Use Site Sales to Peg Program Performance – By Julie Stepkowski

by Colleen on June 8, 2015

There are basic, key performance indicators that every affiliate marketer is familiar with: revenue, cost per sale, average order value, conversion rates. Increase this, decrease that, and optimize your program – great!

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But, where most marketers get stuck is having insight into when good is good; and when good is bad. How big should an affiliate program be? Is it under-performing? How much revenue can I expect from my affiliate program? These are the questions we hear time and again from our clients.

Here’s a tip: use your total online site sales as a benchmark for your affiliate program’s potential.

Understand the nuances of pegging program size to your total online revenue, and you can set realistic expectations for your affiliate program in 2015.

According to our benchmarking, retail-based affiliate programs, range from 12% to 25% of total online site revenue. Programs that push the higher end of this range usually have fewer restrictions, such as an open trademark policy, available coupons and discounts, and aggressive commission rates.

Merchants who use affiliates to replace or supplement other marketing channels, like retargeting, email, and price comparison channels; fall toward the higher end of the range as well.

In contrast, programs will lean toward the lower end of the range if strict (and rigorously enforced) trademark bidding policies are in place, few promotional offers are available, or if there is a restriction on the types of affiliates allowed into a program.

If a program doesn’t fall into this revenue range, it should raise a red flag.

If a program is below this range and looks to be under-performing, it is a sign there is more revenue out there for you.

Focus on the individual optimization of top affiliates as well as overall affiliate recruitment. Also, ensure that you review your network configuration to ensure that sales are tracking properly.

If a program exceeds this revenue range, take a closer look at the numbers before presenting the success to upper management. A higher-than-average percent of total online revenue often signals compliance issues with unmonitored trademark violations, duplicate order issues, or overall fraud in the program.

Understanding the levers that expand and contract affiliate program revenue can help marketers have a better gauge on 2015 affiliate expectations.

Julie Stepkowski manages affiliate programs at Schaaf-PartnerCentric.

This article appeared in issue 30 of FeedFront Magazine, which was published in April 2015.http://issuu.com/affiliatesummit/docs/feedfront-30

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