There are lots of alternatives to Clickbank out there, plus many internet marketers who run their own, independent affiliate programs, so don’t think of Clickbank as the be-all, end-all source of affiliate products to sell. It’s simply the most popular, and (in my opinion) easiest place to start.

So, where do you start? The list of products at Clickbank are sorted by popularity, so the higher in the listings a product is, the more it sells. However, this does not mean you want to simply pick the top few items in a list. The top few items likely have a lot of affiliates promoting them, so you’ll be competiting with more people to sell the same item. I tend to look for products around #9 or #10… these still sell well enough to be on the front page, but they are not so “hot” as to have hundreds of people trying to sell them.

Leveraging the Numbers - What’s the Refund Rate?

Every product at Clickbank has some information attached to it, which can help you determine whether it is a good product for affiliates to sell or not. For starters, take a look at the commission percentage - this number will tell you how much you will earn for each sale. So, for a $34.95 product with a 75% commission, you’ll score a smooth $23.50 for each sale (Clickbank takes 7.5% plus $1 for providing the payment processing). Note that Clickbank does not provide the sale price in the data it gives you. You’ll need to actually look at the product’s site to determine the sales price.

However, if you take a look at the “Earned per sale” amount, you’ll see that this number will not match. For example, the product I am looking at while writing this has an “earned per sale” of $18.62. This apparent discrepancy is due to the fact that the “earned per sale” takes refunds and chargebacks into account. Now, this is a beautiful thing that most people don’t even pay attention to! With these numbers, we can calculate the effective refund rate of this product!

The difference between the $23.50 than an affiliate is supposed to earn, and the net $18.62 that he actually earns is $4.88. And $4.88 is about 20% of $23.50. So, this particular product has an estimated refund rate of about 20%. Ouch!

It doesn’t matter how much I’m going to get paid for this product - I personally wouldn’t feel too good about selling something where 20% of the people who buy it don’t like it. Whether you would or not is a personal choice that you need to make, but I wouldn’t. Your marketing efforts will be 20% wasted in selling this product.

Now, refunds are a fact of internet marketing - so don’t be frightened out of selling something that gets refunds. But I would look for a refund percentage of no more than perhaps 10%. To help you quickly evaluate the refund rate of any Clickbank product, I’ve made a little software tool to calculate it for you (hey - I’m a programmer… that’s what I do). You can download it at http://marcquarles.com/tools/product_evaluator.exe.

It’s not an install program and no shortcuts are created for you - just download the exe wherever you want it to be, and double click it to run it. (There’s also no spyware or anything like that.) It’s completely free, and you can give it away to others as well, if you want.

Download Marc’s free Clickbank Product Evaluator Tool at http://marcquarles.com/tools/product_evaluator.exe

What’s the Referral Percentage?

The next thing to take a look at is the Referred Percentage. This tells you how many sales come from affiliates, like yourself, as opposed to directly from the product owner’s efforts. The higher this number is, the better this product’s sales letter is. I know, I know, this is a generalization… but if a product has no affiliate sales at all, then chances are the sales letter isn’t good enough to convert visitors (from affiliates marketing efforts) to buyers.

This is because members of the product owners list will tend to trust him, and won’t need the sales letter to determine whether they will buy this product. However, when referred by an affiliate, the visitor will almost always read the sales letter to decide if the product is right for him… there’s not yet any trust factor between the product owner and the visitor.

Once again, this is a generalization, but in my experience it’s been pretty reliable indicator. So, you want to lean towards products that have a higher referral percentage.

What About Gravity?
You may notice one other piece of data that Clickbank provides you with: the “Gravity” of a product. Here’s Clickbank’s definition of Gravity:

Number of distinct affiliates who earned a commission by referring a paying customer to the publisher’s products. This is a weighted sum and not an actual total. For each affiliate paid in the last 8 weeks we add an amount between 0.1 and 1.0 to the total. The more recent the last referral, the higher the value added.

Pretty cryptic, isn’t it? Actually it’s rather simple once you understand it. The gravity of a product is a constantly changing value that goes up when more unique affiliates have made money from selling it. However, older sales by affiliates are worth much less than recent sales by affiliates. Affiliate sales older than 8 weeks are not used in the calculation at all.

I personally don’t lend much credibility to the Gravity of a product. If the product is on the first page or two of Clickbank’s listings, and if the refund rate is low, and if the referral percentage is high, then it’s a winner in my book.

However, one thing to watch out for: if a product is on the first couple of pages (eg, high in popularity), but the gravity is low, it means that not very many affiliates are making sales… it’s possible that just a couple “super affiliates” are responsible for all the sales. This does not mean you should avoid the product, just understand that if you sell the product you’ll be going head-to-head with people who really know affiliate marketing.

Next Steps

In the next post, we’ll take a look at Step 2 of the basic affiliate marketing formula: the actual marketing process itself.