- Gross $/Customer: This is your average order size multiplied by the number of purchases you expect the average customer to make with you over his or her lifetime. For example, if you sell luxury boats, you may expect that a customer will make one purchase with you and never buy again. If you own an online shoe store, your average customer may buy 6 pairs of shoes every year for the next 5 years, or 30 purchases.
- Affiliate Commission: Each row in the chart is a different percentage of sale. You may use these numbers to figure out what you can pay in commisisons on each sale, while still maintaining marginal profitability. This will also help you in negotiating with your biggest affiliates – you’ll know how much you can afford to pay while still remaining profitable.
- # Orders Commission is Paid On: A typical customer who makes his or her first purchase through an affiliate link will probably make some future purchases through affiliate links and buy some things directly from you, without searching the web for coupons or information. This all depends on the type of product you sell, and how aggressively you remarket your customers after they make their first purchase. A merchant with a strong, segmented, targeted email campaign will be able to obtain a large percentage of direct sales and pay zero commissions on those orders.
- Net LTV: This is an estimate of the Lifetime Value of a customer acquired through an affiliate link. It is your bottom line after all costs associated with discounts, commissions and fees are taken out of your margins. From this number, you will be able to predict to some degree whether affiliate marketing is a profitable model for your business.