If you’re familiar with marketing, you’re aware of how important are key performance indicators (KPI) in every advertisement, campaign, and promotion you run.
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KPIs in affiliate marketing can assist you in identifying whether or not an affiliate campaign is successful. Knowing which key performance indicators to monitor is a critical step in this approach. Some marketers, however, get stuck monitoring the wrong KPIs that don’t indicate any measurable growth/success.
Before we get into the specifics of what KPIs to track in your affiliate marketing business, let’s briefly mention them all.
Here are the top 10 metrics (+ one bonus!) that you should focus on when evaluating the performance of your affiliate business.
- Net monthly sales
- Earnings per click (EPC)
- Top 10 affiliate partners
- Sales per affiliate
- Customer lifetime value (LTV)
- Organic traffic
- Quality of traffic
- Average order value (AOV)
- Conversion rate
At the risk of stating the obvious, revenue is the most crucial KPI for affiliate marketers. However, it is not always clear because many affiliates become concerned with metrics like traffic, clicks, or even email subscribers without understanding how these things affect revenue. Sometimes getting targeted traffic is more important (and valuable) than getting more traffic.
That is why most affiliates choose to publish product reviews or product comparisons; they convert better than any other content. It usually works well for both parties because the affiliate draws consumers with increased purchase intent.
Top tier affiliates are usually distinguished by two factors:
- a (higher) number of sales
- a (higher) average order value.
This appears to be the most basic KPI but bear with me while I explain. Of course, you want to monitor clickthrough rates or views, but if they are not also translating to sales, your affiliate offer may not be relevant enough (or your audience may not be finding the offer relevant).
I see many marketers and bloggers investing extensively in new content for their sites to increase traffic and pageviews with no specific plan for increasing revenue.
It’s easy to become distracted with marketing, but at the end of the day, it’s a company, and your primary goal should be the profitability of your job.
Net Monthly Sales
Net Monthly Sales refers to the net revenue produced by the affiliate channel after affiliate commissions are deducted. If affiliates focus on low-priced goods, the average order value can have an impact on net sales. Significant drop or raise in monthly net sales should be studied and documented.
The most significant (and obvious) affiliate marketing KPI is “clicks” on the affiliate link.
This is the amount of exposure your products are obtaining through promotional channels. This metric can be compared to the number of sales to determine the success of your affiliate marketing. There may be a disconnect if you have a high number of clicks but just a tiny % of sales. This will give you the information you need to change your strategy if necessary.
An essential affiliate marketing KPI would be:
- the number of referrals you receive
- the number of clicks on the affiliate link.
This is the most crucial part because if an affiliate can receive a lot of clicks on his link, he is helping to establish the brand.
The number of people that convert is the second most essential KPI. So, how many people who click on that link really end up on the website and buy? As a result, both are critical. However, the significance may vary depending on a brand’s path.
A website like Amazon, for example, is more concerned with how many visitors are actually purchasing.
On the other hand, if it’s a new brand, they’ll be interested in how many people are actually clicking since, for a new brand, people won’t trust and click a link easily. It would take some to establish trust. So, these are two key factors, although their importance may vary depending on a brand’s business maturity.
Earnings per click (EPC)
EPC is simply calculated by dividing the total profits generated for an affiliate offer over a period of time by the number of clicks generated over the same period of time.
When this is calculated, it estimates how much income you may earn from each individual click on an affiliate link.
This is a classic metric that is calculated based on earnings per 100 clicks. With so many distinct models of active affiliates, this average can be severely distorted by accident or design. If coupon sites convert at a better rate, the EPC figures will give prospective content affiliates false hope. If coupon sites receive lower-than-standard commissions, content affiliates may be hesitant to join due to decreased EPC rates.
Managers that want to increase the EPC can easily pay more fees to all models. This would help the program get higher network rankings while also significantly increasing the cost per customer.
Top affiliate partners
Measuring your Top partners is key because they are responsible for a major portion of your program’s revenue. Is there a new partner in the Top 10 this year? Were there any dropouts? This is key to comprehending the success of your program and how to expand it over time.
Sales per affiliate
When working with affiliate marketing organizations, sales per affiliate is a critical metric for two reasons:
- Recognizing your top-performing affiliates will help you to appropriately reward them and keep them engaged.
- It can assist you in identifying affiliates who have potential but may require a little extra motivation or training to achieve top performance for your brand.
Tracking each affiliate’s sales over a specific time period provides that point of comparison. You’ll be able to recognize and reward your top affiliates. You’ll also be able to examine trends in each affiliate’s sales over time and investigate the reasons for them.
Customer lifetime value (LTV)
The lifetime value of a customer is the most important affiliate marketing KPI. The importance of lifetime value stems from the fact that it might define how much you can pay to acquire a customer in the first place.
Many individuals believe that if it costs more to acquire a customer than they spent on their first product, the lead generation cost is too high/doesn’t work. However, if the customer purchases, again and again, the initial cost of acquisition will be offset, giving you a lifetime value per customer.
To be successful in affiliate marketing, you need a lot of organic traffic owing to the low Earnings Per Click (EPC), but you also need the correct organic traffic. So, in order to rank well on search engines for a variety of various search/keywords, you must provide relevant content with excellent information.
You can get traffic through social media and buy traffic from various channels, but one source is unrivaled: organic search engine traffic.
Organic traffic is superior to all other types of traffic since it is free and because visitors come from search engines via specific keywords that are well represented on your website. As a result, visitors are prequalified because they are browsing for your content.
In general, it is best, to begin with, specific keywords and work your way up from there. The Google Search Console is a free and useful tool. Check for crawl issues on your website and identify the keywords that people use to locate them.
Then, to broaden your thematic footprint, develop more content for closely related keywords. Also, look for relevant products that you may market in conjunction with your favorite content.
Quality of Traffic
The fundamental criterion for forming long-term and successful partnerships is the quality of the traffic flow.
If consumers have a high level of trust in a publisher and are passionate about a certain topic, they are more likely to interact deeply with a site and convert at a higher rate. They are also likely to be repeat purchasers who purchase various connected products and services as they progress down the funnel.
Cohort analysis can inform you how well your audience enjoys what you’re doing in terms of publishing. If you witness an increase in email open rates and deeper, longer-lasting user engagement with your website, things are going in the right direction.
Average order value (AOV)
AOV is the most crucial affiliate KPI that will benefit your relationship with the affiliate network or customer you are working with.
If your traffic has a greater AOV, it indicates that you are targeting the right people. The affiliate networks will want to assist you in increasing the amount of traffic you provide them, putting you in a position to negotiate a better deal.
This KPI is useful if you sell a variety of products at varying pricing.
AOV is the average amount spent by clients each time they buy something from you. This is one of the greatest indicators for tracking both customer behavior and affiliate efficiency.
The calculation of AOV allows you to see which products are selling and which are not. It denotes the viability of your program.
AOV is calculated by dividing revenue by the number of orders.
The higher the average order value, the more money customers spend on each purchase.
And, if your AOV is low, you’ll need to adjust your strategy in order to improve sales of high-priced products. It also assists affiliates in optimizing the shopper at the point of purchase.
AOV calculations allow you to spend less money and earn more money per product transaction.
Affiliate marketing site owners frequently boast about revenue, unique visits, ranks, and so on, but none of these measures provide any insight into conversion rate.
Of course, the niche should be considered, but I feel that a low conversion rate frequently indicates that some of the traffic collected is irrelevant.
As a result, a high conversion rate tells you that you are driving relevant traffic and providing value to your visitors, which is one of the primary goals of an affiliate marketer.
While click traffic and revenue are vital components, conversion rate optimization is the next stage in fine-tuning. This can have a significant impact on the bottom line and build commercial ties. You could say that creating traffic is the initial stage, but converting visitors to clients is as crucial.
There are numerous ways to boost conversion rates, including landing page design, checkout experience, pricing, segmentation, and more. All of these aspects influence whether or not a visitor feels compelled to make a purchase based on what they see. Furthermore, it reinforces itself because the lessons learned during the process can be employed in the future.
Brands want high-quality leads, and affiliates want to trust that their recommendations will be rewarded. True affiliate marketers understand the value of optimizing their traffic funnel in order to increase the amount of work done.
Consistent tracking of your affiliate business should be a regular, ongoing job. Once you’ve gathered data for all of these affiliate marketing KPIs, you can make changes to your existing programs with the goal of increasing profitability.
When it comes to affiliate business, the KPIs can be complex and multi-leveled, but it’s essential to break down and work with all the data you have to be able to identify weak spots and double down on what’s already working well. The best thing about affiliate marketing is that it’s almost like its own ecosystem; if you can find the top affiliates in your niche and work with them, the rest will automatically follow.