How well do you know what’s happening with your affiliate partner program? The answer to that question will depend on how good your data is and how well you keep track of it.
If you’re still getting things together, no sweat. Partner programs take time and effort to build and getting proper reporting in place can be hard to do, especially if you’re the company’s first affiliate partner manager.
In this article, we’ll break down the key metrics you should pay attention to. We spoke to Tanner Braden, Affiliate Marketing Manager at PartnerStack, to get a good understanding of how to think about metrics for your affiliate program.
Related: Learnings from my first quarter as a B2B affiliate manager.
Role of an affiliate marketing manager
An affiliate program often starts off as something that people are running on the side of their desk as part of their other marketing or sales responsibilities. When these employees become curious about the data and can take action on the revenue opportunities, it can become a valuable revenue channel and require a full-time headcount.
But as we’ll discuss in this article, it’s typical for affiliate managers to realize that there’s more value in these programs – and more opportunities for growth – than meets the eye. And gathering the right metrics can help you make the case to executive leadership that your program deserves more funding.
So to give you a solid foundation, here are the top metrics you should be tracking (plus, those that you can leave out for a while, at least according to our expert) as an affiliate program manager.
Understanding your customer journey
Before deciding which metrics to pay close attention to, it’s key to start with a strong understanding of your customer journey. This journey will look different from business to business, but essentially, it’ll come down to different events or actions that people take, for example, a click, sign-up or sale.
Overall, your customer journey helps you put the metrics you track into context. It also helps you decide which metrics are important and which you can worry about later as your partner program grows.
Top 10 affiliate metrics to track
1. Affiliate revenue
Incremental revenue is earnings generated from new business initiatives. It can be a satisfying metric to track, because it’s the revenue that you can directly attribute to your own activities, in this case, the total earnings from your affiliate program.
That said, Braden recommends being crystal clear on what you’re defining as affiliate revenue. “It is very difficult to rely on data to differentiate between incremental revenue and what I like to call cannibalized revenue, where you're basically just cannibalizing revenue from other channels and saying that your channel drove it instead of their channel,” he explains.
In fact, even if your affiliate program drove that revenue, there are still instances where it shouldn’t be counted.
“Partnering with an affiliate that is just a coupon site —also known as voucher sites —that's not incremental revenue,” explains Braden. “If they are searching for a coupon — they have already decided, they've already discovered you. They're just trying to save some money. So that affiliate is not driving incremental revenue.”
See more: How to set strategic partnership KPIs to drive revenue in 2024.
2. Overall revenue
This is the money that you’re making from your entire partner program. Overall revenue tells you how effective your entire ecosystem is and which channels are bringing in the most money. This information can help you advocate during budget meetings and compare your affiliate marketing to other paid marketing strategies.
Braden believes that an affiliate partner program should be run like any digital marketing channel — paid search, paid social or display programmatic display. “They know the customer journey, they know the costs per key event. They know revenue. That's how they run those channels. Affiliates should be run the same way,” advises Braden.
3. Cost per acquisition
This metric will depend on what action is most important to you based on your strategy. For example:
- Shorter sales cycle: Cost per acquisition will likely be your target KPI
- Long sales cycle: Cost per click may be the most important metric to your program
The goal when it comes to tracking the “cost per” is to understand how efficient your operations are.
“You should understand the cost efficiency metrics for each key event along the customer journey,” says Braden. “You should also know your revenue per each key event. That is how you can calculate if your ROI or ROAS is returning on ad spend.”
Braden explains that the goal is to have an ROAS or a ROI above one, which means for every dollar you're spending on a click, you are earning more than a dollar of revenue.
See more: 8 affiliate marketing tools to streamline your affiliate management.
4. Impressions
Impressions tell you how many times a digital asset showed up on someone’s screen. This metric is not about action, since something will register as an impression whether someone has clicked on the ad or not. While some argue against tracking this metric, it can be helpful if you have the right context.
Impressions can help you understand the reach of your campaigns in two areas:
- To recruit more partners or affiliates to your program
- The effectiveness of individual affiliate’s networks
When you compare your clicks against impressions, you can see whether your affiliates have the right audience. For instance, if you see that you’re getting a lot of impressions but few clicks, it may be a sign that you’re not working with affiliate partners who are aligned with your ICP or that your marketing materials need adjustment.
5. Clicks
Clicks are the number of times someone has taken action on a digital asset that you’ve shared online. Your clicks tell you more than just whether your affiliate marketing efforts are going well — they also tell you whether the language you’re using is resonating with your audience.
While impressions tell how many people you’re reaching, clicks will tell you how often your ad is resonating with that audience enough to compel them to take action. This is a useful metric to track both for marketing your affiliate program to partners and for getting new customers through your affiliate program.
6. Conversion rate
Many businesses – and sometimes different campaigns within a business – will define their conversion rate differently.
If you have a relatively short sales cycle you may define a conversion as an actual sale. On the other hand, if you sell enterprise technology with a big price tag, you may have a longer sales cycle. In this case, you might define someone downloading a white paper or booking a demo as a conversion.
Conversions tell you whether you’re reaching the right audience. For instance, if your impressions and clicks are high, but people quickly bounce when they get to your page, then it’s likely that something about the landing page or offer is not meeting their expectations.
You might also like: How to build a revenue-driving partner program landing page.
7. Reverse chargeback
This affiliate metric refers to how many credit card charges have been returned to the consumer after they’ve disputed a transaction. Is it worth tracking for an affiliate program?
“Yes, depending on your program and sales motion,” explains Braden. He shares that for those with a high volume, low ACV program, then it’s particularly important to understand how this metric is impacting your revenue because these types of programs have thousands or hundreds of thousands of small purchases. “They typically have a higher chargeback rate that can eat into the cost efficiency and the ROI of your program.”
Braden also says chargeback rates are important to keep in mind if you’re paying out commissions on any pre-sale events. But for those with rev share or cost per acquisition offers, it is less important to watch.
8. Customer lifetime value
Customer lifetime value (CLV) is equal to the customer’s value multiplied by the average customer lifespan. Tracking CLV as part of your affiliate program metrics allows you to see which channels and partners bring in customers with long-term value.
“You should understand your expected revenue for every key event along the customer journey,” says Braden. “Let’s say I have an affiliate who drives a thousand sign-ups at $10 per sign-up. The average revenue per sign-up is going to be dependent on your customer lifetime value. That's how you calculate your revenue.”
9. Active affiliate rates
Percentage of active affiliates tells you how many affiliates have sent out links and promoted your products within a given period. It can be a helpful starting point for developing activation or re-engagement campaigns. That said, Braden says its importance depends on the maturity of your program as in the early days, it may not matter so much.
“When you have a really big robust mature program, yes, you're looking to drive incremental improvements, so trying to ramp up the percentage of active partners makes sense. But at the beginning, the real goal should be driving the volume of key events along the customer journey with cost efficiency.”
10. Total sales by number of top affiliates
Knowing who your top performers are is a great way to make strategic decisions about your overall affiliate program. If you find that 80 per cent of your sales is coming from 15 per cent of your affiliates, that’s excellent data that tells you where you can ramp up revenue. You can use this information to create tiers in your affiliate program where the highest performing partners are eligible for bigger commissions, thereby incentivizing them to invest even more into promoting your products.
As Braden explains, this metric also helps you understand the composition of your partner program. He also recommends not worrying too much about this if your affiliate program is still young.
“What that metric indicates is how diverse and robust your affiliate program is,” says Braden. “Ideally, you don't want to be too dependent on just a handful of affiliates because then something can change and you lose a quarter of your pipeline.”
Tracking the right metrics can help you speak the language of profitability to your partners
Just because a company decides to join your partner program, doesn’t mean they’re going to invest in promoting your products. Partners are always evaluating which programs bring in the most money for them, either based on the commission amount or based on the amount of resources the program manager makes available to them.
If you can understand — and speak — the metrics they focus on, it becomes easier to convince them to invest more energy into your affiliate program.
