A proper affiliate marketing channel, like any online channel, provides insight into the program performance through various metrics. The metrics used for determining affiliate sales performance are similar to other online metrics, and may even share the same name, but in the context of affiliate marketing, they can tell an entirely different story about the health of a program.
Integration of the affiliate channel into your other online marketing activities dashboard will help shape not only affiliate marketing activities but may help you rethink other online marketing activities and roll them into a performance-based model as well. Here is a quick guide to the metrics you should monitor and track to determine your affiliate marketing program’s success.
The number of impressions indicates your product’s level of exposure among affiliates’ promotional channels. A very high volume of impressions that relate to a small number of clicks or sales can be an indicator of inaccurate affiliate tracking, low affinity between the affiliates’ audience and your products or an inconsistency between the ad promoted and the landing page the ad directs traffic to.
*Please note that not all programs or ad types support impression reporting, and it may not be a useful measurement for your program unless you plan to reward some affiliates based on impressions.
The number of clicks is a measurement of the interactions between the impressions given by your ads and how the audience interacts with the displayed banner or link. Clicks reflect a baseline for interest in the content where the related ads are placed. Essentially a click can equate to the audience “taking the next step” towards the final goal of a sale or action.
The number of actions is representative of the total number of conversions within an affiliate program. Sales are the most common conversion metric, but other activities such as lead generation or trial downloads may also be part of a program and are considered actions. When affiliates do not drive actions, it is important to understand why. A lack of actions for an entire program may indicate integration or tracking issues, while individual affiliates that do not drive actions may be an opportunity to improve your program’s performance by addressing their needs.
4. Conversion Rate
A conversion rate in affiliate marketing is usually calculated by dividing the number of actions by the number of clicks, resulting in a percentage. As one of the more highly used performance indicators in e-commerce, the conversion rate applied to affiliate traffic will indicate the effectiveness of affiliates, specific ads, ad types or campaigns. Conversion rates above 10% are usually considered very high and could mean that the affiliate’s traffic has a strong affinity with your market, but in some cases, it could indicate that an affiliate is employing suspicious promotional methods.
Cost in the very basic sense within affiliate marketing is the commissions paid to your affiliates based on the actions they create. This metric may be broken down into different silos depending on the platform you use, so it is important to understand what the costs represent related to the specific report you are viewing. Oftentimes calculated bonuses, platform fees, ad serving fees and other costs associated with affiliate marketing are not included in basic sales reports so be sure to check and understand the total costs of your program so you can fully recognize how each expense fits into the total costs for a program. If platform fees or ad serving fees are too high, it may impact the commission amounts you are able to offer or the types of ads you feature in your program.
Revenue for affiliate marketing is just like revenue from any other marketing channel and is defined by the sales tracked through that system. Taking the revenue metric one step further, incremental revenue is additional revenue attributed to a specific channel. Though incremental revenue may be difficult to pinpoint and sort out with one hundred percent certainty, especially in fully-fledged marketing campaigns that include multiple touchpoints from various channels. Determining the incremental value of your activities to at least some degree plays a crucial role in prioritizing tasks related to your marketing mix and determining which type of marketing performs best for each task.
7. Active Affiliates
In most cases, an active affiliate has generated a click, an action, or both. Some programs use one variation of the above criteria to create outreach programs to bring their affiliates into an active state. Especially in cases where an affiliate was previously active but has recently been inactive, proactive outreach for determining why this occurred, and how the affiliate might be encouraged to move back into an active state will help keep your program in a healthy state. You might even get some valuable feedback from affiliates about competitive commission rates or missing resources.
8. Affiliate Mix
Traditionally, affiliates are grouped based on how and where they interact with their audience to drive traffic and sales to your site. Typical designations are content creators, influencers, media sites, deals & coupons, paid search, email marketing, bloggers or even affiliate networks working as sub-affiliates. By keeping your affiliates in groups it will enable you to message them more effectively by sending actionable messages that are specific to their needs, as well as let you see areas you might want to increase or decrease the number of affiliates to recruit for a given category to optimize your affiliate mix.
9. Returned Orders
Returned orders are simply the number of returned sales within your program. The rate for returned orders from affiliate traffic should not be that different from your overall return rate. If you notice an affiliate with a higher than average return rate from their sales, you should investigate how they are promoting your products and driving traffic to your site. You may find that they are exaggerating features of your products so your customers referred by them are disappointed, or you may even find that they are using illegitimate practices to generate sales and they should be removed from your program.
Are you a FastSpring user who hasn’t yet leveraged an affiliate network to sell your product? Learn more about FastSpring’s Affiliate Program here.