How To Measure Affiliate Marketing: Metrics That Matter
Affiliate marketing is a growth driver for B2B SaaS, period.
But let's face it, tossing a bunch of affiliate links into the digital wilderness and hoping for the best isn't a strategy - it's wishful thinking.
To transform that wish into a well-oiled revenue machine, you need to have a robust affiliate marketing measurement plan in place.
That's where we want to chip in.
This guide is your playbook, offering a step-by-step roadmap to turn those hopeful throws into strategic plays.
From crucial affiliate marketing metrics to financial KPIs that directly impact your bottom line, we'll walk you through how to measure and fine-tune every aspect of your affiliate program.
Ready to go from wishful to tactical? Let’s get to it.
Quick take: Your affiliate program performance measurement untangled with this guide
Navigating the complex world of affiliate marketing performance measurement? This guide arms you with a 14-step roadmap to measure everything that matters - from clicks and conversion rates to financial metrics and partner performance. Finally, streamline your efforts and turn metrics into actionable strategies with Reditus, offering a one-stop dashboard designed explicitly for B2B SaaS affiliate programs.
The building blocks: Fundamental metrics for affiliate success
Metrics are your silent partners in growth - knowing which to track is akin to having a GPS for your affiliate marketing journey. Without these navigational aids, you're essentially flying blind, unaware of what's truly driving your success or where you're missing out on potential revenue.
So, are you ready to shine a light on your affiliate marketing efforts? Great, because we're diving deep into both the key affiliate funnel and financial metrics you need to track.
Key affiliate funnel metrics to track
When we talk about the "funnel," we're discussing every step, from recruiting affiliates to turning their referrals into paying customers. Precise tracking at each step isn't a mere option; it's your roadmap to maximizing ROI and uncovering growth avenues. So, what metrics should be your North Star? Let's dive in.
Metric #1 - Number of affiliate partners
Why care about the number of affiliates? Because they're your growth army. The more quality affiliates you have, the greater your reach and revenue potential. Quality over quantity is the mantra here.
Need to scale your affiliate team quickly? Check out the Reditus marketplace. It's a goldmine of over 6,000-plus SaaS-focused affiliates to elevate your program. And if you're too swamped to manage recruitment, Reditus can even do that for you, actively seeking out top affiliates to boost your MRR.
Metric #2 - Number of affiliate link clicks
Clicks serve as the first touchpoint in the customer's journey and are a pivotal indicator of both affiliate engagement and potential conversions. The more clicks your affiliate links receive, the more chances you have to convert those clicks into actual signups or sales.
Metric #3 - Number of affiliate link-driven signups (referrals)
After all those clicks, here's where the rubber meets the road - signups. This metric directly correlates with how compelling your product offer is and how effective your affiliates are at conveying that message. A strong number of signups suggests you're not just attracting attention but also compelling action. Keep an eye on this number; it's your gateway to revenue.
Metric #4 - Click-to-signup conversion rate
This metric shifts the focus from quantity to quality. It tells you how many of those clicks are turning into signups, offering a snapshot of your funnel's efficiency. A high click-to-signup conversion rate indicates that your messaging and the affiliate's audience are well-aligned. Keep an eye on it to fine-tune both partnerships and campaigns.
Metric #5 - Number of paid referrals
This is the ultimate metric that tells you whether those signups are actually translating into revenue. Paid referrals are the signups who have transitioned from merely trying your product to upgrading to a paid plan. If this number is high, it means you're turning interest into commitment, which is the goal, right? This is the metric where you can see your ROI start to materialize.
Metric #6 - Signup-to-subscription conversion rate
Picking up where we left off on paid referrals, this metric takes it a step further. It reveals the percentage of signups that become paying customers. It's one thing to get people to sign up and another to turn them into paying customers. A high signup-to-subscription rate signals a strong product-market fit and indicates that you and your affiliates are attracting the right audience.
Metric #7 - Churn rate
Churn rate measures the percentage of referred customers who decide to leave your product. It's calculated by dividing the number of churned referrals by the total referrals. A high churn rate is a red flag that something's off - either with the product itself or with the match between the product and the audience your affiliates are targeting. This metric is your reality check, allowing you to course-correct before it's too late. Keep an eye on it to ensure long-term program success and customer satisfaction.
Key affiliate program-related financial metrics to track
Now that you've got your funnel metrics dialed in, let's talk money. While funnel metrics help you optimize the customer journey and understand engagement, finance-related affiliate marketing KPIs are crucial for quantifying your program's success in monetary terms. They give every affiliate manager the "so what" behind all those clicks and signups, linking your affiliate efforts directly to revenue and profitability.
Metric #8 - Monthly recurring revenue (MRR)
MRR stands for Monthly Recurring Revenue, a key metric for any SaaS business. In the context of affiliate marketing, this metric helps you track the steady income generated from affiliate-referred customers who have signed up for subscription plans. The importance of MRR can't be overstated; it not only gives you a snapshot of your financial health but also helps you forecast future revenue, which is essential for scaling your operations.
Metric #9 - Total affiliate-driven revenue
While MRR gives you a window into recurring revenue, total affiliate-driven revenue broadens the view to capture the complete financial impact of your affiliate program. This metric sums up all revenue generated through affiliate referrals, regardless of whether it’s recurring or a one-time purchase. It’s a solid answer to how effective your affiliate marketing strategy is at driving not just clicks or signups but actual sales.
Metric #10 - Affiliate revenue to total revenue ratio
After sizing up your total affiliate-driven revenue, you need to know how it fits into your overall earnings. That's where this ratio comes in.
Simply divide your affiliate revenue by your total revenue to get the percentage.
If this ratio is rising, it's a strong signal that your affiliate channel is growing in influence compared to other marketing channels. On the flip side, a decreasing ratio could signify that it's time to reassess your affiliate marketing strategy or pay more attention to other revenue-generating avenues.
To get an even more nuanced understanding, you can also compare the growth rate of your affiliate channel against other marketing channels. This will give you a clearer picture of how impactful SaaS affiliate marketing is in terms of driving growth for your business.
Metric #11 - Average lifetime value (LTV) per affiliate-driven customer
Now, let's assess the long-term value of customers your affiliates bring in. This metric gauges whether these customers are valuable assets or one-time buyers. To calculate, divide the total revenue from affiliate-driven customers by their total number.
A higher LTV suggests affiliates are attracting customers who stay and generate more revenue over time. This is a positive sign for increasing affiliate investments.
Metric #12 - Earnings per click (EPC)
Earnings per click (EPC) tells you the monetary value of every click on your affiliate links. To calculate EPC, simply divide your total affiliate-driven revenue by the number of affiliate link clicks.
Metric #13 - Average cost per acquisition via the affiliate channel
This metric is all about cost-effectiveness. It tells you how much, on average, it costs to acquire a new customer through your affiliate program.
To calculate it, add up all the costs linked to your affiliate program, which may include platform expenses, employee salaries, and affiliate commissions. Then, divide this total cost by the total revenue generated through affiliate marketing in the same time period.
A lower average cost per acquisition means you're not just cost-effective; you're competitive. You're acquiring valuable customers at a rate that rivals or beats other marketing methods.
Your 14-step roadmap to measure affiliate marketing success
Ready to crack the code on tracking affiliate marketing results? You're in the right place. Coming up is a step-by-step guide that will walk you through everything from defining clear objectives and tracking analytics to optimizing your program and scaling success.
Step 1: Define clear objectives
Set goals: First things first, what do you want your affiliate marketing program to achieve? Is it more sales, new leads, or perhaps elevating brand awareness? Your goals will serve as the North Star for the entire program, guiding your actions and helping you make informed decisions.
Pick your KPIs: Once your goals are set, you'll need to determine how to measure them. That’s where Key Performance Indicators (KPIs) come into play. For example, if your goal is to ramp up trial sign-ups, you might focus on metrics like the number of new sign-ups per affiliate or conversion rates from click to sign-up. If revenue growth is the ultimate aim, cost per acquisition (CPA) and customer lifetime value (CLV) will be your guiding stars.
Step 2: Set up affiliate link tracking
Assign links to affiliates: The first task in your tracking agenda is assigning unique affiliate links to each of your partners. This ensures that the traffic generated can be directly attributed to the corresponding affiliate, leaving no room for guesswork or error. These unique identifiers make it easy to track the effectiveness of each affiliate, which is invaluable when you're aiming to optimize your program's performance.
Use advanced analytics: Next, you need good tools to look at that traffic. Google Analytics is okay for starters, but it won't give you everything you need to know. If all this tracking talk sounds complicated, don't worry. Reditus' advanced SaaS affiliate marketing platform makes it simple. Just add a small piece of code to your website, and it starts collecting useful data. After that, you'll know exactly which affiliate sent a visitor your way when they take action on your site, like signing up or making a purchase.
Step 3: Assess affiliate traffic quality
Examine traffic quality: Once you've got your tracking in place, it's time to start watching the kind of traffic your affiliates are bringing in. Look at things like how many pages people visit before they leave your site (page views per visit), how long they stick around (average session duration), and how many just leave right away (bounce rate). High bounce rates or low session durations might signal that you're attracting the wrong kind of visitors.
Segment traffic: Divide your incoming traffic by key factors like location, device type, and other relevant demographics. This granular view allows you to fine-tune your strategies so you're reaching the audience that matters most to your SaaS business.
Step 4: Monitor conversion metrics
Track conversions: Keep an eye on the specific outcomes you're looking for - whether that's leads, sign-ups, or paid subscriptions from each of your affiliates. This data is critical for understanding which partnerships are actually driving value.
Calculate conversion rates: Don't just stop at raw numbers. Go one step further by figuring out the conversion rate for each affiliate. This is basically the percentage of clicks from an affiliate link that turns into your desired actions. It's a quick way to gauge the effectiveness of each affiliate in terms of meeting your specific objectives.
Step 5: Pull up financial metrics
Compute CPA (Cost per acquisition): After you've tallied up the conversions, it's time to find out how much each one is costing you. Calculate the cost per acquisition (CPA) to get a clearer picture of how profitable your affiliate channel really is. In simple terms, how much are you spending to get each new customer from your affiliates?
Analyze ROI (Return On Investment): Knowing the spend is one thing, but what's the return? ROI measures the bang you're getting for your buck. It helps ensure that the money going into your affiliate program is well-spent and generates solid financial returns.
Step 6: Evaluate customer quality
Monitor customer lifetime value (CLV): Tracking the CLV of customers acquired through affiliates helps you gauge their long-term value. A high CLV means you're gaining valuable customers who contribute to revenue over time.
Track customer engagement: Use metrics like product usage, upsell rate, and churn rate to measure how engaged these new customers are. These metrics inform you whether customers are actively using your product and if they're likely to stick around or churn.
Step 7: Track every affiliate partner’s performance
Rank affiliates: To keep your program efficient, rank your affiliates based on key performance metrics. Look at the traffic they're driving, their conversion rates, and the total affiliate sales they generate. This helps you know who's adding real value and who might need a little nudge.
Acknowledge top performers: After ranking, it's crucial to recognize and reward your top-performing affiliates. A simple shoutout or a bonus can go a long way in motivating them to keep up the great work.
Step 8: Conduct a competitor analysis
Benchmark with competitor programs: The first order of business is to gather data on your competitors. Look at their commission rates, cookie durations, and promotional materials. Are they offering webinars or special training to their affiliates? Tools like Semrush or Ahrefs can provide useful insights into their SEO efforts and backlink strategies. Once you have this data, compare it against your own program's metrics to see where you stack up.
Identify and fill gaps: After benchmarking, dig deeper to find the gaps. If their conversion rate is higher, it might be time to review your landing pages. If they have more engaged affiliates, consider upping your game in affiliate support and communication. This could involve more frequent check-ins or additional resources to help affiliates succeed.
Step 9: Leverage feedback from your affiliate partners
Gather affiliate feedback: Your affiliates are your eyes and ears on the ground. They interact with your product and audience in ways that you might not. Regularly survey them to gather valuable insights. Are they satisfied with your commission structure? Do they find your marketing materials helpful? Is there a feature they wish you'd add? This is first-hand information that can help you iron out the kinks in your program and even your product.
Implement good inputs: Whether it's adjusting your commission structure, revamping your resources, or tweaking your affiliate dashboard for better user experience, take action based on the feedback you've collected. This shows affiliates that you're invested in their success, which in turn makes them more committed to yours.
Step 10: Build long-term partner relations
Nurture partnerships: From a simple 'thank you' email for a job well done to quick responses to their queries, show your affiliates that you value their partnership. The point here is to go beyond transactions and cultivate a real relationship. This often leads to better collaboration and increased trust, which naturally boosts performance on both ends.
Provide resources: Equipping your affiliates with the right tools and training is another cornerstone of building long-term relationships. Whether it's marketing collateral, product training, or data analytics dashboards, give them what they need to succeed. If they succeed, so do you, simple as that.
Step 11: Regular reporting and analysis
Example of an affiliate program performance dashboard powered by Reditus.
Create reports: Make it a routine to compile regular reports that highlight key performance indicators, financial metrics, and traffic data. This is where a tool like Reditus really shines. With its user-friendly analytics dashboard, you get a one-stop shop for many of the key metrics we have discussed in this guide, making it easier than ever to track your program's health.
Analyze trends: Now that you've got these metrics at your fingertips, let's use them wisely. Keep an eye on fluctuations in your MRR, changes in affiliate-driven revenue, or even variations in your churn rate. Are you noticing seasonal spikes in conversions? Do certain affiliates excel in driving more paid referrals? Or maybe you're finding that despite high sign-up rates, your churn rate is alarmingly high. Analyzing these trends will give you actionable insights and shape your optimization strategy.
Step 12: Maintain regulatory compliance
Ensure compliance: Imagine having a thriving affiliate program and then getting slapped with a regulatory fine. Not a pretty picture, right? Compliance isn't the most glamorous part of running an affiliate program, but it's crucial. Make sure you're up to date with legal requirements and industry standards, whether that involves data protection laws like GDPR or advertising regulations.
Audit for compliance: Even the best of us can overlook a detail or two in the rush of day-to-day operations. That's why periodic audits are a must. Go through your program's terms, affiliate practices, and even the promotional materials used to ensure that they're all in line with current regulations. Audits might sound tedious, but think of them as your safety net, preventing potential legal snags down the line.
Step 13: Double down on successful strategies
Deepen engagements with your star affiliates: You've been watching your metrics, and some affiliates are clearly knocking it out of the park. These are your all-stars, and they deserve more attention. Increase your investments in these relationships, whether through higher commissions, bonuses, or additional resources to help them succeed even more.
Keep expanding your A-team: While it's crucial to double down on top-performing affiliates, avoid the trap of complacency. The affiliate ecosystem is dynamic, offering new opportunities for fresh partnerships. Scout for emerging talent who can tap into new audiences and revenue streams. Initiate these partnerships with pilot campaigns to assess their effectiveness.
Step 14: Optimize all the time
Data-driven iteration: Constantly analyze your metrics to refine your overall strategy. Use A/B tests to optimize landing pages and offers for better conversion rates.
Performance audits: Conduct regular comprehensive audits to assess the effectiveness and efficiency of your entire affiliate program, including the cost-effectiveness of commission structures.
Closing thoughts: Power your affiliate program with metrics and Reditus
From defining clear objectives and setting up link tracking to continuous optimization, you now have a blueprint for measurable and sustainable growth.
Remember, in the data-driven world of affiliate marketing, what gets measured gets managed. Your job is to convert those measurements into actionable strategies that consistently push the needle.
Worried about the grunt work of tracking and measuring? Say hello to Reditus.
Consider it your control room where metrics are not just seen but understood. Tailored for B2B SaaS, Reditus lets you turn your affiliate program data into action without breaking a sweat.
Increase customer retention and loyalty with the right SaaS renewal process. Find out what it takes to create an effective strategy from the experts at Reditus.
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