Affiliate Program KPI’s Optimization Crash Course

Cristian MiculiSr Affiliate Marketing Manager

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What we will cover todayKPIs for your Affiliate Program

Importance of monitoring the affiliate program KPIs

What are the KPIs you should watch?

Revenue-based KPIs

Exposure KPIs

Performance & Product KPIs

Partnership KPIs

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Who are you?

Merchants

Affiliates

Affiliate program management agencies / OPMs

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Strategic investment requiring adequate monitoring and often positive ROI

Affiliate programs are the 3rd largest marketing budget behind PPC and email …

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US affiliate marketing spending will reach $4.5 billion by 2016 and will increase at a compound annual growth rate of 17% from 2011 through 2016

Strategic investment requiring adequate monitoring and often positive ROI

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Merchants on average see 23% of total online sales coming from the affiliate channel – Affiliate Benchmarks

The average shopper uses more than 10 sources … to make a decision – Google

Usually 10% of affiliates generate 90% of sales - Jay Berkowitz

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What are important KPIs to affiliate programs?Take into account all the pieces

Revenue

Acquisition

Conversion

Retention

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What are important KPIs to affiliate programs?Focus on your true business goals

Revenue KPIs: weigh the amount of revenue you get / spend

Sales volumes / orders

Leads, installs (for digital goods only)

Acquisition KPIs: get customers through affiliates

Exposure KPIs: clicks, views

Network KPIs: recruited affiliates, active affiliates, power ranking

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What are important KPIs to affiliate programs?Focus on your true business goals

Conversion KPIs: how efficient is your affiliate program

Conversion rate – Orders / Clicks

EPC – Sales volumes / Clicks x 100

Average order value (AOV) via affiliates – Sales volumes / Orders

Retention KPIs: get a view from the customers’ perspective

Refunds

Renewals (digital goods)

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Getting down to business…

Affiliate program management KPIs should be tuned in with your overall business KPIs

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The faster you react, the faster you grow

Get dedicated help (in-house or OPM) to handle this.

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Revenue KPIsMoney talks

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Revenue KPIsSales – the engine for ROI

Sales trend Further investigationsLow sales Check number of affiliates in program, check

conversion rateDeclining Check top affiliates, check platform tracking

issues, check seasonality patternsConstant See other KPIs to increase salesIncreasing Be sure you know why this is happening and

try to replicate

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Sales – the engine of ROILow sales

• Promote your affiliate program on your website• Accelerate the recruitment process – in affiliate

network, direct contact, services• Get more top affiliates to promote your

products• Get affiliates to promote in specific territories.

How many affiliates do you have in

your program?

• Run a test on the tracking platform.• Be sure that affiliate links direct to

valid landing pages, affiliates are addressing the correct target audience (e.g. based on territories).

Are there tracking issues?

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Sales – the engine of ROIDeclining trend for sales

• Get in touch with them if their sales are getting down – see how you can help.

• Try to offer affiliates better conditions than your competition – commission, incentives (*).

• Help them get original content on their website – sample products for reviews, unique selling points, etc.

Check out your top affiliates and

how they promote your products

• Conversion rate dropping – shopping cart funnel analytics, see where people abandon the purchase.

• Conversion rate constant exposure is getting lower also – find out which affiliates are not sending traffic anymore to you and why.

Check the conversion rate

trend

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Sales – the engine of ROIDeclining trend for sales

• Run affiliate special campaigns to increase sales during off-season: sales contests, special bundles, discounts

• Offer a complementary product / service in order to compensate the sales drop

Sales seasonality?

• Check level of refunds for the product• See what your competition is offering as

similar products and if they are successful with it

• Too many competitors? Focus on a certain niche – functional / geographical

Product end-of-life / saturation?

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2. Use Performance IncentivesAncestry.comUse Performance Incentives to drive peak performance from key affiliates

With 7 billion genealogical records from across the globe and millions of family trees, we are the world’s largest

online family history resource.

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Affiliate Tiers for Memberships• 25.00% for up to $3,000 per month net

• 35.00% for $3,001 to $9,000

• 45.00% for $9,001 to $18,000

• 50.00% for $18,001 to $25,000

• 55.00% for $25,001 to $30,000

• 60.00% for $30,001 and above

Plus tiered gift memberships

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Sales – the engine of ROIConstant sales volumes

• Higher number of clicks? You’re getting more exposure to non-targeted audiences. Get the affiliates to send more traffic to your targeted audience.

• Lower number of clicks? Get more traffic sent from affiliates and you will increase sales.

• Increase the AOV by offering complementary products in the shopping cart or bundles.

• Constant number of affiliate partnerships? Recruit more – basically this will increase your sales.

• Get more affiliates in your program activated, so that you will get more sales.

• Offer your affiliates other tools to promote your products (*)

Check other KPIs and tune them to grow

sales

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Give them the right toolsEngage their customers and make it easier for them

Argos.co.uk - UK multi-channel retailer

www.argos-affiliates.co.uk

Present in the affiliate landscape since 2001.

Offers a dedicated portal for affiliates, with lots of resources: how to guides, creative resources (banners), PPC word lists, webinars, etc.

The Right ToolsArgos provides a dedicated portal for affiliates, with a plethora of resources: how to guides, creative resources (banners), PPC word lists, webinars, as well as top 10 reasons to be an Argos affiliate

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Understa

nd the

causes

• Have you run a campaign lately? What did you offer to customers? What were the incentives you offered affiliates and which category of affiliates performed best? (coupon affiliates, niche, etc.)

• Did you manage to attract top affiliates in your program?How did you find them and what was the approach? What did you offer them?

• Are you getting more exposure?Segment your customers and reach out to affiliates that can drive more purchasing customers

Replicate the

success

actions

• Find association patterns among the causes and replicate them to similar audiences• When in doubt, try replicating one thing at a time: increased commission, sales

contest, discount coupon, etc.

Sales – the engine of ROISales volumes on the rise

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What are important KPIs to affiliate programs?Take into account all the pieces

Revenue

Acquisition

Conversion

Retention

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Leads / installs also influence the revenueHybrid revenue-acquisition KPIs

Leads / installs can be viewed as qualified clicks

B2B products – affiliates generally paid per lead Digital products – affiliates can also be paid for installs Some merchants pay affiliates for both sales and leads / installs

Leads / installs numbers risingIf sales numbers are dropping, you might have a problem on the product side: price, offering, etc.Closely monitor the balance between the costs and the revenue coming from sales

Leads / installs numbers dropping – lower interest for your productCheck the correlation with the sales numbers; incentivize affiliates if necessaryCheck to see if it’s worth it for you to also pay affiliates for this

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Acquisition KPIsGet customers through affiliates

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Exposure KPIsSee the attention your products get online

Exposure trend Further investigationLow exposure Check number of active affiliates promoting

your productsDeclining Check top traffic senders / affiliatesConstant Expansion possibility to new marketsIncreasing Be sure you know why this is happening and

grow revenue along with exposure

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Exposure – see the attention your products getLow exposure from affiliates

• Make sure affiliates have the necessary tools• Recruit affiliates – from website, affiliate

network, direct contact, via professional services

• Send promotional launch campaigns to speed up the adoption of your products by affiliates.

• Incentivize affiliates to promote your brand

Attract the affiliates’ attention

• Get more traffic on your website through direct sources also, to boost its popularity and attract affiliates

• Engage on social media

Get more exposure for your brand /

products

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Get the affiliates’ attentionIObit launched a new software product and created a campaign to offer the affiliates in the Avangate Network a $30 end-user discount. Result: new product was picked up by more than 50% of their affiliates plus the ones joining along with this campaign

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Exposure – see the attention your products getExposure declining

• See their reasons for this• Offer them better conditions than the

competition if they were converting• Incentives for best performers

Get in touch with affiliates that

dropped their clicks / leads / installs

(digital goods only)

• Contact the big affiliates that you have in your program who are not sending clicks to your products

• See what they need to get started

Activate affiliates with

no / few clicks

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Exposure – see the attention your products getConstant / rising exposure

Understand what led to this and

replicate it

• See where your clicks / views come from and expand to new markets

• Grow the sales by running special campaigns, offering incentives to affiliates, getting new power affiliates, etc.

Monitor the

traffic qualit

y

• Get quality exposure / leads for your products based on your target audience

• Use the “unqualified” traffic: segment your offering to have more users that can spread the word on your product

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Network KPIsLeverage your products’ potential via strong partners

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Network KPIsRecruited affiliates

• newsletters, • direct contact, • list of power

affiliates

• welcome emails• starter kit tools• asking for

feedback

• Website,• affiliate forums, • PPC, • direct approach

big affiliates

• higher commission,

• better incentives, • products with

better stats (conv. rate, EPC)

Look at competitors

Recruit via every

channel

Affiliate network

recruitment

Engage with recruited affiliates

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Affiliate network recruitmentSome affiliate networks provide “start-up” kits: lists of power affiliates to begin the self-service network recruitment process. You can contact them and get your products promoted on their websites.

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Network KPIsActive affiliates

Incentivize Actions to get them to promote your products

Motivate big fish with performance incentives

Provide exclusive conditions

Give them the right customized tools to drive sales

Engage and Educate Affiliates

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Network KPIsAffiliate Network Power Ranking

Based on internal network algorithms

Helps affiliates determine the best products / campaigns to promote based on conversion rate, previous sales, # of affiliates promoting it

Speak with your network representative to see how you can grow it

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What are important KPIs to affiliate programs?Take into account all the pieces

Revenue

Acquisition

Conversion

Retention

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Conversion & Retention KPIsHow efficient is your affiliate program?How good are your products / services when compared to others?

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Conversion KPIsEfficiency of affiliate program

Conversion rate: orders / clicks

Indirectly shows the value of your product / service

Average conversion rate: 2%

Grow it by optimizing your website, offering affiliates the necessary materials to promote your products

EPC: Sales / clicks x 100

Shows the theoretical value of a click for affiliates

The higher it is in conjunction with an average price, the more attractive is for affiliates

EPC can be increased by growing sales and optimizing the conversion rate

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Conversion KPIsEfficiency of affiliate program

Average Order Value: Sales / orders

See how much people spend on our products on average

Used to compare actual AOV to your products’ prices. If too low – your affiliate channel sells mostly discounts

Grow it by offering cross-sells, bundles at special prices, initially free products with renewals (digital goods)

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Retention KPIsHow attractive is your product to customers / affiliates

Refunds

Too many refunds – look at why this is happening and stop this

Refunds usually associate themselves with negative reviews

See the correlation between the drop in revenue / exposure and refunds

Renewal rate (digital goods)

Affiliates mission: bring new customers to you

You can reward your best performing affiliates with crediting them for the renewals

See the ratio between new customers vs. renewals

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Convince top affiliates that your affiliate program can bring them more money

Help affiliates help you – give them the right tools to promote your products

Be aware of the numbers (KPIs) in your affiliate program – there’s always room for better

Stay in touch with affiliates to react rapidly

Realistically align your affiliate program goals with your business goals

Takeaways

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Want to Learn More?Blog: blog.avangate.com

Twitter: @AffiliateDoc

Facebook: Avangate.Affiliate.Network

Avangate B.V.Amsterdam, The NetherlandsTel: +31 20 890 8080

Avangate Inc.Redwood Shores CA., USATel: (650) 249 - 5280

info@avangate.comwww.avangate.com

Thank You!Cristian Miculi, Sr Affiliate Marketing Managercm@avangate.com