Affiliate marketing works.
- An old report shows 40% of Amazon’s revenue comes from affiliate marketing.
- We have a case study on how Bees Mission increased 12% revenue simply by installing Social Snowball on their Shopify store.
But how well does it work for you?
If you already have an affiliate program and want to determine how well it works for you, you need to look at the KPIs.
What Are Key Performance Indicators (KPIs)?
A key performance indicator (or KPI) is a quantifiable measure used to understand current performance and determine how well it’s meeting the key business goals.
In context of affiliate marketing, it helps you see the ROI of the affiliate program and how much it’s contributing to the end business/affiliate objectives and goals. Moreover, analyzing KPIs helps in identifying new opportunities that can boost the profits from the affiliate channel.
The 5 KPIs To Determine Affiliate Marketing Success
1. Total affiliate revenue
The revenue all your affiliates combined generate is your total affiliate revenue.
It gives an overview of how the affiliate program is working for you. From it, you can find:
- On which days you are getting maximum sales.
- Whether or not the affiliate revenue is increasing month over month. In other words, is it forming growth loops or not.
- The ROI of your affiliate program.
It’s a big-picture KPI that gives a gist of the success or failure of the program and whether it needs a thorough examination.
2. Revenue by affiliate
The revenue by affiliate KPI shows the revenue individual affiliates bring. Continuing the previous example, Dom Garrison brought $480 in revenue for the store.
Revenue by affiliate helps you find:
- How successful individual affiliates are in selling your products.
- The % of affiliates who haven’t made a single sale.
- The % of affiliates who stopped promoting your products.
Based on collected data, you can send reminder emails and offer extra incentives to affiliates who don’t promote but used to. If you are using an automated affiliate marketing app, it’s possible the customers don’t know they can promote your products for incentives — update them!
3. Sales by affiliate
Sales by affiliate show the number of orders and customers individual affiliates bring to the store.
It helps you find:
- The number of customers an average affiliate is bringing.
- The affiliates with potential.
If an affiliate is consistently bringing customers but can potentially bring a lot more, motivate them — with extra commissions, bonuses on milestones, training…anything.
On the other hand, if you are using an open-to-all affiliate program (as most e-commerce stores do), most affiliates may share their link/coupon code with close friends and bring just a couple of customers. In this case, you can decrease commissions and likely get the same results.
4. Average order value
The Average order value (or AOV) KPI of affiliate marketing reveals how much an average customer brought by an affiliate spends on the store.
AOV = Revenue by affiliate/Sales by affiliate
If the AOV difference between two affiliates is significant, one affiliate may be doing something better for your brand than the other. You can ask the other to replicate the same. It can be promoting premium products instead of the standard ones, influencing potential customers to buy X & Y products together, etc.
5. Top 10 affiliates
In general, the top 10 affiliates drive a significant amount of the total affiliate revenue. Meaning, they have massive influence over a niche audience. And therefore, you need to keep an eye on their statistics.
If any of them start promoting competitor’s products, get disinterested in your brand, or for whatever reason don’t bring in the kind of revenue they used to, consider it a red flag and do whatever you can to continue the partnership. Typically, big bonuses on reaching top milestones, commission negotiations, and such happen in the market.
In case new affiliates pop up in the top-10 list, congratulate them, strengthen your relations with them, and motivate them to keep promoting your products.
Keeping an eye on essential affiliate marketing KPIs is crucial. It helps you see the progress up until and help you strategize for further affiliate program success.
Though there are many metrics you can track, we recommend checking these five for a minimal yet thorough look:
- Total affiliate revenue
- Revenue by affiliate
- Sales by affiliate
- Average order value
- Top 10 affiliates
If you are reading this article before implementing an affiliate program and want to experience the magic of affiliate marketing for your Shopify store:
It’s one of the best Shopify apps out there!