“The Magic of Recurring Income:
How $1 Turns into $90 and
Why You Should Care!”
Every online marketer needs to invest in the long-term, even when promoting someone else’s product…
Short-term vs. Long-term thinking
“How much money am I going to make today when I send this email?”
Don’t get me wrong. That’s an important question because we all have to eat. And we can only do that if we’ve got good, positive cash flow working to our advantage.
But the better question is:
“How much money am I going to make today AND over the long haul when I send this email?”
If you’re not looking out for the long term, you’re not adding to your overall wealth.
Wealth is the accumulation of good, financial assets (for our purposes). So, our goal is to always add more monthly, recurring revenue in every way we can.
- Sometimes, that’s by promoting programs like NAMS or membership programs like our MyNAMS Profit Planners and Business Accelerators to create recurring income from affiliate commissions.
- Or sometimes, it’s investing in automation processes that execute money-making systems without you having to monitor them every day.
Hopefully, it’s both.
But today, we’re talking about the first…
Recurring income from affiliate commissions
We see a lot of low-cost and $1 trial products available in the marketplace today. And usually, they’re at the 50% commission mark.
Why would anyone promote a product that yields a $.50 commission? It just doesn’t seem to make sense to most marketers… unless you understand the hidden math.
But frankly, most marketers can’t see past the low commission. After all, if you make 100 sales today, you only make $50.
And the short-term thinking marketer will get out as fast as they can.
What if I can show you how to turn that $1 sale into $90 of commission for you?
The long-term thinker is looking ahead to the renewals and future commissions as well to see what the real return on investment is.
For example, Ian Del Carmen - one of our best affiliates and a real long-term marketer - promoted our MyNAMS Profit Planners and Business Accelerators aggressively.
He understood that the for each $1 trial, 7-day trial, he’d make a lot more money down the road.
Let’s look at Ian’s “What If?” situation.
Three of the five products in our sales funnel for this promotion are recurring as indicated by the red arrow and the green numbers. All of them start with a $1 trial.
We did a couple of things to help affiliates increase their commissions to ease the pain of a low-cost front-end. Especially for those affiliates who can’t see or don’t trust the long-term possibilities.
First up, we added a 1000% commission on the $1 trial. The affiliate got $10 for every $1 trial they signed up. We know our back end and trust the ongoing recurring commissions immensely.
Next, we added a couple of upsells and downsells at the $37 and $47 price to increase the immediate commission returns and fund the $10 commission on the $1 trial.
The only reason those are included in the funnel is to add additional one-time commissions and more revenue to the affiliate.
In the first 4 days of the 8-day promotion, Ian has gotten $663.29 in commission. Not bad, not great. If he’s planning to pay the rent this month with this promotion, it doesn’t look like that’s going to happen.
But that would be short-term thinking.
On this promotion, 7 days is a magical number…
That’s when the renewals for the full monthly and annual membership fees start to happen. And the picture changes dramatically.
Let’s assume that 5% of the people will cancel before the renewal date. That’s pretty consistent with our previous in-house launch numbers.
And remember, the membership amounts are:
- MyNAMS Profit Planners Monthly - $9.97
- MyNAMS Profit Planners Annual - $77
- MyNAMS Insiders Club Monthly - $47
So, let’s do the math.
We’ve reduced our renewal numbers by 5%.
At the 7-day renewal, Ian will get another $818. 56 in commission in addition to the $663.29 paid previously.
That’s a total of $1,481.85.
But we’re not done yet…
Let’s assume that the average stick rate for these memberships is 6 months (and based on our numbers over the last year, this is a solid estimate).
So, we’ll collect monthly membership fees from those members Ian brought in for 6 months and he is paid 50% commission instantly through Warrior+Plus, the platform provider we’re using for this launch.
The additional 6 months of commissions brings in another $1,619.60 bringing his total so far to: $3,101.45
And, finally what happens at 12 months?
We’ll make another assumption based on historical numbers.
Half of all our monthly and annual members will be gone by then. But at 12 months out, the remaining annual members will renew and we’ll have collected half of our monthly members for the last six months of that period.
The total amount collected during the 13 months (we’ve added the first month in on the promotion front end) comes to $4,185.56 commission paid.
And that total divided by the 46 recurring membership sales to date has a value of $90 per sale.
$90 PER $1 Trial for a low-cost membership trial!
One more assumption:
And let’s say we’re wrong by half. (We’re not, but let’s say that…)
That’s still more than $2k in commission over 12 months and $45 per $1 trial signup.
Math never lies
And math is always the friend of the long-term marketer because it only reveals the truth. When you accept the truth about any promotion, the math reveals:
The truth of numbers should be driving every marketer to make long-term decisions versus short-term, but it’s really hard to convince most marketers of that. Most need the money now. And that’s their only consideration.
That’s called living paycheck to paycheck.
Ian, on the other hand, understands long-term decision making completely. A $1 investment by one of his customer today is likely to yield $90 to him over a 12-month period.
How to maximize the long-term ROI?
Because this is an evergreen promotion, Ian and everyone else is free to promote this product every day of the year if they want. We will as well.
And spreading out those commissions over the next year or two is like building out a completely separate long-term stream of income that is unlikely to go away.
Even a 3-day promotion every month would yield big results.
Problems revealed by the math
- Conversions are low.
To improve the conversions, we’ll have to test the heck out of sales pages variations.
That will mean radical testing at first - extremely radical. Right now, we’re looking at a long sales page that contains a lot of words, not enough benefits and unclear informational graphics.
And it needs some design help too.
A radical test might be a video sales letter or VSL vs. the page we have currently.
Then, we start testing the headlines on the winner vs. the control.
Then, radical design next.
Then, bonuses… and so on.
- Seven days is a long time in the marketing world
At the end of this promotion, we will modify the 7-day, $1 trial to become a 3-day, $1 trial to turn the commissions and the ROI faster.
That will turn up the commissions and marketers won’t forget why they are doing this...
Plus there's another advantage to us. And it's called EPCs. You see, when you do a $1 trial, the earnings per click can be very low and marketers pay attention to that.
My friend Matt Bacak has a formula he uses:
X * X * X = $$
It's not great algebra, but I know what he's saying:
- The first X = Subscribers
- Second X = Clicks
- Third X = Earnings per Click
- And we know what $$ is...
So, this is how it really works:
Subscribers * Clicks * EPCs = Money
1000 subscribers * 10% Click * $2 EPC = $200
1000*.10*2 = 200
When will the money pour in...
Remember, I said that 7 days was the magical number because in this promotion that's when the membership renewals begin.
When the trial ends the members are automatically billed the next membership renewal fee. Thirty-one percent of our registrations were for the annual purchase at $77. The other 69% were on the monthly rate of $9.97.
Assume that we have 100 sales at $77 and 200 at $9.97.
On the renewal, we'll see a payday of $7,700 and $1,994.
Not bad, but it shows us two big opportunities.
- How can we collapse that renewal rate?
- How can we increase the annual to monthly ratio?
And why are these things important?
Faster renewal rate has a few benefits:
- We (and our affiliates) get the money faster
- Affiliates will want to promote early and often because they see more money before they move on to something else (affiliates have to move where the money is)
- Customers renew before they forget what they signed up for reducing refunds and cancellations
- Higher EPCs will be reflected in the stats faster-helping affiliates justify more promotion
Increasing the ratio of annual to monthly signups also has several benefits.
- On renewal, the affiliate sees more immediate revenue
- The incentive of higher revenue helps affiliates focus on incorporating the promotion in their automated funnels for consistent sales
- The annual rate has few refunds and longer stick time than monthly
With all this to consider, our job is pretty clear. We have to do everything we can to make this program indispensable to our customers and very profitable for our affiliates.
It begins with commitment.
Commitment to customers
Continue to improve the product to make a long-term membership something they can't do without and deliver the best value possible for the money. How do we do that?
- Surprise them with great support
- Create a Facebook community to improve engagement and provide bonuses
- Reward customers for loyalty
- Encourage customers to ask questions
- Provide the occasional in-depth course (as a bonus) on one of the topics
- Reduce refunds and cancellations to lowest possible number by building customer loyalty
Commitment to partners
Commit to providing high-quality, recurring value, with long-term results, to win over more long-term thinking marketers. How do we do that?
- Continue to improve conversions by testing sales letters and funnels
- Run monthly promotions to the program
- Create spot contests to encourage participation
- Reward long-term, loyal partners with special bonuses
- Take care of partner's customers and provide great service
- Help our partners promote their products even if we can't do it to our list
And frankly, all we care about at the end of the day is building a profitable relationship with partners by serving their customers.
We want valuable partners like Ian who get it and continue to see the value of promoting this program on a regular basis so they have a long-term income stream.