An affiliate program is an organized system that enables affiliate partners to drive traffic to your properties through tracked links and earn a cut when that traffic converts. Affiliates come in many different forms and they can include influencers, content creators, publications, membership associations, and technology vendors.
In an affiliate program, an online merchant pays affiliates to send them traffic. There is a payout to the affiliate for that traffic, and then if the traffic buys the product, the affiliate receives a commission. An affiliate program is a cost-effective marketing strategy that works for both B2B and B2C brands.
Example: Lisa runs a popular software blog. Loop, a software brand, pays Lisa to place an affiliate link on her blog. When someone buys Loop's software through the link, Lisa gets a payout. Yay!
An activation rate is a metric used by companies to determine when their users are achieving value. Your partner program’s activation rate is the percentage of partners that sign up for your program that gain or add value in the program. What is defined as activation can differ between programs, but it's often a first sale, first referral, or revenue achieved over a set number of months — something that indicates the partner is likely to stay profitable or engaged.
To determine your activation rate, you can take the number of partners who successfully met your activation metric, divide it by the total number of partners who joined your program, and multiply that result by 100.
Also see: Activation
Example: Soltech measured their activation rate to be 30%, which was lower than their target of 60%. They decided to revamp their partner onboarding process to better prepare their partners to sell.
Affiliate tracking is technology used to track the traffic, referrals, and/or sales that come through a specific partner. The purpose of affiliate tracking is so that a company knows which affiliates drive favorable business outcomes (in other words, attribution), and can reward these individuals accordingly. UTM links are the most common mechanism for affiliate tracking.
Affiliate tracking can also be achieved using promo codes. For example, if an influencer can offer his or her audience 10% off a 1-year software subscription with the promo code PERCY10, this allows the company to track precisely how many sales Percy drives. This then enables the company to determine which partnerships are most lucrative and invest in building these relationships and enabling them to do their best work.
Example: Through affiliate tracking, Partner Marketing Manager Lisa identified five partners who were driving 60% of PekoeCorp’s partner-sourced sales each year. She decided to send them each a gift basket of PekoeCorp swag, fancy chocolates, and red wine.
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