Sramana: How much money do you make off a customer once you acquire him or her, and what is the customer acquisition cost that you’re willing to invest ?
Deborah Sweeney: We have done a number of formulas and the cost structure changes throughout the life of our company. We continue to grow because we offer new services, as I mentioned. Customers are staying with us longer and longer over time, so I am willing to spend a bit more and not necessarily break even on the first transaction knowing that they’re going to be back with us over the course of a year. I was fortunate enough to acquire a business that was already up and running, so I had a stream of revenue to work with. I was able to gamble a little bit with the new acquisition of customers, whereas other businesses would not have that benefit.
Our average customer spends about $350 with us over the life cycle. If they buy a $99 product, they will stay with us about three years. I am usually willing to spend about $75 per acquisition because I have to [factor] in the cost of doing business. That covers our physical location and our employees as well as profit. That being said, I do try to be ROI positive on some of our customer acquisition models, and search is one of them. I don’t want to be spending $150 for customers to buy $199 products. If it takes me $50 to produce that product, I end up losing money.
Sramana: Talk to me about your affiliate program, which you said was aggressively successful.
Deborah Sweeney: We love our affiliates because they are people who are our own advocates. We do a small revenue share, which incentivizes our affiliates to give us a presence on their websites. Frankly, I think that helps our SEO because we have 6,000 sites that all have us listed as a preferred partner. We can develop relationships with affiliates and their clients and customers. We really focus on our responsiveness to our affiliates and their customers, which allows us to acquire customers through multiple avenues.
We acquire affiliates through multiple avenues. We do trade shows, meet and greets, lots of webinars, speaking engagements, and we talk a lot about our product offerings with anybody we can. Affiliates like the idea of teaming with us because it simplifies their lives and provides them with a small additional revenue stream.
Sramana: How much do you pay your affiliates?
Deborah Sweeney: We give them 15%. [This is] customers add-ons in addition to the $49 package. We work as hard on the $49 customers as we do on the $500 customers. We do everything we can to make each customer beyond happy. Interestingly, with affiliates, we don’t have as much of an annuity relationship. If the customers do reorder, we do offer the affiliates a percentage of that as well. We pay hundreds of thousands of dollars in affiliate revenue every year.
Sramana: What are the SEO benefits of an affiliate program?
Deborah Sweeney: Affiliates all create links back to our sites. Larger affiliates are very important for SEO. Websites are ranked by companies such as Google. If you have a large amount of large sites linking back to your site, you increase your site’s ranking. Our affiliates include companies like Intuit. We also love the small CPAs and professionals that link to us. They have nominal traffic, but their clients see us. We are building brand awareness. We build that benefit two different ways.