Face it; running an affiliate program can be time-intensive. Whether you’re a marketing manager directly overseeing your campaign, are using an outsourced solution or a combination of both—understanding and focusing on the right key performance indicators (KPIs) from the start can mean the difference between a successful versus a not-so-successful affiliate program.
In this article we share our top three KPIs for driving financial affiliate program growth to help you optimize your performance and spend your efforts in the right areas. We’ll also walk you through what each indicator means, why it matters and how to use it to grow your program. Ready? Let’s get started.
#1. CONVERSION RATE
What it is
The IAB (Interactive Advertising Bureau) provides one of the simplest definitions for conversion rate as “the percentage of users who complete a desired action.” Typically reported on monthly, conversion rate is calculated by dividing the number of leads by the number of clicks (number of leads ÷ number of clicks = conversion rate).
Why it Matters
By measuring clicks against desired customer action, conversion rate puts clicks into context thereby making it more valuable (and informative) than click rate data alone.
Tracking conversion rate will help you:
• Identify your most lucrative partners, showing which affiliate partnerships and campaigns bring in the best traffic so you know where to invest in expanding.
• Identify your most lucrative digital channels, because you can compare a standardized rate across channels against affiliate channels.
• Identify high potential affiliates, that may only need small adjustments to their program to yield big payoff
How to use it to help grow your program
You can use conversion rate to help you identify breaks in your customer journey and show you areas for improvement. Very low click rates may signal poor ad placement and/or execution or the need for landing page optimization. Making necessary adjustments can prevent losing valuable clicks that could become leads and ultimately convert to sales.
Other ways you can use conversion rate are to:
• Compare high versus low conversion rate affiliate promotions, to see which placement types and techniques best drive leads for your business (ex. placement, ad, information presented, traffic demographic)
• Identify high traffic, low conversion rate affiliates as high potential and target your efforts to these affiliates to improve their promotional efforts and customer experience
• Gauge promotion and landing page impact on prospect interest level at various points in the customer journey.
But, don’t rely solely on conversion rate alone; use it in tandem with the next KPI—approval rate to gain deeper insights into your affiliate program performance.
#2. APPROVAL RATE
What it Is
Approval rate is defined as the percentage of approvals for a particular product such as credit cards that require a screening process. Typically reported on monthly, approval rate is calculated by dividing the number of approvals by the number of leads (number of approvals ÷ number of leads = approval rate).
Why it Matters
While a high volume of leads can be the sign of a healthy program, approval rate comes into play when the desired outcome is qualified prospects that become customers.
Approval rate compliments conversion rate by:
• Showing the quality of leads—adding dimension and value to conversion rate numbers. A high conversion rate without a fair approval rate is not necessarily delivering value.
• Helping identify the most lucrative partners and digital channels. Much like conversion rate, approval rate shows you where to best invest your energy.
• Telling a more complete story, of where to focus your partnership cultivation and program growth efforts.
• Giving a greater degree of targeting. A low conversion rate but high approval rate is an even more targeted way to identify and segment high potential affiliates.
How to use it to help grow your program
A low approval rate may signal a mismatch between the product offering and the affiliate audience it’s being offered to. Use this opportunity to correct course; communicate the target customer profile to your affiliate so that they can adjust their messaging and positioning.
Approval rating can also be used to:
• Help affiliate managers work with an affiliate, to better understand their audience demographics and give strategic recommendations on more suitable products.
• Evaluate affiliate’s ability to drive targeted and quality traffic. Instead of changing the product side, you can work with the affiliate on its traffic acquisition efforts to generate more targeted leads
• Guide positioning changes or improve product information on the site for better alignment with the product. This increases the chances that the affiliate is ready to convert when gets redirected from click.
• Identify lack of landing page optimization. A high conversion rate but low approval rate can signal where the origin of the low approvals may lie (i.e. too many steps in the buyer journey which is leading to bouncing).
In contrast to conversion rate, approval rate is a more specific quality metric pointing to the fit of the affiliate’s site and its traffic, with the product. Be sure to assess the brand fit on product-level and partnership-level and look at the affiliate’s method of acquiring and screening traffic.
Look closely at cases where approval rating is really low to avoid a poor fit that could potentially hurt your reputation. Make sure to monitor the messaging of the promotion to ensure it is accurate and not misleading. Depending on the situation, it may be worth re-assessing the partnership as a whole for alignment with the affiliate’s brand and yours.
Or, very low approval rate may signal that it’s time to sever the partnership altogether rather than continuing to invest heavily in an unfruitful partnership. Re-allocate your resources and time into more promising relationships. Looking at approval rate together with our next KPI—program growth – can help you make this decision.
Watch this space to read all about the third very important KPI that is key to driving the growth of your financial affiliate program! Part 2 is coming soon.
Want to know more about how to implement these KPIs using the Share Results platform? Get in touch!