Tips & Guides — 12 Jan 2025
How to Set KPIs for Affiliate Programs
Affiliate marketing is a great way to boost your brand and your income, but how do you know if your affiliate program is as effective as it could be? The key to success is to track, measure, and analyze your affiliate KPIs (Key Performance Indicators). Doing so can be a powerful part of your holistic process improvement strategies.
Getting the most out of your affiliate program is a two-part strategy. First of all, you have to decide which key performance indicators are important, and, second, make sure you know how to track them efficiently.
However big or small your business is, it’s essential to focus on your ROI when undertaking a marketing campaign. Expressed as a percentage, there’s a simple way to calculate your return on investment: divide the gross profit earned by the investment made in your affiliate program and multiply that by a hundred.
It’s worthwhile keeping this simple metric at the front of your mind. Doing so can help you gain a quick overview of the financial health of your program. However, when it comes to affiliate marketing, the picture can be much more complex. That’s why the following KPIs can be just as informative and can give you a fuller picture of your marketing investment.
The total number of clicks on affiliate links is one the most popular metrics to track affiliate marketing performance; it is easy to monitor and count. Better yet, total clicks can be quite informative if used properly.
When you measure clicks, take great care of how they correlate with other metrics. Separately from other metrics, clicks mean nothing significant. Meanwhile, high numbers of clicks and a high affiliate-driven income allied to a powerful SaaS SEO strategy – may be a good indicator of possible rapid growth.
You should always ascertain whether the figures are too good to be true. If your report shows a high number of clicks, but there are few sales, it could indicate poor ads, inaccurate tracking, or even affiliate traffic fraud.
For the latter, clicks tracking together with additional features can help you combat ad fraud. For example, by setting minimal time to conversion. Assuming you know that a user needs at least a minute between clicking on an ad and installing an app, you just set up this span and decline all conversions that happen earlier. Further, you can benefit from click-level fraud prevention.
Your overall revenue generated is essential and forms an integral part of your ROI calculation. To gather the number of sales or transactions your affiliate program causes it’s important to think of reliable tracking solutions.
Each transaction represents one customer-driven action by your affiliate strategy. Thus, this KPI can be used to measure the all-important customer acquisition.
The number of transactions driven by each affiliate partner helps evaluate their performance and value for your business. Moreover, the publishers that generate tons of clicks but barely any conversions may turn out to be engaged in fraudulent activities.
Whatever digital marketing channel you utilize, tracking the engagement rate is a must. Affiliate marketing should follow this rule as well, as dedicated publishers are more creative and persistent with their marketing campaigns and drive more sales.
The problem with affiliate engagement rate is that it’s hard to measure. To get credible results, you may rely on such metrics as the frequency of interaction with your marketing assets, participation in training, involvement in your marketing campaigns, etc. In a word, the option is to count the interactions affiliates make with your program.
Each customer gained through an affiliate program is important, which is why the number of transactions is so important, as we discovered earlier. Even if a customer spends little initially, they could return to spend more in the future or recommend your products to friends and colleagues.
Word of mouth can bring rapid customer growth, with 92% of buyers saying they trust the recommendations of those close to them. That makes loyal customers even more important, which is why it’s a great idea to set affiliate-driven customer loyalty as a KPI. Returning customers are an indicator that you have a healthy affiliate program in place.
Do all you can to encourage brand loyalty and returning customers. Don’t look solely at your marketing strategy, but also at your customer experience offering across your platforms. Make it easy for consumers to buy your products and contact you, through the use of cutting-edge call queue systems and proactive customer service solutions.
The basic ROI equation gives you a rough idea of the cost per engagement from your affiliate strategy, but it isn’t the whole picture. Typically, there are two costs to consider: cost per click and cost per sale. By comparing these two metrics, you can get a fuller picture of the real cost per engagement, allowing you to decide which strategies are working and which need to be modified.
Every business can expect to have some chargebacks, and this can be proportionately higher in the sale of seasonal goods or fashion items. Even so, it’s vital to monitor the chargeback costs which originate from your affiliate channels, as this allows you to see the quality of leads being generated through your program.
If your chargeback costs start to rise month on month, or if they are consistently above 10%, it could be a strong indicator that your affiliate program is heading in the wrong direction. Tweaking your program and your affiliate channels can help you find the right customers, greatly reducing your chargebacks and returns.
Remember not to stick too rigidly to any one strategy; flexible planning of both your marketing strategy and your team organization will ensure that you can make a move when you have to.
We live in a rapidly changing world, even without the impact of the pandemic, your business needs to be just as rapid and adaptable. Modern communications platform solutions and advancing technologies are changing how we work and live. They also give you more power than ever before when it comes to assessing your key performance indicators by providing the opportunity for timely interactions with affiliates.
Customer service is essential as always, but it’s equally as important to keep in touch with your affiliates. Contact them regularly, giving them praise when appropriate and help when needed. Make it easy to contact you by being available through emails, direct messaging apps, telephone, and virtual fax. This latter option can be especially useful, as it allows your affiliate team to send you documents with both speed and efficiency.
Keeping your affiliates engaged will help you access the affiliate metrics that matter, especially when considering the data generated by your programs. Gathering data, and understanding it, will help you make the most of your affiliate marketing. Your affiliate marketing expenditure may be one of your greatest outlays, so ensure that each penny is spent wisely.
Choosing the right affiliate marketing channel or software can make a big difference to your bottom line. The more data it returns, the better. Look for underlying trends and anomalies that jump out at you, but always take special interest in the key performance indicators which show the real cost and potential success of your affiliate marketing strategy.
Written by
Affise Academy
Affise is a partner marketing platform for brands, advertisers and agencies to scale via all possible performance marketing channels. Synergy of technology and our long standing experience lets you expand your partnerships, automate every step of the campaign lifecycle and make data-driven decisions.
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