Are You Ready to Scale Your Affiliate Program?
Affiliate marketing is designed for sustainable scale. Instead of painstakingly building your digital brand over time, you can recruit established partners to promote your products today.
But more than any other channel, an affiliate program needs to be built on a strong marketing foundation. Presenting a weak offering to potential affiliates will make them reluctant to work with you. And without adequate support, even the ones that do sign up won’t be able to perform at their best.
Before attempting to scale your affiliate program, ensure that you’ve nailed the fundamentals. In particular, make sure to think through the 4 Ps of affiliate marketing success. Get to know these below.
The most important factor for success is to have a compelling product that customers love.
In financial services, the modern baseline requirement is an end-to-end digital offering, including:
- A fully or primarily digital new account signup process
- A web and mobile app with comprehensive self-serve options
- Access to online support via email and/or chat
Without a complete digital product, conversion and retention rates are likely to be negatively impacted. This will make it challenging to attract and incentivize affiliates to promote your product(s) effectively.
If your product clears that minimum bar, the next step is to assess how much value your customers are getting from your product. This can be done by calculating your customer retention rate and customer lifetime value, as follows:
Customer Retention Rate =
[(Customers at End of Year – New Customers Acquired) / Customers at Start of Year] * 100
Customer Lifetime Value =
Avg. Monthly Value of Customer * Avg. Retention Time in Months
These two metrics are key for understanding how compelling your product actually is, as measured by objective financial results. Since they are both tied to retention rather than traffic or conversions, they give you a snapshot of product quality, independent of marketing program performance.
If your product performs well on both these metrics, affiliate marketing is likely to be a cost-effective channel for you.
We’ve written about the importance of having a good foundational marketing strategy before. But getting clarity on your marketing processes becomes even more critical when you’re scaling up an affiliate program.
Benchmarking against competitors is a great way to tell if your processes are up to par. Be sure to monitor their advertising tactics via digital channels and what their customer onboarding flow looks like. If you’re using a full-service network, you can even ask your account manager what a healthy range for cost per lead (CPL) and cost per acquisition (CPA) deals would be in the market.
Unlike CPL and cost per impression (CPM) deals, cost per acquisition (CPA) deals are based on customers making it fully through the funnel. Brands with weaker customer journeys end up having to compensate with higher CPAs or end up spending too much on CPL deals.
If you find that you can’t profitably match going market rates for CPA deals (or CPL deals), then you probably have to improve your processes. A good place to start would be our article on the financial customer journey.
Note that this litmus test works especially if you offer CPA deals. Because you’ll only be paying per successful signup, affiliates will evaluate your ability to close the referrals they send your way. And if they find that your weak processes are leading to a poor conversion rate, they may eventually stop doing business with you.
One major benefit of affiliate marketing is the opportunity to work with a diverse group of partners that provide third party endorsements of your company. This is especially valuable in financial services, due to the central importance of reputation and trust in overall brand perception.
When starting out, it’s generally best practice to give a chance to all interested affiliates. This is because affiliate results typically follow a Pareto distribution, with 80% of revenues coming from 20% of affiliates. But it can be challenging to determine who those affiliates will be in advance.
As your affiliate program matures, patterns will begin to emerge among successful affiliates. At that point, it becomes useful to identify the key qualities you want in your ideal partners. These could include:
- Traffic and brand recognition
- Audience demographics
- Market positioning
- Complementary product portfolio
- Partnering commitment
At the same time, remember that an affiliate partnership is a two-way street. You should also carefully consider what contribution you can make to your affiliates. Here are some possible value propositions to consider:
- Does recommending your product add value to their customers?
- Does your product help them be perceived as a trusted advisor?
- Does your product complement the rest of their product portfolio?
- Does your product improve their prestige in the eyes of their customers (e.g. exclusivity, cutting-edge products)?
The more synergistic the relationship, the more committed your affiliates are likely to be. Since the majority of revenue is likely to come from a handful of partners, it’s worth taking the time to find the right ones.
Time is often the key constraint in scaling an affiliate program. If you only have ten affiliates, it’s easy to track all the required information in a spreadsheet. But as you grow to hundreds of affiliates and beyond, you’ll need a more robust solution.
An affiliate marketing platform or network can help you scale more easily by streamlining the affiliate management process and giving you access to targeted partnerships. A good platform should allow you to automate:
- Tracking, with a one-time platform integration, rather than having to manually set up tracking links for each new affiliate;
- Commission Management, with the flexibility to handle a wide range of commission structures, including custom commission deals for your top affiliates;
- Payouts, which are typically automated on a regular monthly or quarterly schedule;
- Real-Time Reporting, which your affiliates can use to rapidly iterate and optimize their performance; and
- Contract Management, handled once at a program level, instead of having to draw up an individual contract for each affiliate partner.
Apart from these technical features, you should also look for a good strategic fit. Three key questions to ask potential affiliate platform provider(s):
- What verticals or industries do you specialize in?
Finance is a very specialized sector, and a bank or insurance company is unlikely to do well in a network that is more broadly focused on retail, health or beauty consumers.
- What types of affiliates do you have in your network?
Some types of affiliates will only be effective in specific industries. For example, financial brands will want to avoid networks that primarily cater to coupon code or cashback loyalty sites.
- What type of support can I expect from you?
Due to the complexity of financial services, a one-size-fits-all, self-serve model is unlikely to work well for many merchants. If that’s the case for your company, it might be worth selecting a platform that offers a full-service option.
Fintel Connect is an affiliate marketing platform focused solely on the North American financial sector. We offer both full-service and self-serve models for Canadian and US banks, insurers and other financial service providers.
If you’d like to learn more, please contact us here.