Counting More than Cash

Because your affiliate marketing program is really just another way to reach customers with your products and services, the simplest, most fundamental way to measure its results is to look at the dollars. No one will fault you for considering an affiliate marketing program a "success" when it generates more dollars than it costs.

Understandably, the bottom line is a practical reference point. But affiliate marketing, like other aspects of business, is actually somewhat more complicated than counting coin. In fact, there are many intangibles that can make an affiliate marketing program successful even when it fails to produce a profit during a given accounting period.

Here are a few other factors to evaluate:

Success with affiliates

Your marketing affiliates are an important resource that contributes to the success of your company in many ways, such as beating the bushes for new prospects you wouldn't find otherwise, bringing aboard additional affiliates who will expand the outreach of your company, purchasing your products and services themselves, and serving as a contact point for new relationships that may lead to entirely new prospects, customers and markets.

So it's fair to evaluate your affiliate marketing program at least partly in terms of how well it is received among this group. Do successful affiliates want to join? Do your affiliates remain with your company over the long haul? How satisfied are they with your treatment of them, and with the marketing tools, support and services you provide them?

In survey after survey, what marketing affiliates say they value most are their earnings within a program. If your program is not as successful with affiliates as you would like, their earnings is a prime candidate for tweaking.

Affiliate selection

Most affiliate marketing programs generate the bulk of their revenues from relatively few players. One way to measure the success of your program, therefore, is to see how well you're able to identify "top producers" in their earliest stages and how quickly you can nurture or guide them along to significantly higher levels of productivity.

Try surveying your top producers. Ask them questions to determine their pattern of success within your program, and to ascertain the role your program played in making them as successful and productive as they are.

Affiliate focus

Because relatively few affiliates are likely to contribute the bulk of your program's sales, another way to measure the success of your affiliate marketing program is to evaluate how well it rewards its top earners.

For example, if a particular affiliate sends you (for illustrative purposes only) 5 percent of your total program sales, but earns less than 5 percent of total affiliate compensation, it's fair to say he or she is under-compensated. This could point to a structural weakness in the program that may, over the long haul, limit your program's success at producing revenue growth.

Affiliate education and training

Since the viability of your program often boils down to revenues, one important measure of your program's success is how well it helps affiliates bring you more sales. Sure, a profitable program in which you do nothing to help affiliates can be considered successful. But it's picking the low-hanging fruit, and such sales will eventually run out.

In contrast, a program that trains affiliates to generate increased revenues through classic sales techniques and hard work will probably remain successful, and bring you significant sales, long after all the easy prospects have been converted to customers.

Affiliate analysis

It's important to know how many affiliates are in your program, of course. But the raw number of affiliates is not nearly as important as the contribution of each affiliate to the overall program's results. So another way to measure the success of your program is to look at the metrics you're using, and see whether they are the best ones to guide management decisions toward strengthening your affiliate marketing program.

In addition, a program can legitimately be considered more successful when it has in place the tools and techniques to identify significant differences between top affiliates and those whose performance is average or below-average. Certainly it's important to know who the best affiliates are. But it's far more important to understand why top affiliates are producing so much more in revenues than everyone else in the program. It's even better if your program can create strategies and tactics for transferring the effective techniques of the top affiliates to the rest of the affiliate team.

To help with this analysis, an affiliate marketing program should be able to gather and calculate real-time data on such measures as:

  • • Raw number of hits sent your way by affiliates.
  • Conversion ratio of these hits to sales, broken down various ways.
  • Conversion ratio of these hits to "further contact" permissions, whether through newsletter sign-ups or "send me more information" requests.
  • Number of contacts required, on average, to convert these prospects to customers.
  • Cost of the affiliate marketing program per customer, and per sale.
  • Behavior patterns of these prospects and customers -- what they look at, where they visit, how much time they spend*.
  • Character of sales made by these customers, including average size of purchases, frequency of purchases, contribution to total revenue and total profit, product/service mix, attributes of the sales cycle*.

* It's even better if this information is compared with customers brought in through other mechanisms and channels.

Clearly, there may be many ways an affiliate marketing program can contribute to your bottom line without actually producing a profit this quarter. That's why it's important to look at some of the more subtle and useful ways to measure the success of your affiliate marketing program.

Robert Moskowitz is a consultant and author who speaks and writes frequently in the U.S. and abroad on such topics as white collar productivity, knowledge management, practical use of the Internet, telecommuting, caring for aging parent, and business applications of information technologies. He has authored several books, including "How To Organize Your Work and Your Life," and "Parenting Your Aging Parents," and teaches several online courses.