Brands can measure several metrics that help them assess the success of their affiliate program, such as sales or conversion rates, average order values (AOV) and revenue per partner.
New customers are essential to any business's survival. Recognizing which affiliates are leading the charge can help guide better advertising placement decisions and marketing campaigns.
1. Conversion Rate
Conversion rates are an integral measure of affiliate program success. They represent the number of customers who successfully convert from one stage of your customer acquisition funnel to another - for instance signing up for free trials or purchasing products after visiting your website.
This metric is calculated by multiplying the number of defined actions performed over a specified timeframe by the total amount of visitors during that period. It's an invaluable measure that should be closely tracked over time.
An effective KPI review should take place weekly or monthly, to identify any significant deviations and investigate further - for instance if conversion rates seem significantly higher than expected during one particular month, it should be investigated whether that could be attributable to new visitors or another external factor.
2. AOV
Average Order Value (AOV) is another critical performance indicator that should be monitored closely. This metric reveals how much customers spend on your products, providing insight into customer outreach and loyalty efforts.
AOV can also serve as a reliable indicator of affiliate program success. When there's an increase in AOV, that could be an indication that marketing strategies are paying off.
Monitoring AOV on a weekly or daily basis can also be useful in quickly recognizing any dips and peaks, so you can respond immediately to changes in customer behavior or optimize outreach strategies, helping your business expand in both the short and long term while simultaneously lowering customer acquisition costs and improving margins.
3. Revenue
Revenue metrics measure how many sales or transactions were generated by an affiliate program, and brands should review this KPI regularly to ensure it's driving revenue and reaching its goals.
Revenue growth over time is another essential metric to monitor as it provides an accurate representation of a program's long-term success. Unfortunately, however, this metric can be unpredictable; seasonality and industry can have a dramatic effect on sales performance (for instance, gift shops may experience increased sales around holidays while swimwear brands often see an uptick during summer sales periods).
Tracking individual publisher performance can also help your business identify which affiliates are contributing the highest revenues and prioritize recruitment efforts while rewarding top performers for their hard work.
4. CPA
Revenue per affiliate over time allows advertisers to identify high-performing affiliates and nurture them, as well as spot underperforming affiliates and take necessary actions accordingly.
Average customer purchase values, calculated as total spending divided by number of sales, provide an essential indicator for identifying high-value customers and drawing them closer to your brand.
Acquisition Rate of New Customers via Affiliate Links The rate at which new customers are acquired from affiliate links indicates both the effectiveness of your marketing campaign strategy and quality of product/service offerings. It is particularly crucial for subscription-type businesses. Tracking Recurring Revenue over Time to understand Return On Investment.
5. Revenue per Partner
Metrics that measure your affiliate channel's ability to attract new customers should be tracked closely as this provides insight into individual publishers' performance and can help you determine whether or not their efforts warrant your time and energy.
Simple metrics that enable you to assess your return on investment in an affiliate program are Profit per Affiliate Monthly and Income per Affiliate Monthly.
However, unlike some affiliate metrics which can fluctuate depending on seasonality or economic fluctuations, this one remains more stable and can help determine your program's longevity. It is calculated by dividing total commission received by total clicks received; an increased click-through-rate suggests a successful affiliate program; but for optimal performance you should also focus on key performance indicators like clicks and revenue as KPIs.
