S5E16 – How to Set-Up & Grow a SaaS Affiliate Program with Adam Glazer

What exactly is affiliate marketing, and how can you successfully set up and scale a SaaS affiliate program? In this exciting episode of the Grow Your B2B SaaS Podcast, host Joran Hofman sits down with Adam Glazer, the President of Partner Commerce, to explore the strategies for launching and growing a thriving affiliate program. Adam, a true expert in the field, explains that affiliate marketing is a referral-based partnership model where an affiliate, or publisher, drives traffic or leads to an advertiser or merchant. In return, the advertiser compensates the affiliate for the traffic or sales generated through their referrals. Adam emphasizes that the key to affiliate marketing is its performance-based nature affiliates earn commissions only when they successfully drive a sale or lead, making it a highly effective and results-driven approach. Tune in to learn how you can leverage this powerful marketing strategy to accelerate your SaaS growth!

The Rationale for SaaS Companies Embracing Affiliate Marketing

Affiliate marketing offers many benefits for SaaS companies, just like it does for other businesses. These benefits include growth potential, a performance-based cost structure, and lower risk compared to traditional paid media. As the costs of paid media, such as cost-per-click (CPC) and cost-per-thousand-impressions (CPM), continue to rise, affiliate marketing provides a cost-effective alternative with limitless reach. Unlike paid advertising, where costs are upfront and returns are uncertain, affiliate marketing ensures that companies only pay for tangible outcomes. Additionally, the advocacy effect of affiliate marketing where third-party affiliates endorse the brand adds credibility and boosts customer trust. This ultimately increases conversion rates across other marketing channels as well.

Identifying the Right Time for SaaS Companies to Start Affiliate Programs

Timing plays a crucial role when launching an affiliate program. Adam advises SaaS companies to start their affiliate programs sooner rather than later because building a successful affiliate channel takes time and effort. It involves building relationships, optimizing partnerships, and scaling efforts over time. However, the decision to launch an affiliate program should also consider factors like the target market size (Total Addressable Market, or TAM) and the nature of the product. Affiliate marketing works particularly well for SaaS companies targeting small to medium-sized businesses (SMBs), especially micro-SMBs with 1-10 employees. Products that have broad market appeal, such as CRM platforms, tend to perform better. In contrast, niche offerings might struggle to find suitable affiliates.

Common Pitfalls in Setting Up an Affiliate Program

A common mistake companies make is assuming affiliate marketing is a passive channel that doesn’t require active management. In the early 2000s, simply joining an affiliate network could yield results. Today, however, affiliate marketing demands a proactive approach. Companies must actively manage their affiliate relationships, engage with partners regularly, and offer updated deals and incentives. This involves nurturing partnerships, equipping affiliates with the necessary tools and content, and investing in human and technological resources to keep the program effective and dynamic.

Strategic Planning: The Foundation of a Successful Affiliate Program

Before starting affiliate marketing, SaaS companies need a comprehensive strategic plan, also known as a go-to-market plan. This plan involves understanding the business, including the ideal customer profile (ICP), the customer buying journey, and key motivating factors. By aligning these insights with the ideal partner profile (IPP), companies can identify potential affiliates who influence customers at critical points in their buying process. Competitive analysis, measurement strategies, and incentive structures are essential components of this plan. Adam emphasizes that having a clear, well-thought-out blueprint helps avoid hasty decisions and ensures long-term success.

Recruiting Affiliates: Building a Strong Network

Once the strategic plan is in place, the next step is recruiting affiliates. This process typically involves using affiliate platforms, working with agencies that have existing relationships, and conducting competitive analysis to identify potential partners. Companies must classify affiliates into managed and unmanaged categories. Managed affiliates receive personalized outreach, while unmanaged affiliates are targeted through automated marketing efforts. Prioritizing affiliates based on their potential impact and aligning recruitment efforts with the strategic plan will help build a strong affiliate network.

Onboarding and Incentivizing Affiliates

Effective onboarding is crucial for affiliate success, and it requires a tailored approach for different types of affiliates. Managed affiliates should receive personalized support, while unmanaged affiliates should have access to self-service resources like video tutorials and FAQs. By segmenting affiliates based on types, such as agencies or influencers, companies can tailor their communication and support strategies. Reward structures are also key to incentivizing affiliates. Adam suggests offering a range of incentives, from revenue-sharing models to cost-per-lead arrangements, with tiered rewards for top performers. Experimenting with different reward structures can attract a variety of affiliates and motivate them to take calculated risks.

Overcoming Challenges in Affiliate Marketing

One of the biggest challenges in affiliate marketing is ensuring the incrementality of referrals. This means confirming that affiliates are bringing in new customers who wouldn’t have discovered the brand otherwise. To achieve this, companies need advanced technology and expertise to analyze cross-channel insights and accurately attribute credit to affiliates who generate true incremental value. Additionally, integrating the front-end and back-end of the program—assessing customer lifetime value, churn rates, and revenue growth—is essential for optimizing the affiliate strategy. SaaS companies must continuously refine their approach to build a successful and sustainable affiliate program.

Advice for SaaS Founders: Balancing Growth and Efficiency

For SaaS founders looking to grow their businesses, Adam offers valuable advice on balancing growth and efficiency. In the early stages, it’s essential to prioritize growth over immediate profitability. Reinvesting profits into marketing, hiring the right talent, and improving the product is crucial for reaching breakthrough growth. As the company scales, the focus should shift to efficiency. Investing in tools and processes that optimize media buying and improve overall marketing effectiveness will ensure long-term, sustainable growth and profitability.

Conclusion: Setting the Stage for Affiliate Marketing Success

Affiliate marketing presents a great opportunity for SaaS companies looking to expand their reach and drive customer acquisition. However, success requires careful planning, active management, and strategic execution. By understanding their target audience, leveraging existing networks, and implementing flexible reward structures, SaaS companies can build a strong affiliate program that delivers incremental value and supports long-term growth. With the right approach, affiliate marketing can become a powerful driver of success in the competitive SaaS landscape.

Key Timestamps

• (0:00) – Introduction to affiliate marketing misconceptions
• (0:49) – Episode overview and guest introduction
• (1:22) – Defining affiliate marketing
• (2:06) – Why SaaS companies should set up an affiliate program
• (5:03) – When should a SaaS company set up an affiliate program?
• (8:16) – Ideal circumstances for affiliate marketing success
• (10:37) – Common mistakes in setting up an affiliate program
• (11:09) – Importance of supporting affiliates
• (11:30) – How to start setting up an affiliate program
• (15:52) – Recruiting affiliates
• (19:14) – Onboarding affiliates
• (21:38) – Payment models and rewarding affiliates
• (25:35) – Best practices for setting up a successful affiliate program
• (30:57) – Challenges in growing an affiliate program
• (34:06) – Advice for SaaS founders growing to 10K MRR
• (34:53) – Growing towards 10 million ARR
• (37:03) – Contact information for Adam Glazer

Transcription

[00:00:00.000] – Adam

A lot of brands have a perception of affiliate marketing that it’s a turnkey thing. You’re going to join a network, plug into the network, set up an offer, and affiliates are just going to discover you on their own, and they’re going to self-serve, and they’re going to activate their offers on their own, and it’s just going to scale, and you’re going to be able to passively manage this thing. Once you have a clear definition of who that customer is, what the buying journey looks like, where in their business cycle they’re buying, and what the key motivating factors are, you really have to develop that ICP What you need to do is engineer the structure to incentivize the affiliate to take more risk. If they take the rev share offer, they should be able to earn more net on that referral than if they were to take a cost per lead.

[00:00:49.920] – Joran

In today’s episode, we’re going to talk about how to set up a successful affiliate program for your B2B SaaS. My guest is Adam Glazer. Adam has been affiliate marketing since the in the year 2000 and for the last 15 years, active with his performance marketing agency, Partner Commerce. They help companies like TikTok, Google, Uber, Notion, Zendesk with client acquisition through affiliate marketing. They purely focus on B2B, which makes them perfect expert in this industry. Happy to have you on, Adam.

[00:01:19.560] – Adam

I’m happy to be here. Good to see you.

[00:01:22.400] – Joran

Good to see you, Adam. Let’s dive in right away with the basic questions. What is affiliate marketing?

[00:01:30.300] – Adam

And its core, it’s referral-based partnership marketing. We’re one party often called an affiliate. Sometimes you’ll hear the word publisher refers traffic, sometimes leads, but most often traffic to another party, that other party often being called an advertiser, sometimes a merchant, and where the customer purchases directly from the advertiser, and the affiliate earns a reward reward for referring that customer. That, in essence, is how I think of affiliate marketing.

[00:02:06.710] – Joran

We’re going to dive deeper in what rewards and how would they promote later on. Maybe one other basic question, why should SaaS companies set up an affiliate program, in your opinion?

[00:02:17.690] – Adam

I think for the same reason that any company should set up an affiliate program, which is you’re looking to grow and your options are paid media. With paid media, the costs are increasing exponentially. Every year, your CPCs and your CPMs are going up, double, sometimes triple digit. At some point, those channels are going to saturate. There’s a finite amount of paid search that you can buy. There’s a finite number of people searching for something, and there’s a finite number of impressions available for your audience. Also, with paid marketing, paid media runs an inherent risk. You’re outlaying capital without guaranteed return. You have test and learn. With affiliate marketing, in theory, there is no cap. You keep adding more partners, you keep getting more reach. It’s limitless reach. It’s also performance-based, so there’s less risk. You’re only paying when you have a monetary transaction, most of the time. Sometimes there’s other types of events that can be monetizable that don’t involve a sale, but nonetheless, it is performance-based. You’re paying for outcomes rather than just paying upfront for impressions. And you have greater control over the ROI. It’s not a biddable marketplace, an auction marketplace, where it’s designed to drive the costs up.

[00:03:44.180] – Adam

I found it to have a greater ROI than other marketing acquisition, direct marketing channels. And I think the last thing why affiliate would be preferable to other types of marketing options you have is in addition to just being able to drive a great amount of acquisition and growth, there’s an advocacy effect. You have a third party who’s advocating on your behalf. They’re driving traffic, they’re driving sales. Even when someone is not directly clicking on that link and acting on it, they’re still reading the review, the article, they’re seeing the endorsement that has an impact on the response rates and other direct marketing channels. I think affiliate marketing, the whole is greater than the sum of the parts because of that advocacy effect.

[00:04:30.990] – Joran

In the end, not everything will be attributed towards the affiliate. You will actually have a lot more going on outside of it as well.

[00:04:37.290] – Adam

The third party, it’s not a billboard advertisement where it’s sponsored by the company. There’s an implied endorsement from a trusted third party. I do business with Chase Bank, and if Chase Bank tells me that they like this vendor for this type of service, that comes with an implied endorsement. I trust Chase Bank. Chase Bank trusts this company, so there’s advocacy behind it.

[00:05:03.340] – Joran

Makes sense. And affiliate marketing is not for every company. When should a SaaS company set up an affiliate program?

[00:05:10.650] – Adam

For brands that should set up an affiliate program, do it sooner rather than later because it takes time to build a channel. It’s not an immediate. It’s not like a faucet that you turn on an instant flow. You have to develop relationships, and you have to build a pipeline of relationships. Those partners need time to get their things in market and scale, optimize, learn, and scale. So sooner is better.

[00:05:31.050] – Joran

For example, what revenue should you have? How many users should you have? Should an early stage company do it?

[00:05:36.660] – Adam

What I’ll say is this. I think that we’ve seen affiliate work best when the SaaS company has a SMB audience and skewing micro SMB, so 1-10 employees. Smb can be, people define it, up to 250, 500 employees sometimes. I think when you’re selling to larger businesses, they tend to have longer, more complex sales cycles. There’s a buying committee. Affiliate marketing lends itself better to SaaS brands that are selling to an SMB audience, also where you have a very large TAM If you have a product selling to mid-market companies, utility companies in the Southwest, it’s going to be very hard to do affiliate marketing. If you’re selling a CRM product or some desktop publishing product. I think those things that everybody needs, every business needs. There’s millions and millions of SMBs. The TAM is very large, and they’re micro SMBs, so they’re looking to publishers and influencers to help them make decisions on software, whereas a much larger company might engage with a service provider who is going to actually do the selling. Now, that’s also partnership marketing, but now you’re getting outside of affiliate and you’re getting into channel and reseller. So We said SMB, micro SMB, large TAM.

[00:07:04.530] – Adam

The other thing is where you are a platform product. What do I mean by platform product? Some SaaS brands are platform products. A CRM would be a good example. You’re going to build processes and work streams around your CRM. You’re going to develop work streams around it. There’s a whole cottage industry around a platform product to help implement, support, and develop around it. There more add-on products, there’s a platform products that end and that plug into the platform product. The platform products just tend to do very well with affiliate marketing because of that natural ecosystem of service providers that are built around it. But the add-on products have a harder time doing affiliate marketing. That doesn’t mean it can’t be successful. If you’re talking about the perfect circumstances of when affiliate is going to succeed, those would be the things. As far as where the company is in their evolution, there’s some benefit to if you have a brand and you’re doing There’s other marketing and there’s brand awareness that definitely is going to help you with affiliate for sure. But I think as long as the payout is structured correctly and the product is valuable and you have the right offer and the right incentives in place, I think you can be successful even within an early stage.

[00:08:16.550] – Joran

For people who don’t know, Tim, it’s a total addressable market, so your market has to be big enough for people to market towards. I think it all makes sense. What you’re saying is there needs to be a big market SMB, which is easier to purchase than selling the enterprise, which also makes it easier to find people who have access to the network or to the ICP you’re targeting. The more niche you go, the harder it is going to be to actually find people who have access to your ICP. That’s it. If we talk about the fun stuff, what are the most common mistakes companies make while setting up and growing an affiliate program?

[00:08:54.590] – Adam

There are a few big ones, I think, that program killers. If I I had to boil it down to the one most overarching common misconception, I think, would be not actively managing the channel. A lot of brands have a perception of affiliate marketing that it’s a turnkey thing. You’re going to join a network, plug into the network, set up an offer, and affiliates are just going to discover you on their own, and they’re going to self-serve, and they’re going to activate their offers on their own, and it’s just going to scale. You’re going to be able to passively manage this thing. That’s just not true. There was a time in the early 2000s when more B2C type brands would join Commission Junction, what was called Link Share at the time, which is now Rackuten. They were just like, turnkey, the all-in-one affiliate tracking platform and marketplace. You would join these marketplaces, and it was about scale. You would get tens of thousands of affiliates, and they would self-serve. That worked for a while, but what we learned was that it came with a lot of fraud. It came with a lot of non-incremental referrals. And the programs eventually that emerged were the most successful were ones that took an active management approach that really focused on a smaller number of more productive partners and invested in those relationships.

[00:10:11.430] – Adam

You are developing relationships, you’re nurturing those relationships. You’re actively managing the channel, you’re keeping it fresh, you’re updating offers, you’re updating incentives, you’re helping enable your partners to sell effectively. That takes a team, a human capital, it takes some technology, it takes some investment in resources. But I think if you go in with a passive management approach, it’s going to fail.

[00:10:37.060] – Joran

You say something really crucial, helping your partners to sell. I think that’s super important, right? Because if people find you If they’re not a user, they might not always know how to recommend you, or they might start recommending you in the way you don’t want to be recommended. So actually helping them to sell and provide them all the materials and details they need.

[00:10:56.810] – Adam

Training, certifications, sell sheets, battle cards, content, and then even just educating them on as your product evolves, new offers, new features, and the selling approach.

[00:11:09.280] – Reditus Ad

Are you struggling to find people and companies which have access to your ideal customer profile? At Reditus, we just launched the second side of the marketplace, which allows you to search, filter, and contact B2B SaaS affiliates which have access to the audience you’re looking for. We do this by leveraging first-party data sources. Want to learn more? Go to getreditus.com.

[00:11:30.500] – Joran

Let’s maybe even break it down. If a SaaS company is listening and they think, yes, I want to set up an affiliate program, but they never done so, what would be the first step they should take to actually set up an affiliate program?

[00:11:42.380] – Adam

The very first thing is strategic strategic plan. We call that a go-to-market plan. That begins with, for us, as a third party coming in, it would be discovery, just understanding your business, the unit economics, the audience. Internally, I think it’s just understanding your audience. Who’s your ICP? Ideal customer persona. Then once you have a clear definition of who that customer is, what the buying journey looks like, where in their business cycle they’re buying, and what the key motivating factors are, you really have developed that ICP. You can then map that back to what I call an IPP, an ideal partner persona. You can think about all the different insertion points in that buying cycle and who are the partners that are touching those customers at those critical moments moments of the buying journey and where they’re having influence. Once you’ve mapped that to your IPP, you can then prioritize. You can start to do some research and find out how many of those partners are there and who’s currently working, What other competitive products are they currently promoting? And are they likely to want to work with me in a performance basis, in an affiliate basis, and how would we engage them?

[00:12:54.580] – Adam

And what are they going to need from us to be successful? So also doing some competitive What are your competitors? How are they incentivizing partners? Looking at their backlinks, trying to figure out who’s promoting them. Also having a very clear sense of the KPIs, your key performance indicators. In other words, just how are you going to measure success? Making sure that you have a clear plan of what does success mean and how are you going to measure that? Then I think part of that, so we’re talking about the components of a go-to-market plan. This is before you can start putting the bricks on your house, you need a very clear blueprint. This blueprint, this go-to-market plan includes things like I mentioned, the ICP, map to the IPP, competitive research, defining your measurement strategy, your KPIs. Then how are you going to incentivize and reward partners? What does that structure look like? How are you going to negotiate? Because inevitably, there’s going to be negotiation. So are you just going to come out of the gate with your best offer? Are you going to have a tiered structure? Are you going to incentivize greater for higher volumes?

[00:13:58.420] – Adam

Are you going to pay only on a rev share? If you do that, is that going to preclude you from working with other types of partners? Do you need to be prepared to pay on a cost per lead? How are you going to discover and recruit these partners? How are you going to enable it? We talked about enablement and support. So if In your IPP, you’ve decided that, I really want to work with agencies. We think agencies is a great opportunity. They’re touching customers early, and maybe it’s a web development company. They’re not implementing the CRM, but they’re in a position to say, usually a small business might say to the person that built their website, do you use Google Workspace or do you use Microsoft 365? We like Google Workspace. Here’s a coupon code. Go and set it up for you a little bit. I’ll set up your record so it maps to your domain, but I’m not going to manage it for you like the way a reseller would. But a web developer could be an affiliate. In fact, we have Google Workspace as one of our clients and agencies. Let’s say in the planning process, you’ve identified agencies as a key segment of part.

[00:15:04.250] – Adam

Now you have to think about what are they going to need to be successful? Are they going to need coupons? They’re going to need coupons. How are we going to support that? By thinking through all of the opportunities and challenges and having a clear roadmap and things are prioritized and everything is measurable and you know how you’re going to measure success, then you’re going in with a plan to win rather than just ad hoc doing things in a knee-jerk fashion and failing. And then leadership says, You’ve spent six months and you’ve gotten no, but we learned all these things not to, which is a good thing, but you could have avoided that if you just took the time to go slow to go fast. The strategic plan is absolutely the first thing everyone should do, and I think it’s too often overlooked. They just start doing it without really thinking through the evolution of the program. Yeah, makes sense.

[00:15:52.250] – Joran

Once you have the plan and once you have your IPP, then it’s time to start recruiting those affiliates. You mentioned already looking at competitors, looking at backlinks or maybe define agencies. How would you go about and actually recruit affiliates?

[00:16:07.110] – Adam

First, it’s probably going to be building your program on a platform. For example, there’s a network. You’ll have that resource. You’ll be able to access that marketplace and discover affiliates, and they’ll be able to discover you. That’s one option. You can hire an agency as well who has their own network. It’s not a market marketplace like in Reditus, but we have relationships with tens of thousands of affiliate partners that we’ve worked with on behalf of Notion and Google and Klaviyo and TikTok and Uber. We know who has been successful and what types of offers, and we have those relationships ready to go for you. An agency is another option. If you’re doing it on your own, then the low-hanging fruit would be looking at your competitors, reverse engineering, trying to discover who Who’s partnering with them, and then trying to recruit partners. There are some discovery tools that you can license that essentially are automating what you could do yourself manually by going to Google and other search engine If you know the right Boolean operators and you know how to scrape results, but it’s knowing the right operators to search so that you’re finding prospective partners that are likely…

[00:17:27.310] – Adam

For instance, if I’m finding someone that already has the footprint of affiliate tracking on their site, that’s an indicator to me that they’re likely to want to work with you in an affiliate capacity. You’re going to discover thousands of sites to go after, which ones do you prioritize? You want to start to prioritize ones that are buying my competitors, work with other affiliates, trying to get some sense of their reach, how much traffic they have, so you prioritize and know which ones to prioritize in your negotiations. I think also you’re going to be putting broadly prospects into two buckets. At least we do. We have what we call managed and un. A managed partner is basically just someone that we think has scale and potential to drive real impact. A managed partner is going to be someone that we’re going to outreach to manually, that pick up a phone and call them and develop a relationship with them and handle them and onboard them onto the program. For the unmanaged, so let’s say it’s agencies. We’re going after web development agencies in the Netherlands. We’re going to acquire a list. We’re going to search and scrape together a list.

[00:18:44.430] – Adam

We’re going to use contact management tools to find the right people at those companies. We’re going to prioritize the ones that we think are managed, and those 50 are going to get called by our best partner development managers. The other 950 are We’re going to go into a sequence, and we’re going to use marketing automation to try to warm up opportunities with them. And so there’s a push and a pull to the recruiting. Yeah.

[00:19:14.610] – Joran

And It probably goes also towards the onboarding, because what I wanted to ask, do you treat everybody the same? But you gave answer here already. You have the unmanaged and managed bucket. Does it also go for onboarding affiliates?

[00:19:28.080] – Adam

Yeah, definitely. Yes, in terms of managed and unmanaged, yes. The managed affiliates, the unmanaged, we’re going to develop things to help them self-serve. We’re going to develop outtools, video content, a wiki or FAQ, ways that they can help themselves and use triggered messaging. So if they’ve been dormant for a while, they’re going to get a message. If they’ve generated their first click, they’re going to get a message. If they generated their first sale, they’re going to get a message. And so we’re trying to replicate the experience of managing them, but in a more automated way because we can’t scale to thousands of partners. The human cost, that would be too high. I would say in addition to the managed, unmanaged bifurcation, it’s also important to segment your affiliates by the type of affiliates that they are. Agencies are going to have very different needs and ways of being communicated to, and they’re going to require different enablement resources than influencers. Same with publishers, same with whatever There are groups. You want to customize it to the group, the region, managed, unmanaged, and that way, the number of touches, the types of touches, it’s all going to be customized.

[00:20:41.460] – Joran

Yeah, makes sense. They will need different things. They are going to promote you differently. You will need to provide them different kinds of materials as well.

[00:20:49.760] – Adam

Some affiliates are going to need… Most of the time, affiliates that we work with are driving traffic, so they need a link. Sometimes, certain affiliates want to refer leads leads. We don’t want every affiliate to have the ability to refer leads because you don’t want to inundate your call center or your sales force with poor quality leads. You want to reservingly enable some affiliates to have a form where they can submit leads. Making how you group affiliates and how you enable certain features, depending on in terms of the type of affiliate that they are. Otherwise, what you did, if you just open that up to everybody, you’re giving everybody this tool, and that’s going to create more pain for you. You have to think through how you recruit, onboard, activate, support affiliates in a customized way.

[00:21:38.440] – Joran

I guess then leaves only one last step, which is actual the rewards. You have leads at the beginning, you mentioned you can’t get certain partners if you don’t give them something they want. What payment models do you guys work with and what do you see is working with?

[00:21:54.310] – Adam

We like to think of it as a continuum of offers. If you think about, let’s just say, a SaaS brand, the least The least risk to the advertiser, to the SaaS brand, is the hang out on a red share. Typically, we see a percentage of year one revenue, 20%, let’s say, I would say, is the industry benchmark. It’s a 20% of year one revenue, right? That’s the least risk to you as the brand. But it’s the most risk to the affiliate because one, the sale has to happen. They drove the traffic to you, and now you have to actually close that sale, and then they can’t churn and they have to stay for a year. They don’t have to trust that you’re actually going to pay me. It’s going to take me a year to recover that money. A year plus, because really, what if it’s a 90-day sales cycle? It could be 15 months before I get all my money. But I have an upfront cross in getting that traffic to you. The affiliate is naturally going to want to get paid at the other end of that continuum. They’re going to want to be paid upfront.

[00:22:50.600] – Adam

Give me a flat fee, give me a cost per click. Then along that continuum, there are lots of different opportunities. You can pay on the signup The lead, the start of a trial, you can pay on a qualified trial or qualified lead where it’s a bona fide customer and it’s a new customer and they’re not what I call a mayfly. They’re actually activating and behaving like a real customer not just to get the incentivized elite. You could pay on the event where they become a paid customer. You could pay on a hybrid of these things. You could pay something on the lead plus a rev share, and any combination thereof. There’s a This continuum of offers, and I think what you need to do is you need to engineer the structure to incentivize the affiliate to take more risk. If they take the rev share offer, they should be able to earn more net on that referral than if they were to take a cost per lead. Put it in simple math, if they’re going to get a dollar per lead, if they take the rev share, it should back out to $2 per lead because they’re taking more risk.

[00:23:59.000] – Adam

Yes, we’ll work with you, partner on a CPL, but if we’re going to work with you on a CP, that means we’re taking more risk. That means you have to accept a lower payout, effective lower payout. You want to engineer that. Then you also want to maybe within each band on that continuum, create tiering. If you’re working with someone on a rev share basis, maybe 20% of year one revenue is the public offer. But if the affiliate is able to generate more than X MRR, then they can get 25%. If they can get to the next tier of MRR, they can generate 30% and so on. You could do that for each band of that payout spectrum. So you’re not only engineering the affiliate to decide to take more towards the rev share end of the spectrum, but you’re also creating a natural incentive for scale. If you take that approach, you’re going to set yourself up for success. If you go in and say, I’m only going to pay on rev share. This is another thing we see happen a lot where brands have a perception that affiliate marketing means rev share. Some affiliates are willing to do that and should be rewarded, compensated well if they take that risk.

[00:25:10.520] – Adam

But there are some affiliates who have great reach and the right audience strategic fit, and they can drive scale and activate immediately, but they have choices, and they’re not going to work with you on a rev share basis. They’re going to want to work with you on a CPA or CPL. I think to have a really successful robust program, you need to be prepared to engage with partners in all of those different methods.

[00:25:35.970] – Joran

What you’re saying, be flexible with the partners you’re getting in and align things with based on what they can do for you. If somebody has good ways to get to your audience, they fit your IPP, then reward them accordingly as well.

[00:25:51.080] – Adam

You have to be able to experiment a little bit. I think sometimes the challenge is that the CPL and CPA, depending on the company, you can start to overlap with, is it affiliate marketing or paid media? Should this be managed by another group that’s managing these types of deals? Those sorts of conflicts can happen. There’s also where does that budget come from? If it’s not tied to revenue, like affiliate, sometimes the way At least on larger organizations, their funding is tied specifically to revenue. They get a certain amount of fixed budget for agency and technology, but the partner payout is tied to sales. If you’re paying out on a CPL that isn’t directly correlating to sales, then that just creates a little more friction sometimes. I think the brands that have flexibility and are able to convince leadership and finance to provide some budget and they have some types of testing, different types of offers, different types of reward structures, they’re ultimately going to be more successful.

[00:26:47.940] – Joran

It goes really all into my next question. Being flexible is definitely a best practice. Do you have any other best practices when it comes to setting up a successful affiliate program?

[00:26:58.900] – Adam

You definitely need a You need a tool like yours because to be able to scale, for maybe one or two partners, you can do it without it. But ultimately, you’re going to have hundreds, thousands of partners. The contract management, the tracking, you need the amount of reporting to the affiliates to handle a clearing house for payments, a dynamic commitment, all of those things you need a tool to enable the type of approach that we would want. We could never manage a program if it wasn’t on a platform like this or one of the other types of platforms out there. Technology, I think, is key. Shamelessly advise getting an agency as well. On a serious note, I really think that with paid media, there’s a lot of people out there that have paid search skills, and there’s a lot of tools out there that automated, and you don’t necessarily need an agency for that. But I think with affiliate marketing, it’s a unique skillset, and there’s relationships, and a lot of best practices that you really need to know It will take somebody a much longer curve. I think you can fast track that by hiring an agency that knows what they’re doing and getting a best-in-class technology platform.

[00:28:11.370] – Adam

I think you’re well-served to have success.

[00:28:15.200] – Joran

I 100% agree here, so I will back you up on this. That’s what we see in our platform as well, not to make it commercial. But in the end, as you mentioned before, leverage a network of affiliates from a network or a platform like ours, but also from an agency, and then leverage all the knowledge they have.

[00:28:29.530] – Adam

No, Echoing what you’re saying. I think there’s also, again, I know we want to talk more about marketing in general, but I think one of the advantages of an agency, you have aggregate buying power. We’re negotiating with a publisher on behalf of Notion and Google and TikTok, and Uber and Klaviyo. We’re buying a lot of inventory from those partners. If we’re now working with another at Kame SaaS, we can have a little more leverage than them approaching that partner directly on their own. Not only do we have the relationship, we know who to call, they take our call, we speak to them daily, but we also can say, Listen, I need you to… I’ve got this new offer. Can you put this on position one and run it for 30 days? Let’s see how it does. That’s very hard to break in.

[00:29:16.300] – Joran

I guess for people who don’t understand, if you have certain keywords you want to be ranking for, let’s say you’re a CRM, there’s often blogs out there which are the best CRM tools or the nine best CRM tools. What Adam means here is you want to be on top position number one, and it’s always the same publishers, the same affiliates who are ranking really well on these content articles because they’ve invested a lot of money into it. If you have a relationship and you want to get yourself out there and when you get yourself listed, having a relationship like this will help you to actually get yourself listed and get you on a higher position. It is true that even all these articles are not always the best ones are at top. The one who pays the most or has the best relationship is going to be on top.

[00:29:59.660] – Adam

That’s it. Sometimes Sometimes it is really just an auction marketplace where everyone’s willing to pay the most gets in. But this is the world it’s relationship driven. Sometimes these sites that you’re always just talking about, what we call listicles, where they’re stack ranking different advertisers. Once they’ve got a successful matrix of companies, they don’t want to touch that too much, and they don’t want to upset the apple cart. You don’t want to knock somebody out of the position to test someone else who then ultimately isn’t going to be successful. And now you’ve got to back to that other advertiser. It requires sometimes relationships to say, Look, divert 10% of the traffic. Let’s test this other offer. Let’s see what happens when we move this guy to the second position. A relationship can get that economy.

[00:30:46.080] – Joran

We made it sound super easy right now to set up an affiliate program. What are some of the common challenges SaaS companies will face when trying to grow an affiliate? How can they overcome them?

[00:30:57.590] – Adam

I think some specific challenges, I think, would be incrementality. One of the biggest challenges I think that all, not just SaaS companies face, but all affiliate partners face is, how do you ensure that the affiliates are driving incremental referrals? How do you make sure they’re not driving customers you would have gotten anyway. Oftentimes, you’re giving affiliates not only a reward, like a rev share or cost per lead or something, but you’re also probably, in a lot of cases, giving them some discount that they can distribute or some value add they can distribute to their customers. So I’m sure that you’re not just discounting customers and paying a bounty to a third party or a customer that probably was going to find you anyway. And that, again, requires technology, but it also requires someone who knows how to use that technology to read those, what I call cross-channel insights, understand which partners are really just coming in at the bottom of the buying funnel and are leapfrogging credit from other partners or from other media sources. Are you overpaying some partners? And are you under-crediting other partners? There’s a lot of affiliates, particularly influencers, that are introducing customers into the buying flow.

[00:32:14.920] – Adam

If but for that interaction, that customer wouldn’t even have known about you. That was really the interaction should win the credit for the sale. But you’re rewarding this other affiliate who’s at that last click, and that’s a mistake. Being able to use technology and have someone managing your program who understands how to interpret those insights and action on those insights, you can ensure that you are not throwing money at partners that aren’t really driving incremental value. And you can reinvest those dollars to partners that are really driving incremental value because of the limits of the way you’re measuring. They’re not selling on the radar as driving immediate revenue. That’s a key thing. I think also, especially with B2B SaaS, being able to marry the front end of your program to your back end, not just looking at top-line numbers like, how many new customers did I generate and the CAC of those customers. But are those customers churning? Are they adding on new revenue? Are they growing? What’s the new ARR and the ARR growth? What does the LTV model look like from the customers from this channel? Not just from the channel, but this segment of partners or this particular partner, because that also is going to be key to optimizing your program.

[00:33:39.300] – Adam

That’s how you’re really going to build a super successful program.

[00:33:42.880] – Joran

Getting the right insights and making sure who’s actually doing the things you want them to do and making you the money long term. We are going to go into the final part of the podcast show. When we take it a bit more wide, we have to answer how you’d like. When we talk about growing a B2B SaaS, what advice would you give a SaaS founder who’s just starting out and growing to 10K money revenue right now?

[00:34:06.880] – Adam

The advice I would have given myself, there are two types of companies, what I call lifestyle brands, and then there are growth. Lifestyle brand is one where the founders are supporting their lifestyle and they’re taking a lot of the profit out to support their lives. To really get to scale and get to that breakthrough velocity, you need to reinvest. That means investing in marketing, hiring the right talent, and just keep reinvesting in growth, obsessive ungrowth, and brand, and just creating a product that’s really valuable.

[00:34:42.600] – Joran

Then let’s assume we reach game on Levered Current Revenue, we’re going to take it one step further. We’re going to grow towards 10 million ARR. Any specific advice here?

[00:34:53.310] – Adam

Once you’re at that point, then you’re going from growth to efficiency and starting to think about investing in things like maybe some tools that allow you to look at incrementality of all your marketing, which is not… That’s not directly growth. It’s a cost center. If you’re investing in some tool that’s going to have a cost without being directly tied to revenue, but it’s going to help you be more efficient in the long term. I think at that point, you’re making those investments. Whereas at the beginning, it’s growth at any cost. Even if you’re losing money, you’re winning customers and scaling, and then you get to a certain point where you’re critical mass. Now it’s okay we have to start thinking about profitability. How do we be more intelligent with our media buying? We need to invest in some tools and processes to see that and optimize. Nice.

[00:35:42.920] – Joran

Thanks. I’m going to try to summarize We talked about how to set up an affiliate program for your B2B SaaS. First of all, why affiliate marketing? In theory, there’s no cap to reach. It’s performance-based, so less risk. Works great with SMB audience, big time, and platform products work good. It will take time to set up and grow the channel. If you are going to set it up and grow the program, first of all, set up a strategy, go to market plan, go from ICP to IPP, do competitor research, set up KPIs, set up your offer, get materials needed for the affiliate, recruitment Leverage a network of affiliates, either like a platform like Relitus or from an agency partner or both. Check your competitor affiliates, leverage discovery tools. Once you have the affiliates, segment them going from unmanaged versus managed buckets, differentiate them on the gaps and needs, set the rewards up in a way where the structure is going to be that the affiliate has to take more risk but more reward as well, create different tiers, be flexible and experiment with them, and in the end, leverage technology. You need a platform to scale, to stay flexible and receive the right insights.

[00:36:48.150] – Joran

Some common mistakes, not activating affiliates or doing active affiliate management, so not actually helping your partners to sell.

[00:36:55.740] – Adam

Oh, you’re like an AI.

[00:36:57.430] – Joran

Exactly. Great. Nice. Thank you for coming on, Adam. If people want to get in contact with you, how can they do that?

[00:37:03.700] – Adam

You can just find me, you can just search my name. You can find me all major social networks. I’m Adam Glazer. Company’s partner commerce. That’s our handle’s partner commerce. My personal handle is Adam Glazer. We’d love to have a chat, so feel free to reach out and happy to meet and greet everybody out there. Good luck to everyone with your affiliate marketing and growing your B2B SaaS. This is a real pleasure, Yoron. Thank you for having me Great.

[00:37:31.120] – Joran

We’re going to make sure we’ll add the link to your LinkedIn profile to the website of Partner Coverage, so people can’t make any spelling mistakes. If you are listening, please, again, leave us a review or leave us a comment on the polls we always do. I love to hear what you think of these episodes. Thanks again, Adam.

[00:37:47.460] – Adam

Thank you. Bye, Raoul.

[00:37:52.830] – Joran

Thank you for watching this show of the Grow Your B2B SaaS podcast. You made it till the end, so I think we can assume you like this content. If you did, give us a thumbs up, subscribe to the channel. If you like this content, feel free to reach out if you want to sponsor the show, if you have a specific guest in mind, if you have a specific topic you want us to cover, reach out to me on LinkedIn. More than happy to take a look at it. If you want to know more about Reditus, feel free to reach out as well. But for now, have a great day and good luck growing your B2B SaaS.