ WhatTheFork.org, and its userbase. Users were migrated from our present hosting environment (Imp) to that provided to us by EclipseHosters.com (Lit). A client management and billing system was put in place, and a support helpdesk as well. Going forward, things will be done under the EclipseHosters.com label, rather that WhatTheFork.org. Existing accounts will remain as they are, with the added benefit of the convenient web-based systems EclipseHosters.com provides.

What does this mean to existing users? You may, from time to time, receive email from either WTF, or EclipseHosters.com. Your accounts have been assigned unique ID numbers, and enrolled in the EclipseHosters.com Sales Program. The details of this program can be found in an email you should have received, or in the knowledgebase. Support requests will be handled through the support center, rather than by email. You will have access to web-based tools to streamline the management of your site, and empower you to do more with the resources you have. At any time, you may opt to upgrade to one of the packages offered by EclipseHosters.com, though it is not required.

What does this mean to WhatTheFork.org itself? It allows us to return to our roots, and focus on the community again, while EclipseHosters.com takes care of our clients.