The affiliate marketing industry stands out from other industries because of the dedication to measuring performance. There are so many affiliate marketing strategies to apply for those who want to try it out. As an affiliate, you have the means to assess and evaluate which affiliate marketing strategy will work for you. You can even find and compare them across different platforms.
All affiliate programs are paid based on the sales volume incurred. Hence, it is paramount that affiliates track their activity. Doing so ensures that they receive the right compensation for their hard work and dedication to promoting a particular product or service.
Figuring out successful ways to promote affiliate offers is crucial to success. Tracking them is important in an affiliate marketing campaign if you wish to get the most value out of it. The only way to grow your business is to monitor and evaluate what you are doing right and wrong with affiliate marketing.
Some of the biggest high street brands and companies rely on an in-house team to manage their affiliate marketing programs. Others tend to rely on digital marketing agencies and affiliate networks. Regardless of which approach they take, they all have to consult their data in order to make informed decisions.
The idea is to take advantage of this data in the best possible way to get the best performance. Here are some tips on how to test if your affiliate marketing strategy is effective:
Identify your common key performance indicators (KPIs)
Knowing and understanding the data you gather is the first step in measuring the success of your strategy. The list below are some of the common KPIs that should be monitored consistently for the best results:
Measuring sales is an apparent measurement for an effective affiliate marketing strategy. If you have good sales, it means the affiliate marketing offers and strategies are effective. Using this number, you can evaluate the overall impact of your affiliate program on your business.
This shows how much revenue you wouldn’t have gotten without affiliate marketing. The sales number can then be compared to the incremental revenue from other channels such as search, content, and social, to name a few platforms.
The conversion rate indicates the percentage of people signing up on your website from links referred by an affiliate. In a case where your website’s conversion rate is 3 percent, this means that out of 100 people that visit your site and leave their contact details, 3 of them will buy something. Conversion rates are the most widely used metric in e-commerce.
Return on advertising spent
The margin you earned from the campaign is determined by how much money you spent on the campaign.
Since a marketing campaign’s profitability is measured by the return on investment, ROI is considered the most important success measure. This is the same for the amount of money you spend on advertising. This means ROI lets you know how much money you got back for each dollar you invested for advertising.
With return on ad spends, you can evaluate whether a particular promotion was successful or compare the response over a number of such promotions. To figure out your profits, you need to divide the amount of profit you made from your investment by the amount you spent on the investment.
Click-through rates or CTRs measure the number of users who land on another page after departing from your page via an ad or external link. The click-through rate is an important indicator of how effective your affiliate marketing campaigns are and shows the most effective link types.
Understanding how active and how much revenue your affiliates generate and how many of them you have. When evaluating, you can take note of the following metrics:
- Your affiliates’ level of adoption of your program: Find out whether your affiliate is really promoting your product by checking how they relate to your brand. Determine whether they are meeting your traffic needs or if they are making quick income at the expense of your brand voice.
- Active affiliates types: Make segments by how affiliates generate traffic (bloggers, deals, coupons, search, and so on). Understanding where the customer journey is in the customer’s journey will help you convert more customers. It would be best if you defined what “active affiliate” means. An affiliate who is generating clicks, leads, or sales is generally considered an active affiliate.
- The percent of dormant and top affiliates: To improve your affiliate campaigns’ efficiency, identify affiliates that generate low volumes or have stopped generating leads altogether. The lapsed affiliates may be reactivated by sending them dedicated emails or offering some type of reward, whatever you need to do.
Referrals from affiliates
You should compare the traffic your website gains from affiliates versus other promotion channels. This will give you an idea of the overall impact of your affiliate program on your website traffic. Is there a positive trend over the years, and has it changed? When your affiliate traffic is in decline, it’s time to activate your affiliates and recruit new ones. Declining affiliate traffic suggests that there are cheaper or better alternatives. Ensure that you provide strong incentives for your affiliates to promote your products.
Average earnings per click
The average earnings per click can be calculated by dividing the total affiliate commission by the number of clicks they generated. This lets you see whether they are providing value for money.
Customer lifetime value
The customer lifetime value is a newer KPI that is currently used by only about half of advertisers. The idea here is not to just track affiliate sales data but to combine it with brand sales data, generally over 12 months. Altogether, these factors include churn rates, the number of people who spent time on the site, new or returning customers, and how valuable each individual customer is to the company.
Measurable results are more likely to be managed.
Having adopted a successful affiliate program is not necessarily an assurance that it will be successful all the way. You can compare affiliate offers and tweak them according to what fits the product or service that you are offering. You need to continually measure the efficiency of your affiliate marketing strategy as the market changes as well as the platforms that the affiliates use. By assessing the right metrics, your company can increase its chances for success.