Affiliate marketing has been around for close to 20 years and is a well-established channel for driving new sales to a merchant’s site. But with advances in technology, consumer habits have changed and the affiliate industry has shifted with them Tweet . Today, different platforms and categories of affiliates have emerged that speak to specific verticals better than others.
Running an affiliate program for a software or SaaS merchant has challenges unique to the category. The affiliate offer is often structured as a percentage of sale, but the commissions are high in respect to other categories. A typical commission will range from 30% to 200% of the initial sale, with trusted partners seeing 2x the listed commission rate. Software sellers often see more ROI of affiliate sales on the recurring revenue of renewals or monthly subscriptions, as opposed to the static sale. When setting a commission rate, and ultimately reviewing the ROI of the affiliate channel, the merchant should take into account the lifetime value (LTV) of the new customer. In addition, the nature of this category often offers less transparency into the referral source of a sale so fraud controls must be fortified.
A simple way to deter fraud is to structure the commission payment on a sale, as opposed to a free trial. If the latter is chosen, be diligent in monitoring the conversion rate of free trial to paid subscriptions on a per-affiliate basis.
For a program to be successful, a software merchant must have active management for their program. If not, program growth will be stagnant or the merchant could lose thousands in fraudulent commissions.
Schaaf-PartnerCentric, a premier affiliate program management agency, sees an average 231% lift in revenue and a 14% reduction in the cost of sale within three months of taking over an under-managed program. This can be attributed to higher quality recruitment, advanced commissioning strategies, and better compliance measures.
Your choice of commerce platform is also important. Some are just set up better to work with affiliate programs. The Avangate platform, for example, offers features that help with active affiliate program management, including:
- The Custom Commission List section. This allows a software vendor to segment commissions by affiliate or groups of affiliates. With sophisticated commission segmentation strategies, and the capabilities to execute them, a merchant can align the value of an affiliate’s traffic to its commission rate, incentivizing top partners to send more, and allowing a continued partnership with smaller affiliates.
- Communication tools. It’s also beneficial to the program to be able to easily communicate with your affiliates on a mass as well as an individual level. This ensures your products stay top-of-mind and informs your partners about new product launches and pricing updates. Avangate allows access to publisher contact information as well as a newsletter service that allows you to easily update your partner base.
- Power Affiliate section. Program health relies heavily on new affiliate recruitment. With Avangate’s Power Affiliates section, you can find high-volume partners to easily push your affiliate offers, and hopefully start a long-term relationship.
Creating and growing a successful affiliate program requires consistent partner development, great communication, and fraud controls Tweet. Contact us today to discuss if launching an affiliate program is right for your business.
