I think the Fraudulent signups would be the biggest expense of any affiliate program if it is not run correctly. There are many ways that you can prevent these fraudulent signups. For example:
Log the person's domain name for each referral. When the new account has been running for a week, check back and see if the domain name resolves. If it does not, check the site on your server to see if there is an actual web site on it. You can keep track of any questionable referrables and the person that referred them to you. If you find more than 2-3 questionables at one time, think about possibly cancelling the person's affiliate account.
As long as you insure that every order coming through to your site is not fraudulent, you should have no problems. For any questionable orders, just require a contract signed and faxed to you. Have them sign a credit card authorization, and have them fax a copy of their driver's liscence to you. If they do all of that, I think you can say with 99.99% accuracy that the account is not fraudulent.
Also, another idea would be to put a timeframe on each referral. For example "each new signup must stay a customer for 3 months, or you will not recieve credit for it".
I'd say the typical setup is to pay affiliates for every purchase. Sometimes people setup a minimum payout amount (like $25 or so), but I've never liked that.
A good payout depends on the amount of the sale. If you are selling $1 per month web hosting, then a good payout is going to be much less than if you were selling $40 per month hosting. I would suggest that you take a look at the price for your most common plan, and then payout anywhere from 50% to 300% of the sale.
A good way to maximize your revenues before paying out to your affiliates is to do the following: Pro/rate the customers first month, and then bill each customer on the first. So, if a new client is referred to you on the 15th of July, you charge him 50% of July's fees, then on Aug 1st you charge for 100% of august's fees, and THEN you cut a check to the affiliate. Even if you offer a payout of more than 100% per sale, you can still come out ahead in cashflow if you do this!
I have 3 questions for all the hosts using Affiliate Programs:
How do you ensure that there are no fake customers signing-up just to get the commission?
Do you pay to your affiliates for every single purchase or you wait until they reach certain minimum amount set by you?
What is considered good payout per sign-up?
Well you can have a clause in the contract which states that the clients account has to be in good standing for a specified period of time, before the account is creditted (providing service and uptime is great).
Paying affiliates for every purchase is a good idea, providing you have a minimum payout of $25-50
A good payout is relative to the package that is being ordered. You would not want to payout $10 to the affiliate on an account that they signed up for $3/month. So it is relative to the specific package that they referred the client to purchase.
BGP Blend of Telia, GTT, Zayo, and Cogent in One Wilshire, Los Angeles!
True Definition of Managed Hosting
Proudly Offering Shared Hosting, Reseller Hosting, VPS, Dedicated Servers, and Co-location
For any questionable orders, just require a contract signed and faxed to you.
What is this contract supposed to be, something similar to my TOS or something completely different? Can you point me to sample contract that I can have a look at? Does somebody offer such a standard contract for small fee?
Have them sign a credit card authorization, and have them fax a copy of their driver's license to you.
What is "credit card authorization", is there a standard form for this?
What are my options for paying to my affiliates? Only PayPal?