Smart Affiliate Recruitment: Affiliate Lifetime Value – By Teodora Dobjanschi

by Jenae Reid on February 2, 2017

The value an affiliate has in a specific program is one of the key metrics a manager should measure in order to make the right decision for growing its affiliate channel.

Recruiting the wrong affiliates will inevitably lead to poor engagement, low activation rate, and a high number of latent or dormant affiliates.

Calculating value:

To find the overall lifetime value of your affiliates, you should split the total revenue generated by your affiliates to the total number of registered affiliates.

For example, if the affiliates have generated a total revenue of $100,000 in the past year, and there were 4,000 registered affiliates in the program, the overall lifetime value of an affiliate in this program would be $100,000/4,000 = $25.

TIP: Remember to take into consideration the revenue, not the volumes they are generating, as $25 would be the maximum amount to be paid per lead for recruitment purposes.

Finding the right match:

To find the right affiliates and calculate their lifetime value, you should look at those that are active in your program.

For example, if you have 400 active affiliates and they have generated $100,000 revenue in the past year, the lifetime value of an active affiliate would be $100,000/400=$250.

Review each category and see where most of the active affiliates are from, and what are their promotional methods, and particularities. This will help you identify the right affiliates for your program and set smart recruitment tactics based on real data from your program.

TIP: Taking a closer look at the affiliate lifetime value gives you an insight about the state of your program, and the status of your affiliates,  while at the same time it provides data about top and potential affiliates or the ones that are definitely not a good fit and should be removed.

Planning ahead:

In your analysis you may find out that affiliates from a specific region are the ones that have the highest lifetime value in your program, and also that these are usually using a specific promotional method (i.e.  content or PPC affiliates). This is the data you need to know in order to focus your recruitment budgets in the future on the right affiliate categories, and have full control over your budget.

At the same time, you may find that you have affiliates from a specific country or category who are not productive at all and are not a good fit for your program – you may want to remove these from future recruitment campaigns.

Nevertheless, keep in mind that the same affiliate can rank higher with a specific advertiser, and have lower results with a different one. The affiliate lifetime value is not the general value of one affiliate, but rather the value they have with a specific advertiser.

Calculating the lifetime value of your affiliates gives you great insights about your program that will help you optimize, grow, and manage your affiliate channel.

 

Teodora Dobjanschi is Senior Affiliate Recruiter at Avangate Affiliate Network.

This article appeared in issue 37 of FeedFront Magazine, which was published in January 2017. https://issuu.com/affiliatesummit/docs/feedfront-37

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