To stay in the black, both affiliates and advertisers need to track how efficient their marketing is. If you’re a beginner affiliate or an advertiser willing to promote your offer through affiliate networks, this guide got you covered! We will go over vital affiliate marketing KPIs to help you identify opportunities to grow your profits and understand your performance and ROI.
What are key performance indicators (KPIs) and how do you use them?
KPIs are performance metrics for assessing progress toward a strategic goal or objective. They are used for estimating a business’s strategic, financial, and operational achievements, particularly in comparison to those of other businesses in the same vertical.
You can use affiliate marketing KPIs for several purposes: determining a program’s profitability, assessing your success and profitability as an affiliate, and optimizing your marketing strategy.
To Contents ↑Top affiliate marketing KPIs for affiliates
To understand your audience and which marketing channels, campaigns, and advertisers work best for you, you have to analyze your data. An affiliate’s focus on specific metrics will differ slightly from the advertisers’, but some remain the same.
For example, clicks, average order value, conversion rate, number of conversions are KPIs for affiliates and advertisers alike. Additional metrics for affiliates to consider when selecting advertisers to work with and KPIs that help affiliates review their campaign performance are also available.
Some KPIs vary depending on whether you join an affiliate program or a CPA network, but the vital facts remain the same: you need to align your investment with your profits.
That’s an example of the so-called “hard KPIs” that affiliates must comply with. The payout for each deposit may be fantastic, but you should always align it with your skills and the conversion flow. Then, any KPI will be feasible 🙂
Commission rate:
The amount or percentage an affiliate earns for driving traffic, leads, or conversions to the advertisers. It remains one of the most important KPIs to consider when choosing advertisers to promote or reviewing their performance.
Average commission per transaction (AVC):
You can calculate this KPI by dividing your total commission by the number of sales. This metric gives affiliates a quick overview of how much money they earn on each conversion they drive. In most situations, you’ll have to calculate it per advertiser.
Average earnings per click (EPC):
Commission ÷ clicks = EPC is critical when evaluating new advertisers. Furthermore, affiliates often review this KPI per advertiser to ensure that they are being fairly compensated for the traffic they send.
Average payout time:
This refers to the average number of days, i.e., the duration affiliates have to wait from the day they made a conversion to the day they receive their commission. This KPI depends on the advertisers’ validation and payment terms. You can find the average payout time in the advertiser directory so that you can make informed decisions about which offers to promote.
Void or cancellation rate:
The void/cancellation rate to the number of voided transactions divided by the total number of transactions. You can use this metric to decide whether you should continue partnering with an advertiser. Some advertisers have a high rate of cancellations due to faulty products or poor services, so you want to protect your reputation and use your resources better. However, some verticals may have a higher cancellation rate than others, so it’s worth looking at averages for different verticals.
KPIs for evaluating affiliates in CPA networks
Payout:
An alternative to the commission rate used in CPA networks. The payout for conversion is a relative KPI that assesses an affiliate’s prospect to stay profitable when buying traffic at a specified cost.
Conversion flow:
Conversion flow is the most vital KPI for marketers working with CPA networks. Though it mainly describes the expected result, it also highlights what an affiliate will be paid for. For example, if the flow is CPI (cost per install) limited to iOS devices only, the network will not approve other extra conversions.
Timerframes:
Sometimes — and it happens pretty often — affiliates need to generate leads within pretty strict timeframes. It’s a general practice for Finance, E-ommerce, and iGaming brands. The reason is the advertiser’s call center working hours.
Why do advertisers use affiliate marketing KPIs?
KPIs help advertisers determine whether a program or a CPA network is worth starting or continuing. Time as a business owner is limited: and they alone cannot write content, promote it, do SEO, and attend to customers at the same time. As a result, advertisers tend to focus on affiliate programs that will provide the best value for their money. Affiliate marketing also accounts for the third-largest marketing budget after ads and email.
To Contents ↑Affiliate marketing KPIs for advertisers
As an advertiser, it’s critical to understand the affiliate marketing metrics you should be tracking and reviewing, whether you are launching an affiliate program for the first time or have been running an affiliate marketing program for years.
1. Click traffic
This KPI indicates the total number of clicks your program received over a given period. Click traffic remains the most common affiliate marketing KPI to monitor because it shows how well your program is doing. For example, if you have a higher share of click traffic this year compared to the previous, it means your program is gaining traction. But the devil is in the details, and digging further into your click traffic figures will provide valuable insight.
By digging, we mean finding out which websites, affiliates, or platforms are sending the most traffic and which ones are falling behind. It’s an excellent strategy for narrowing down your program’s most profitable channels.
To Contents ↑2. Top affiliates
After a thorough breakdown of your click traffic KPI, you’ll see your goose that lays golden eggs, i.e., your finest and most rewarding affiliates. We recommend making a list of the top 10 somewhere on an excel sheet and tracking their performance. For example, which affiliate brings in the most revenue and traffic each month.
It can also help you find any performance dips among normally high-performing affiliates.
But it would be best if you weren’t like an overbearing boss that micromanages their employees and shame underperforming ones. To avoid losing them to your rivals, you can thank them, give them positive feedback, and share insights on how they can grow too. Remember, if they grow thanks to you, you’ll get more traffic and conversion in return with them.
To Contents ↑3. Number of new affiliates
Keeping track of the number of new affiliates you’ve approved can help you determine how popular your program is. But you should not include potential affiliates who are already sending referral traffic and sales to your site but aren’t official.
Content producers and publishers may already create content about your products and send significant referral traffic to your website. Keep an eye on strange referral traffic and UTM parameters that don’t match your record book to see if these potential affiliates bring in any unexpected sales.
This can be a gold mine for discovering new and profitable affiliate partnerships to pursue. They show how well content creators and publishers receive your program. It’s a good thing that your program is popular; otherwise, growth will stall.
Two factors affect this affiliate marketing KPI: your product/services and how you promote your program. You can expect to see this KPI grow if you’re selling a product that adds value to people’s lives.
To Contents ↑4. New customer percentage
Ensuring your affiliate program is still active is important for tracking its performance. This means you should check if the program still brings in new customers.
If not, it may be pointless to keep the program running because you’ll be wasting time and resources without making any money.
Some affiliate programs bring in new customers for years after being activated, while others may only do so for a few months.
Keep an eye on this affiliate marketing KPI to see which programs you must end and which you need to optimize.
5. Conversion rate
No other affiliate marketing KPI is more obvious to track than conversion rate. You can calculate your CR by dividing the total number of conversions by the total number of clicks. It indicates how well those clicks are converting into sales.
CR can also help you determine how many clicks can lead to a single conversion.
You should look for any differences in your conversion rate, particularly after a specific event. For example, after running a special promotion, you might want to look at the change in conversion rate to see how well it resonated with your audience.
You can also do your part to boost conversion rates. For example, you can improve your landing page design, checkout experience, pricing, segmentation, and more. These factors influence visitors to complete a purchase based on what they see.
To Contents ↑6. Average order value
To track your program’s profitability and each affiliate’s profitability, you need a very important affiliate marketing KPI: the average order value.
AOV or average check is the average amount spent by customers each time they buy your products or services. A higher average order value indicates that customers spend more on each purchase. If your AOV is low, you’ll need to change your strategy to boost sales of higher-priced items. It also aids affiliates in optimizing the shopper’s experience at the point of purchase.
Tracking other affiliate marketing KPIs like the total clicks and conversions isn’t enough. Even if your total sales currently aren’t as high as last year’s, you might’ve still made more money if your average order value is higher.
In the same faith, when an affiliate partner isn’t driving a lot of conversions, they can still be a valuable source of revenue. They might attract more high-value customers or customers who spend more money than average.
To Contents ↑7. Gross orders vs. net orders
Another important affiliate marketing KPI to track is the difference between your gross and net orders. Gross orders are the total number of sales generated by your program, while the net orders are the total number of gross orders minus all returned or canceled orders.
Monitoring this affiliate KPI might help you spot problems like fraud, logistical failure, lousy quality control, among other things. A high number of gross orders but a significantly lower number of net orders indicates a problem that needs solving ASAP.
For example, if you’re getting a lot of returns because of the same complaint, you should look into that. Otherwise, it could be a sign of affiliate fraud, where a partner uses deceptive methods to place many orders to increase their commission.
To Contents ↑8. Category performance
Track how each category of affiliates performs if you’re running a program with multiple affiliate categories. Category performance is the most crucial affiliate marketing KPI for determining which customers you’re attracting.
Let’s say that coupon websites account for the majority of your program’s revenue. This means you’re attracting more bottom-of-the-funnel customers who are already familiar with your brand and products. If your top priority is increasing sales and conversions, it’s a good sign for you.
Meanwhile, if you’re getting more revenue from content partners, it means your affiliate program is bringing in more top-of-the-funnel customers. If brand awareness is your top priority, this is a good sign.
To fit your business or program’s unique goals, you can shift your focus to a specific affiliate category.
To Contents ↑9. Year-Over-Year growth
Tracking your program’s year-over-year growth is one of the best ways to see how long it will last. Monthly sales performance is bound to fluctuate depending on seasonality and industry, so it’s not always the best KPI for evaluating program longevity. For example, gift shops and costume shops may see a significant increase in sales during the holidays. Others like swimwear stores may see an increase in sales during the summer.
Instead, look at how other affiliate marketing KPIs like click traffic, net sales, the total number of orders, average order value, and the number of new customers have grown year over year.
You can use these insights to determine your affiliate program’s raw earning potential. It will also help you determine whether your program has a consistent demand over time.
To Contents ↑10. Customer lifetime value (LTV)
The customer lifetime value can help you determine how much you can spend to acquire a customer. Many people believe that if it costs you more to gain a customer than what they spent on their first purchases, your lead generation is too expensive or ineffective. Fortunately, if a customer keeps returning to buy, the initial cost of acquisition will be offset, giving you a better lifetime value per customer.
You want to ensure that affiliates are not driving only one-hit discount shoppers but new high lifetime value customers. You can track this affiliate KPI to some extent using Google Analytics.
To Contents ↑11. Return on ad spend (ROAS)
ROAS, as an affiliate marketing KPI, equals revenue generated by affiliates divided by costs (commissions, network fees, management fees, etc.). When someone says you’ve broken even at $1.00, it means that every dollar you spend earns you only one dollar.
Some advertisers are willing to spend less than $1.00 if the revenue is recurring, while others require $2.00 or more to maintain profit margins. In either case, ROAS is an excellent metric for determining how well your affiliate program is performing.
12. Affiliate engagement
Affiliate engagement refers to the number of visits made via affiliate links, as well as the number of affiliate referrals and total affiliate conversions.”
To succeed in affiliate marketing, simply increasing the number of affiliates isn’t enough. Your affiliates must be engaged and enthusiastic about promoting your goods and services.
This serves as a reminder that we must maintain a healthy relationship with all of our affiliates to increase affiliate engagement. You must communicate with your affiliates regularly to encourage them to promote your products.
To Contents ↑13. Affiliate commissions
You pay your affiliate partners a commission for good conversions they generate while promoting your business. This is an important metric to keep track of because it affects the profitability of your affiliate program. While most brands prioritize a successful affiliate program, most affiliates also prioritize the commissions because it affects their profits.
14. Percentage of active affiliates
Some affiliate program owners panic when the percentage of active affiliates gets low. They believe it indicates an unsuccessful program. Then they start deleting affiliates who are no longer active. That is a bad decision. Some affiliates may not be able to drive conversions right now, but they could be working on it. As a result, deleting them out of the blue will irritate them.
It will also affect your reputation because they’ll spread the word of how you supposedly “backstabbed” them.
Last thoughts
Before creating their own affiliate program, advertisers should think about their ROAS, YoY growth, and conversion rates. In comparison, publishers and affiliates should find out the program’s payout, conversion flow, and timeframes.
In addition to affiliate programs, affiliate CPA networks offer high payouts for referred traffic. And these are far from always purchases, namely conversions: installs, trials, downloads, even clicks.
