The importance of targets, objectivity and measurability
Your affiliate programme is fully operational, affiliates have been recruited, they are promoting your products and services and have started bringing-in some results. But how do you measure these results? Are they in-line with the success-metrics and goals defined for the programme?
To get the best from of your affiliate marketing programme, you need to put in place clear KPIs and measure these. One of the best ways to measure your affiliate efforts is by defining quantitative metrics and comparing them with the defined goals and objectives, on a regular basis. Tracking and measuring the KPIs will allow you to collect and analyse the data to identify what is working and what needs to be changed or adapted.
What key metrics should you consider using to analyse and optimise an affiliate programme?
Click through Rate (CTR): The frequency at which an advertisement is clicked-on by a user. It is calculated as: clicks / views and shown as a percentage. This percentage figure represents the effectiveness of the creatives and the offers, showing which assets are getting the highest number of actions and helping to review them according to their performance.
Conversion Rate (CR): The frequency at which sales are generated from a click on an advertisement. It is calculated as: sales / clicks and shown as a percentage. The CR provides an overview of the overall effectiveness of the promotional methods (offers, creatives, type of affiliates) and the user experience on the website (landing pages, conversion funnel, check-out process).
Cost per Action/Click/Lead (CPA/CPC/CPL): A metric used to measure the cost per sale/click/lead. It is calculated as total cost / total numbers of sales, clicks or leads.
Average Order Value (AOV): A metric used to measure the average revenue generated per order. It is calculated as: total revenue / total number of orders.
Return on Investment (ROI) and Return on AdSpend (ROAS): These are calculations used to assess the effectiveness of your affiliate marketing activities by looking at how much you spend versus how much revenue that spend is generating.
Incremental Sales: Is a term used to understand how many sales are driven by the affiliate channel that would not have been driven by another channel or marketing activity.
Sale Active Rate: The rate of affiliates in a programme generating at least one sale. It is calculated as the number of affiliates that generated at least one sale/total affiliates in the programme This metric provides visibility on how engaged the affiliates are, and how effective programme recruitment is.
What do you need to look at?
Once you have gathered enough data, you can deep dive into the performances of your affiliate programme, and create reports based on the KPIs set up for the programme. Here are a few examples of how to analyse the success of the programme:
- What is the conversion rate from your affiliate programme compared to the conversion rate from other channels?
- Has the AOV increased or decreased?
- What is spend vs revenue return
- Incrementality – Is your programme driving incremental sales? Having a clear understanding of how incrementality is being analysed within your company will help you create a process that provides specific numbers and creates actionable items to further improve this metric within your affiliate programme and throughout your entire marketing strategy.
How can your affiliate programme be optimised?
Based on the insights collected from the analysis you will be able to identify and implement opportunities to enhance your affiliate programme. This can be done through landing page/check-out process improvements, implementing a product data feed, developing attractive creative for affiliates (promo codes, banners), providing strong affiliate incentives, programme features or customer promotions.
“If you can’t measure it, you can’t improve it.” Peter Drucker
Having clear goals, measuring the right KPIs along with a regular comprehensive analysis and holistic approach will provide you with the insights to adapt or redefine your strategy to develop your affiliate programme.
If you’d like to talk to us about how we can help grow your affiliate marketing programme and join other large global brands that are using Acceleration Partners expertise, get in touch with us.