Creating a due diligence program
ADOTAS EXCLUSIVE — With online fraud increasing, visibility into your partners’ business practices and full incident disclosure become even more important to your bottom line.
If you wait for your affiliates to begin the dialogue, you may be waiting a long time. Maybe your partner is waiting for you to make the first move? If we all wait on one another, when will the time come for real change in the industry?
While many corporations embrace the idea and morality behind full visibility, very few practice what they preach. The affiliate marketing industry has been known for a long tail of young, savvy, and aggressive marketers. You may have seen one at a recent conference valet parking his Ferrari. These individuals have made a pile of cash, some legitimately, and some through less ethical–and perhaps illegal–means. How can you determine which leaders and organizations have your best interests in mind and which are conflicted by their desire to earn more for themselves and their investors?
The Best Practice approach to partner vetting will help you weed out the bad. To vet means to check. Implementing a vetting program for your company is as simple as formally asking each partner a variety of questions prior to conducting business. For example:
- How long have you been in business?
- Has your company received venture or institutional money?
- How long has your current leadership been in place?
- Have you ever been the subject of a lawsuit or investigation relating to your advertising, marketing, privacy or data security practices?
- Do you have a formal due diligence procedure to vet your vendors and affiliates? (Inquire about the details of the process.)
- Who is responsible for setting compliance policy at your organization?
- Who will be my daily operational contact for fraud- or compliance-related issues?
- What are your company’s best practice standards above and beyond what the federal law requires?
Depending on your company’s risk tolerance, a quarterly or annual audit may also be appropriate to ensure that the affiliate’s practices are still in line with what was disclosed during vetting.
Who executes the vetting and auditing programs at your company may be even more important than the questions that are asked. The associate responsible for partner selection and monitoring should not receive commissions based on sales or volume goals.
Should you require your partners to disclose the details of their business relationships? In general, no; organizations should be able to keep the identity of vendors and affiliates private. In cases where fraud has occurred or a liability risk exists, it is reasonable to request full disclosure. This type of open communication during the vetting, monitoring, and incident response processes will raise the standards for online business and improve the entire ecosystem. How you choose to execute these processes will set you apart from others.
Editor’s note: This is a series from Dianna Koltz, director of best practices and email marketing at Memolink, Inc., on how to use business standards to combat online fraud. Here are the past stories.
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