Affiliate marketing is a performance based marketing program, where the business pays a publisher who diverts traffic by displaying the ads of the business in their own website. The publisher is paid only if the diverted leads convert and make sales. It is a risk-free program that ends in a win-win situation for both the merchant and the publisher.
- Cost Per Lead (CPL)
Your affiliates might generate good leads, but the question to be answered is whether lead generation is cost-effective. CPL is obtained by dividing affiliate marketing campaign expenditure by the number of leads obtained from the campaign. The figure can be compared with CPL from other channels in order to assess where affiliate marketing success stands in comparison with other marketing activities.
- The Conversion Rate (CR)
This is one of the traditionally used KPIs in affiliate marketing. It is a simple and direct way of measuring the affinity of the affiliate’s traffic with your brand. It measures the percentage of people encouraged to buy your products by the affiliate, provided that it subsequently resulted in sales. A word of caution here is to be careful with exceptionally high rates, which may have been caused by using dubious promotional methods to make quick money.
- Return On Ad Spend (ROAS)
ROAS is obtained by dividing the total earnings from affiliate marketing by the amount expended for the campaign. The amount expended on running the campaign includes commissions, recruitment costs, management costs, promotional literature developed etc. When there is a good margin, it means that the affiliate marketing campaign is well-received.
- Click Through Rate (CTA)
The rate in which your ads are clicked through by people, is an indication of effectiveness of ad, their purchase interest and your brand appeal to the market. If the affiliates are effective, then the CTR of your promotional ads will increase. It is important to understand that a positive CTR must have reflected in positive sales. If not, it reveals a greater distance between your product and customer expectations. Even though leads are generated, your portfolio is not able to monetize them by conversion.
- Reversed Sales Rate
A reverse sale happens when a customer, diverted by an affiliate returns the product and the sale gets cancelled. While it is true that the product-requirement match is not the problem of the affiliate, the reversed sales might have been due to low quality or irrelevant traffic. The affiliate might have over-promised on your product to encourage visits to your site.
- Percentage Of Fake Orders
A higher number or fraudulent orders from an affiliate is an insight into recruitment of poor quality affiliates. With such affiliates, it is difficult to take your affiliate marketing program to a success. It indicates a flaw in your recruitment and validation process and indicates that the program is doomed for failure.
- Number Of New Affiliates Enrolled
This KPI measures the consistency of affiliate marketing success. The emphasis here is not the total number of affiliates an organization might have. Having more number of affiliates cannot indicate greater sales. However, with an increase in the number of new affiliates, you can ensure that the program is doing well and affiliates are expressing interest to enrol.
- Average Order Value
The value of every order brought in by dint of affiliate marketing is a useful indicator of program effectiveness. How much an average order is worth, is an indicator of the buying potential of your customers. Only good affiliate networks can bring leads with amazing buying potential. With multiple products, prices and affiliates, AOV is an indication of the performance potential of your product portfolio and the affiliate marketing program
- Social Engagement
This is yet another non-revenue based metric for assessing performance efficiency of affiliate marketing campaigns. Social media engagement includes number of comments, shares and mentions earned by running the campaign. When social media makes the program influence viral, it is a case of affiliate marketing success.
- Expressions Of Purchase Intent
Every business must know what parts of its marketing plans or its products are liked by or ignored by customers. Purchase intent becomes evident when a person leafs through multiple product pages and adds products to cart. This purchase intent must be measured for affiliate-diverted traffic as well, to understand their buying patterns.
- Affiliate Profiling
Many businesses ignore this qualitative factor as long as conversion rates are satisfactory. True enough, a good CR fulfils the purpose of affiliate marketing. But for long-term brand positioning, your business must be curious to know and segment its affiliate mix, based on quality and type ; bloggers, paid search, coupons, social media or mobile. Also analyze what proportion is dormant and what is active.
- Affiliate Behaviour
You need to measure the marketing activities of your affiliates so that you can be sure that they are still interested in your affiliate program. It will not suffice to merely having your brand name or link published. Your affiliate behaviour must represent engagement and promotion, to get the most relevant traffic for your business.
- Customer Lifetime Value
This KPI has assumed recent significance and is a welcome departure from the traditional ones. Instead of measuring data that reflects only affiliate side information, the CLTV is a combination of both sales and post-sales data. It indicates the total contribution that a customer makes, by his association with the business. It is an effective determinant of brand loyalty.
- Do Not Carried Away By Vanity Metrics
Just because measurable data is available, it cannot be taken as a KPI of affiliate marketing success. For example rising bounce rates cannot mean loss of market appeal, since there may be many other reasons for customers to leave mid-sale. Similarly, a rise in rate of impressions cannot guarantee sales, since not all ad-lookers might proceed to buy.
The above indicators must be viewed from multiple perspectives and before taking any decision, the insights must be reviewed time and again. Affiliate marketing may work for some business while it might not, for the others. In short, a fully automated, streamlined and well-controlled program results in affiliate marketing success.