Performance marketing insights, discussions and expertise

Conversion Path Insights: 3 Key Takeaways to Increase ROAS in Your Partner Marketing

By on February 14, 2018

In my role as a Customer Success Manager, I talk to a lot of clients who ask about incrementality and are always looking to take their partner marketing programs to the next level. They wrestle with how much to pay their highest performing partners, whether or not they should purchase promotional placements to gain more exposure, and how they can ensure the best return on ad spend (ROAS).

These are questions marketers have grappled with since the inception of affiliate marketing, which we are increasingly referring to as “partner marketing”. And I’d argue, they’re the right questions to be asking if your ultimate goal is to scale your program while minimizing wasteful spend.

Pay Closer Attention to Conversion Paths

In order to begin to answer some of these questions, I usually tell clients to look no further than the customer journey — the click path the customer took to complete their purchase. In the early days of affiliate marketing, we weren’t so interested in the clicks that started the path, or the clicks that contributed to an eventual purchase. But today, program managers are paying closer attention to how the customer got to the conversion. This might be a new concept for those just starting out, so I’ll focus on three basic takeaways that savvy marketers will observe when analyzing the most common conversion paths.

Takeaway #1: The media partner (publisher) that kicks off the customer journey is often not the party that receives credit for the sale.

According to 2017’s Connect Shopper Report, 85% of shoppers rely on research from multiple online sources before completing a purchase. Often this means that an influencer is driving the point of inspiration for the consumer, who then visits a host of other blogs, review sites, coupon, and deal sites before deciding to turn over their hard-earned cash for those pricey wireless Bluetooth headphones.

As a result, a lot of top-of-funnel traffic can easily get overlooked because most partner marketing initiatives reward commissions based on who drove the last click. Those top-of-funnel partners may not excel at getting the consumer to make the purchase, but they may be driving tremendous value in terms of brand awareness and customer engagement. If you’re not finding ways to reward those partners either through higher payouts, dynamic commissioning structures, or flat-rate bonuses, your competitors will, and you can’t identify who those partners are if you’re not analyzing conversion paths.

Takeaway #2: Higher ticket purchases typically involve many more touchpoints and a longer sales cycle.

Conversion paths will vary a lot depending on the type of product or service being purchased. For most consumers, the decision to book a $9,000 all-inclusive vacation to the Galapagos Islands isn’t taken lightly, whereas buying a set of HDMI cables or an iPhone case are more than likely going to be impulse buys.

For lower cost items, it’s less common to see more than two or three media partners in the conversion path, whereas big-ticket purchases have a longer consideration window. That first burst of inspiration might have come from an influencer’s Instagram post, which then prompted several rounds of intense Google searches, visits to multiple travel blogs, and deal sites before culminating in a purchase four weeks later!

There are multiple quantitative approaches depending on how long the sales funnel is. For brands where the cost of merchandise is in the hundreds or thousands of dollars, the lookback window you’ll want to analyze is probably going to be longer than 10, 15, or even 30 days. And the longer that window is, the more crucial it is to understand all the touchpoints in that customer journey.

Takeaway #3: For retail clients, deal sites and loyalty partners (points or cashback sites) are often at the bottom of the funnel.

This one might also seem like a no-brainer, but I often hear clients equate coupon and deal sites with loyalty. Conventional wisdom will tell you that coupon sites are better at driving new customers, while cashback sites excel at driving repeat customers. That might be true for retail, but no two programs behave exactly the same way. As a result, one type of program may place a much higher value on repeat customers and ban coupon and deal sites altogether. Another advertiser in the same vertical may feel like their internal remarketing efforts are so good at re-engaging their customers, they don’t need to work with loyalty partners. In that scenario, an advertiser may choose to engage coupon partners with a little more zeal than most. Ultimately, your best bet is to look at other metrics to evaluate incrementality, such as the amount of solo conversions credited to that partner, or conversions where that partner is the sole participant in the path.

Understand Each Point in the Customer Journey

The upshot is, for the majority of my career in affiliate marketing, we didn’t have the tools to identify all the participants in the consumer’s path-to-purchase, so we were forced to take a leap of faith on the ones that were driving the most conversions. It’s important to understand the value of each touchpoint in the customer journey because when you start identifying where your performance partners fall within the path, you can start applying advanced commissioning strategies that align the incentives with the value specific partners are bringing to your program. Analyzing the path within the affiliate or partner marketing channel is just the beginning. The fun really begins when you start looking at how those paths interact with your other marketing channels.