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As an affiliate marketer, you want to build a good relationship with customers. Sure, you can make money on one-time referrals. But it’s a lot easier if you build a mailing list, build a good relationship with the people on your list, and periodically recommend products to them.
Of course, this only works if the customer trusts your recommendations. And there’s no faster way to lose their trust than to recommend a bad product.
So how to you tell the good products from the bad. Ideally, you try them out yourself. But there’s a quick and easy way to weed out the worst offenders — check their refund rates. When someone returns a product you referred them to, you lose your commission.
More importantly, you lose their trust, which means you lose any future commissions you might have earned recommending products to them, as well as the possibility that they might recommend you to their friends.
ClickBank doesn’t publish refund rates, but it’s not too hard to compute. You just need to know the product price and the commission rate. I’m not going to bore you with the exact formula (it involves those two numbers and ClickBank’s fees) — suffice it to say that you can calculate the expected commissions per sale, and then compare that number to the average earnings per sale published by ClickBank. The difference between the two tells you how many purchases are refunded.
It’s important to realize that the expected commissions you calculate aren’t exact. If the seller has changed their price recently, if they sell multiple products at different prices, if they manage to sell multiple products to each buyer, etc. — all those things can skew the numbers.
I recently calculated refund rate estimates for 6,764 ClickBank products to see how high typical refund rates are.
The good news is that the vast majority of ClickBank products have very low refund rates — 5,195 of the 6,764 I analyzed had refund rates under 5%. This chart shows my estimates for the other 1,569:
As you can see, according to my estimates, nearly 10% have refund rates over 25%. And over 2.5% have refund rates over 50%. Where you personally want to set your limit is up to you, but clearly, there are a few products that you don’t want to get caught promoting!
You can find my refund rate estimates on the product info pages here.
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