5. Managing an Affiliate Program
Once the affiliate program is up and running, merchants need to manage the program which allows them to:
- Monitor the activities of the affiliates
- Compare the performance of the affiliates
- Analyze the success of the affiliate program
Most of these management activities are done using affiliate software. The software provides an interface for the merchants to monitor and record all the relevant data for the program assessment. The software also allows more control over affiliates, links, and all the program activities.
KPIs (Key Performance Indicators)
Key performance indicators (KPIs) are measurable values used in different parts of online marketing, as well as in running a business in general. Their main role is to demonstrate the success of achieving business goals. KPIs allow a company to measure and compare the performance and whether that performance enables the company to reach its goals.
In affiliate marketing, the goal of KPIs is to measure the success of affiliate marketing strategy and whether this strategy pays off. This is very important, especially when it comes to extensive affiliate programs that have hundreds of affiliates. If you are running a program for a while now, it is likely that the number of affiliates has been growing over time. However, not all of those affiliates are productive, nor do they all bring to the overall success of your affiliate marketing. This is why it is helpful to be able to measure and compare the data related to the program.
There are several KPIs you can analyze when managing an affiliate program, and the choice of which ones to monitor sometimes depends on the type of program you are running.
The number of affiliates
The number of affiliates directly indicates how popular your program is. What it does not suggest is its success or the profit obtained through such a program. One of the primary goals of affiliate marketing management is the promotion of the program and engaging as many new affiliates as possible. The pace at which you recruit new affiliates also indicates how successful your approach is. Having more affiliates means more exposure online and more new potential sales generated through these affiliate links.
Average activity percentage
This percentage represents the number of active affiliates during a particular period. It is advisable to always use one period (a month, three months, a year, etc.) when calculating the activity percentage in order to compare the activities during different periods. For example, if you take one month as a period you will monitor, you can see how the activity changes over the last several months. Many factors can affect this activity. Some affiliates might focus on topics that are popular during a specific period of the year, such as summer (for a blog about summer holidays). You might notice higher activity percentage during the months when you offer bonuses, etc.
In all, this KPI helps you estimate the trends related to affiliate activities and the profit you can generate through affiliate marketing during different parts of the year.
Traffic generated through affiliate links represents the number of clicks (page views) that originated from the affiliate websites. The increase of traffic is the first statistics that will be bumped up as soon as affiliate links are placed on other website or blogs. Before generating any sales or conversions, you will see traffic originating from these links.
While this KPIs is very important and expected to grow, it does not necessarily mean that you will get any value from it. Here are the reasons why:
- Irrelevant traffic – If the affiliate is targeting the wrong audience and promoting your website (and product or services) to the people who have no interest in it, you might see traffic, but it will not result in any conversions. In fact, it will probably increase your bounce rate, which will have a negative influence on SEO.
- Inability to convert – Even if the targeting works perfectly and you see that visitor counter raising each day, conversion might still be difficult to reach because you are not able to convert the visitors. Have in mind that traffic you receive from the affiliates may include visitors who have never heard of your brand, so the landing page must be informative and engaging to make sure you convert them. Besides landing page design and content, mobile optimization is another aspect you will need to consider here.
- Spam – Seeing a boost in traffic in your website analytics does not always have to be a good thing. The main reason for this is spam. Regarding website traffic, spam is irrelevant traffic, often caused by bots, which can seriously ruin your data in website analytics. You might accept affiliates in good faith to join your program, but not all of them deserve to be a part of this program, so make sure you monitor the statistics for referral spam traffic.
The number of sales is one of the most important KPIs, especially if you use PPS (pay per sale) compensation model, which most merchants do. Even though the affiliate software will track and automatically issue payments for you when those are contributed to a particular affiliate, the number of sales is a metric that can tell a lot about your affiliate marketing, as well as about your online marketing in general.
Increase in sales indicates the success of:
- A particular affiliate(s) in generating clicks
- Quality products that meet expectations
- A great design and presentation of a landing page that converts well
- A responsive website
Regarding the affiliate program productivity, use this metric to analyze and compare:
- The performance of individual affiliates
- The performance of specific promotional banners/creative materials
- The type of affiliate that stands out (influencers in a particular industry, bloggers, etc.)
- The type of post that converts (a banner, a product review, etc.)
- Different periods of the year
Information obtained through the analysis of this KPI helps with optimizing the approach you use in affiliate marketing, but it also provides insights for the sales department. You might get some new insights about your target group, about geographic factors or type of content. This can help you shape your sales strategy and determine how you can expand your market or improve your product.
It might seem redundant to point out conversions as KPI because sales usually are conversions. However, a conversion can be a lot of things for different merchants, and some of them might choose pay per conversion compensation model rather than PPS. This metric basically shows the desired action performance. While that can be (and often is) sale, it can also be a lead, a signup, a download of an ebook, filling out a survey, etc.
To calculate the ratio at which you achieve conversions, compare the overall traffic with the number of conversions. What this percentage says is how successful you are at gaining conversions.
In affiliate marketing, this success (or failure) at obtaining conversions is shared between the affiliate and merchants. On one side, we have affiliates who are responsible for referring targeted, relevant traffic through their promotion of affiliate links. If they are successful at this, they are most likely to increase the number of conversions. On the other hand, we have merchants who have to convert the visitors through an effective landing page. Regardless if it is a signup page or a product page, the main goal of this page is to convert, which is why the design of the landing page deserves a special care. Together, their effort is what contributes to the increase of conversions.
The main goal of these KPIs is to evaluate the performance of the affiliate marketing strategy. However, if you have an affiliate manager assigned to take care of the program implementation and promotion, KPIs can be a great way to evaluate the manager’s performance and how successful he or she is at this task. When implementing affiliate marketing strategy, start by defining goals for each of these KPIs, so that you can compare them and analyze the performance of both the strategy and the manager with more success.
Communication with the affiliates is going to be one of the regular tasks merchants will have when managing an affiliate program. This communication can be divided into two segments:
An affiliate program is managed through a software, and this software usually has automated communication features that allow you to create templates and send them out when they are triggered. For example, when an affiliate is accepted to an affiliate program, a welcome email is automatically sent.
The main characteristic of this type of communication is that it is:
- Predesigned – You create messages in advance, sometimes months in advance.
- Mass – The same email template is sent to all of the affiliates.
- Scheduled – Each email template is sent based on a certain trigger, i.e. an action that requires that message to be sent.
Type of emails that can be a part of automated communication are:
- Welcome email
- Weekly (Monthly) performance report email
- News announcement email
- Sale confirmation email
While automated communication can save you a lot of time with predesigned templates, ongoing communication requires your immediate attention. This type of communication includes email correspondence with the affiliates that is out of the ordinary pattern. It requires the merchant to address a certain issue and provide answer for a situation that might be unique, unforeseen, or unusual.
Here are some types of email that are included here:
- Feedback email
- Response to a question
- Response to a proposal, a comment or a suggestion
- Message to point out to something (extraordinary success, low performance, spammy traffic, etc.)
Elements of good communication
Communication is an important part of doing business online, especially when you know that the message you type is the only way to communicate, unlike real-life communication where gestures and body language can say even more than words. This is why you have to develop communication as an essential skill to interact with the affiliates who are a part of your program.
- Personalization – Make each message personal, even if it is a template email. Make your affiliate feel special and acknowledged.
- Timeliness – It is the quality of being there at the right time. When you have an email from an affiliate, try to respond as swiftly as possible.
- Preciseness – Your emails should be completely precise and on point. This is a characteristic of a professional approach.
- Conciseness – Use as few words as possible to convey the message and to provide enough relevant information and details to the message recipient.
- Actionable – Your response and ideas should be fully actionable if you want to solve an issue or a problem successfully.
Although most of the communication is usually done through email, other channels for communication with the affiliates can also be used such as:
- Internal messaging service
- Instant messenger
- Social media
To ensure the success and efficiency of your affiliate program, you will also need to manage affiliates. This means that you should monitor and analyze the performance of the affiliates and how they contribute to your goals.
Start by dividing affiliates into groups:
- Beginners – These are the affiliates who have recently joined your program, and they might need an extra hand with ways they can promote you and increase their commission.
- Regular affiliates – These are affiliates you are regularly collaborating with, and they show moderate success. You might want to offer some special deals or coupons to motivate them to increase their performance.
- Super affiliates – These are the affiliates you want to keep. And you probably want to award them with better commission rates or other special perks. Super affiliates are usually a part of your program for a while and they generate a lot of conversions. Sometimes merchants can have one affiliate who might be accounted for more than half of the affiliate sales.
- Fraudulent affiliates – Since these affiliates use fraudulent methods and fake performance, you should detect and ban them from your program.
These ideas refer to the management of the existing affiliates, but part of the management will be accepting (or rejecting) new affiliates as well. Each affiliate goes through an application form to become a member of an affiliate program. Merchants are supposed to review each application and decide whether to accept the affiliate or not, based on some of these criteria:
- Existing blog (website) – Since you want the affiliate to promote your links through the website links, this is one of the first criteria you will consider.
- Average number of visits – Besides the existing blog, merchants can also choose to work only with affiliates who already have a considerable following on their blog (or website).
- Country – Depending on the type of products or services you offer, you can select country (or geographic area) as one of the requirements for the affiliates.
- Social media presence – This can also be a deciding factor when choosing affiliates. Some merchants prefer working with established influencers who have a significant number of social media followers.
- Affiliate’s strategy – Your application can include the part where you ask affiliates about their strategy for affiliate link promotion. This section can tell you a lot about the affiliate in question. For example, if you see that the affiliate is going to use PPC search engine advertising, it will be clear to you that the affiliate has not read the terms of service where you do not accept affiliates that use this type of promotion.
Understanding all of these elements and how each of them affects the affiliate program is crucial for running a successful program. KPIs help you analyze the metrics and draw conclusions about the overall strategy and about the affiliates. Managing these data and taking actions based on them is going to help you improve the rates significantly.
Management of the affiliates and communication is another level that will be test for your affiliate marketing strategy (and affiliate manager) to handle the situations and analyze the role each affiliate can and is taking in the program. Not only does it help you assess their performance, but it also helps you predict the success of your strategy and determine steps necessary to improve it.