Explanation of Clickbank's Risk Management Tier

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Explanation of Clickbank's Risk Management Tier

Clickbank will introduce a new metric in its system starting from January 2013, it is caled Risk Management Tier.
First let me explain why they do that:
They are the middleman, the retailer, so that all the products they have in their marketplace are bought directly from them. After they pay the commission of the vendor and of the affiliate if any.
But then they have to deal with REFUNDS and CHARGEBACKS. Refunds are just a matter of paying back the money to the buyer (they have a full refund policy of 60 days) and charging the vendors and affiliates (not paying them, or taking back the money given on the sale)
The big problem comes from chargebacks, because the credit cards companies charge clickbank each time a customer chargeback (saying the sales was fraudulent or something like that) and so clickbank also charge the vendor for it.

The problem clickbank has is about their own records with the credit card companies and with the payment systems (paypal, and others) because if clickbank get their paypal account closed, then it will be a big problem for them (and also vendors/affiliates)

So they came up with this new system of risk management tier, where they color code each affiliate and vendor accounts depending on some algorithm and the risk level of having refunds and chargebacks.

The new risk tiers are composed of 6 color-coded tiers, each with an indication of the risk management level for the account:

Violet Tier – Lowest risk account, great performance, exceptional customer satisfaction
Blue Tier – Low risk account, great performance, strong customer satisfaction
Green Tier – New or Good quality with good customer satisfaction
Yellow Tier – Some risk issues, these should be identified and corrected
Orange Tier – Major risk issues which must be improved, account termination potential
Red Tier – Out of compliance with risk standards and must be improved as soon as possible, at risk of account termination

This is for both vendor and affiliate accounts. And of course they introduced some more fees in case of refunds and chargebacks, so in the process they get more money.

You can read a complete description on their help pages:

But the ultimate goal is to improve the overall status of their own account for credit cards company and payment processors..

Because then affiliates and vendors will take more care about the product they promote / sell..

But another problem which is not addressed by Clickbank is the fact that many buyers are dishonest and ask for a refund or a chargeback simply in order to get the product for free. This is especially true in the Internet Marketing niche, and Making Money Online niche.. Because there the buyers are all aware of Clickbank refund policy and they abuse it, since they can download the digital product (often an ebook or a piece of software) and then ask for a refund which is given just about 100% of the time..

In the case of chargebacks, this is because on the bank statement it is always written CLKBANK*COM and then some legitimate buyers don't know where that charge come from, because they didn't buy anything CLKBANK*COM they bought a product from THISCOMPANY or THATCOMPANY, and when they look at their bank statement they made the purchase a month ago or so, and don't know what that charge can be, so they think SCAM.. And ask for a chargeback which the creditcard company does without investigating..

So personally I think it is a good thing this move because it will introduce a new metric in clickbank marketplace that will help affiliate focus on the product with low refunds, and it is better than relying on gravity alone which is not a good indicator of anything..

But clickbank should also provide more information if they want to improve their game overall, like the number of sales for the last 2 months, the number of refunds and chargebacks, etc.. More information so that affiliate can explore their marketplace in better ways than gravity/popularity alone which is not precise at all.

What do you think of this new move from Clickbank? I've read many people dissatisfied with clickbank for many reasons, and that move only add to their opinion.. But if you think more about it, I'm sure you can see some positive effect, especially since there will be accounts terminations of the really bad products, so it will clean up the marketplace a little bit automatically..

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