By Amy Wright on October 13, 2016
Managing a performance marketing program is a lot of work! Affiliate managers are under constant pressure to grow their programs and optimize their partnerships. But doing so isn’t easy.
Most affiliate programs reward their partners on last click. But to grow your program you need to look beyond last click. You need to find partners who are driving value across your entire conversion path.
In this post we will discuss how affiliate marketing managers can mine their programs to drive incremental growth. We will explore how you can find valuable opportunities, identify areas of waste and shift spend to optimize results.
Find Opportunities for Growth
The customer’s decision to make a purchase is rarely the result of just one encounter with your brand. Most often it is the result of multiple encounters at various stages of their research process. Certain partners may be effective at introducing your brand, while others are better at influencing the customer’s decision or closing the deal. Every role is important.
Relying solely on last click attribution puts you at risk of neglecting partners who play a critical role early in the customer journey. These partners may never get credit for last click. If you don’t reward them for their contribution they have no incentive to promote your brand and you may miss out on valuable opportunities. To grow your affiliate program you need to find these partners and incentivize them in a meaningful way.
Introducer Example: A popular blogger who becomes interested in your brand may mention you in a blog post. This mention could be the first time a potential customer becomes aware of your brand or it might serve as a reminder. In either case, the mention is valuable because it exposes your brand to a wider audience. Properly incentivizing this blogger may encourage them to promote that post or include you in future articles.
Influencer Example: A website that focuses on your niche may dedicate a section of their site to product comparisons. When your customers are getting closer to making a decision, they will likely consult this type of information. While it may not drive an immediate purchase, it is critical to your customer’s research process. The omission of your brand could result in a different purchase decision.
Your marketing analytics software is a great resource for identifying these partners. Use it to extract and examine your conversion path data. Drilling into this data will allow you to spot encounters with your brand that take place early your customers’ conversion path.
Sometimes this data will help you see partners who are already in your program, but whose contributions had gone unnoticed due to a focus on last click. And sometimes you will discover contributors that you never knew existed! In this case, take the opportunity to expand by inviting them into your program.
Identify Areas of Waste
How will you get the funds to nurture these new opportunities? Look for partners who are getting more than their fair share.
Wasteful Closer Example: It is not uncommon for a partner to get credit (and commission) for a sale that would have happened regardless of their efforts. We have all had the experience of shopping for an item, putting it in our cart and then realizing that we might be able to get a deal. When this happens, we typically leave the site to search for a coupon then return to complete the sale.
Would we have abandoned the cart without the coupon? If the answer is no, the partner who provided the coupon did not actually drive value. In fact, their participation in the purchase simply eroded the retailer’s profit.
These situations are tricky because some shoppers are true deal seekers who will not purchase without a coupon. Others will complete the sale whether they find a coupon or not. Partners who enable both types of customers provide value, but paying full commission on every conversion does not make sense.
In this case, you can reduce their commission to reflect the actual value they provide. This will free up funds that can then be used to incentivize other partners (such as bloggers and review sites) who contribute earlier in the customer journey.
Once again, these partners can be found by examining the conversion path data available in your marketing analytics software. But if you really want to grow your channel and continuously mine it for these types of opportunities, take advantage of your organization’s marketing attribution solution.
Marketing attribution takes conversion path data to the next level by calculating the true value each partner brings to the conversion. This makes it much easier to see which partners are being over- and under-valued and empowers you to make impactful decisions.
Shift Spend to Optimize Results
Your affiliate partners can function like a team. They will never meet, but you can encourage each of them to play their part in moving the customer closer to conversion – similar to a sports team, who passes the ball so they can score a goal. But this only works if you value every partner and reward them in a way that honors their strengths.
Shifting spend is not something you should do all at once or based a hunch. After you identify areas of opportunity, drill into them to determine why those partners are over- or under-performing. Then treat your findings as a hypothesis. Test changes by proposing new terms on a temporary basis then adjust as you gain confidence.
When selecting an incentive structure, focus on encouraging your partners to continue doing what they do best. Below are suggested adjustments for the three opportunities we described earlier in this post:
These partners are most impactful early in the conversion path. Popular bloggers often fall into this category. They have earned the trust of their audience and by including you in their articles, they are effectively introducing their readers to your brand.
These partners will not be impressed by a last click incentive structure since they rarely inspire an immediate purchase. Consider shifting them to first click, cost-per-click (CPC) or even a retainer fee to inspire loyalty.
Partners that influence your customer’s purchase decision but, again, rarely get last click credit also need a suitable incentive structure. Our example was a product comparison site, but influencers can come in many forms. Gaining an understanding of their motivation will help you propose the right commission arrangement.
These partners are unlikely to achieve first OR last click, so paying them a retainer fee or on a cost-per-click (CPC) basis may be more effective.
Partners who are frequently credited for last click, but aren’t contributing much value should have their commission reduced to reflect the actual value they provide.
This is where your marketing attribution software is invaluable. Use it to determine how much these partners are being overvalued and lower their compensation accordingly. For instance, if their credited revenue is $100, but their attributed revenue is $50 you should reduce their commission by 50%. For a detailed description this calculation, check out Todd Crawford’s post titled “The Holy Grail of Affiliate Marketing Metrics.”
What Can I Expect as a Result of my Efforts?
Rebalancing the commission structure in your affiliate channel incentivizes each partner based on the relative value they provide. Acknowledging and rewarding your partners for their strengths will encourage them to continue playing their part in your customer’s journey. Ultimately, this will enable you to drive more conversions with the same amount of ad spend.
Mission accomplished! You look good, your manager looks good and your partners are happy.