Commission Builder

SKILL.md

---
name: Commission Builder
description: Design and launch ecommerce affiliate, influencer, and referral commission structures that attract quality partners, drive incremental revenue, and stay profitable — without overpaying for sales you'd have gotten anyway.
---

# Commission Builder

Most ecommerce commission programs fail for one of two reasons: they're too stingy to attract real partners, or they're too generous and end up paying commissions on sales that would have happened anyway (attribution cannibalization). Commission Builder gives TikTok Shop sellers, DTC brand operators, and marketplace merchants a structured framework for designing tiered commission structures, setting profitable payout rates, building the partner tiers and incentives that attract and retain high-quality affiliates and creators, and launching the program with the right tracking and attribution setup to measure real incrementality.

## Solves

- Your affiliate program exists but no one is actively promoting for you
- You're paying 20–30% commission but don't know if you're actually acquiring new customers
- You want to launch TikTok Shop affiliate but don't know what commission rates are competitive
- Influencer commission deals are ad hoc — no standardized structure or tier system
- Your referral program has low activation (customers know about it but don't use it)
- You're unsure how to handle commission attribution across multi-touch journeys
- Existing affiliates are sending coupon/deal-site traffic that doesn't convert or retain

## Quick Reference

| Decision | Strong | Acceptable | Weak |
|---|---|---|---|
| Commission rate (physical goods) | 10–20% of revenue for top partners | 8–12% base | <5% (won't attract real partners) |
| Commission structure | Tiered by performance (base → bonus → elite) | Flat rate | No structure / case-by-case |
| Attribution window | 30-day last-click for standard, 60-day for content creators | 7-day | No defined window |
| Partner onboarding | Welcome kit + product samples + content brief | Welcome email only | Access link only |
| Payment cadence | Net-30 on confirmed sales | Net-60 | Irregular / on request |
| Tracking setup | Dedicated affiliate platform (Impact, Refersion, etc.) | UTM tracking | Manual / honor system |

## Workflow

### Step 1 — Define Your Commission Economics
Start with your unit economics. What is your gross margin per product? Set a maximum commission rate that preserves at minimum 15% net margin after commission, platform fees, COGS, and fulfillment. For most physical goods, this limits you to 15–25% commission on revenue. Calculate your target Cost per Acquisition (CPA) and convert it to a commission percentage at your average order value.

### Step 2 — Design the Tier Structure
Create three tiers: Base (all new affiliates), Growth (performance threshold met), and Elite (top performers). Each tier should offer meaningfully higher rates and exclusive benefits. The gap between tiers must be large enough to motivate active promotion but not so large that it's seen as unachievable. A 3–5% commission increase per tier plus exclusive perks (early access, higher sample budget) is typical.

### Step 3 — Set Attribution Rules
Define your attribution model before launching. Decisions: (a) attribution window (how long after a click does a sale count), (b) multi-touch treatment (last-click only, or partial credit for assists), (c) which sales are commissionable (new customers only, or all sales), and (d) how to handle coupon code attribution vs. tracking link attribution. Write these rules down and include them in your affiliate agreement.

### Step 4 — Build Your Partner Profile
Define who you want in your program. Ideal partner profile: follower count range, content category, engagement rate threshold, existing product alignment, and whether you want content creators (high-touch, low volume) vs. traditional affiliates (coupon/deal sites, low-touch, high volume). Be selective. 20 active, high-quality partners outperform 200 passive, low-quality ones.

### Step 5 — Create the Partner Onboarding Experience
Every new partner should receive: welcome email with program rules and rates, product samples or purchase credit, content assets (images, key messages, approved claims), affiliate link and tracking setup instructions, and a brief introduction to your brand story. The faster a new partner can create their first piece of content, the more likely they are to become active.

### Step 6 — Set Incentives and Bonuses
Layer performance bonuses on top of the base rate. Options: first-sale bonus (a flat bonus for their first confirmed commission), monthly GMV bonus (extra payout if they drive $X+ in a month), content quality bonus (extra for content that you use as a paid ad), exclusivity bonus (higher rate for partners who don't promote competitors). Bonuses should feel achievable, not aspirational.

### Step 7 — Launch, Track, and Optimize
Use a dedicated affiliate platform (Impact, Refersion, ShareASale, or TikTok Shop's native affiliate program) to track every link, sale, and commission. Review partner performance monthly: flag inactive affiliates, graduate active ones to higher tiers, remove partners sending non-converting traffic. The program needs active management — set-and-forget commission programs decay quickly.

## Examples

### Example 1 — TikTok Shop Skincare Brand Affiliate Program

**Unit economics:** $34.99 AOV, 52% gross margin ($18.19), 30% COGS, fulfillment $3.50. Max commission budget to stay at 15% net: ~$7 per sale = 20% of $34.99.

**Tier structure:**

| Tier | Threshold | Commission | Perks |
|---|---|---|---|
| Starter | 0–$500/mo GMV | 12% | Welcome kit + 1 product sample |
| Growth | $501–$2K/mo GMV | 16% | Monthly sample allowance ($50) |
| Elite | >$2K/mo GMV | 20% + bonuses | Dedicated AM, quarterly product drops, co-branded content |

**Attribution:** 30-day click window, last-click, all customers (new + returning), coupon codes tied to affiliate IDs for attribution.

**Partner profile:** Female content creators, 5K–100K TikTok followers, beauty/lifestyle niche, >4% engagement rate, no direct competitor partnerships.

**Launch bonus:** $25 flat bonus for first confirmed sale within 30 days of joining.

**Outcome:** 34 active partners in first 3 months, 18% of total revenue attributed to affiliate channel, average CPA $14.50 vs. paid ads CPA of $22.

### Example 2 — DTC Home Goods Referral + Affiliate Hybrid

**Program design:** Two-layer program — (1) customer referral program and (2) creator affiliate program.

**Customer referral (layer 1):**
- Referrer gets: $10 store credit when referred friend completes $40+ purchase
- Referee gets: 15% off first order
- Attribution: First-order only, 30-day referral link expiry

**Creator affiliate (layer 2):**
- Base: 10% on all sales, 60-day attribution window (content lives longer)
- Growth (>$1K/mo): 14% + quarterly product gifting
- Elite (>$5K/mo): 18% + early product access + co-creation opportunities

**Separation:** Creator affiliates get longer attribution windows because a YouTube review drives sales for 6+ months. Customer referrals get shorter windows to manage cannibalization risk.

**Tracking:** Refersion for creators, native Shopify referral app for customer referrals.

## Common Mistakes

1. **Setting commission rates too low** — A 5% commission on a $30 item is $1.50. No serious creator will build content for $1.50. Research competitive rates in your category before setting rates.
2. **No tier structure** — A flat rate with no growth path gives active partners no incentive to push harder. Tiers create ongoing motivation.
3. **Vague attribution rules** — Undefined attribution causes disputes and partner distrust. Write the rules before you launch and include them in the affiliate agreement.
4. **Accepting anyone into the program** — Open programs attract coupon and deal sites that cannibalize organic sales without driving incremental revenue. Curate your partner roster.
5. **No onboarding — just a link** — A partner who joins but has no product knowledge and no content assets is a partner who never posts. Onboard actively.
6. **Ignoring coupon code attribution** — When a partner's coupon code goes viral on deal sites, you're paying commission on customers who would have bought anyway. Set clear terms on coupon code use.
7. **Paying on gross instead of net** — Pay commission on revenue net of returns and refunds. Define this in your agreement or you'll pay commission on returned orders.
8. **No activity minimum** — Partners who join and never post still occupy program capacity and dilute your averages. Set a 90-day activity threshold.
9. **Set-and-forget program management** — Commission programs decay without active management. Monthly performance reviews and partner communication are non-negotiable.
10. **Ignoring multi-touch attribution** — A creator drives awareness; a coupon site captures the last click. A last-click-only model rewards the coupon site. Understand your customer journey before locking in attribution rules.

## Resources

- [Output Template](references/output-template.md) — Commission program design and partner agreement template
- [Rate Benchmarks Guide](references/rate-benchmarks-guide.md) — Commission rate benchmarks by category and platform
- [Partner Onboarding Kit](references/partner-onboarding-kit.md) — New affiliate welcome email and asset checklist
- [Quality Checklist](assets/quality-checklist.md) — Program launch quality gates