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March 23, 2021

How to Run an Effective SaaS Affiliate Marketing Program

Marketing is key to generating profits and sustaining your business in a competitive and crowded market. Many SaaS companies invest huge amounts in their marketing strategies but never get the high ROI they believe they deserve. If you’ve been facing the same issue for years, it might be high time to try out something else!

Affiliate marketing is a good option to consider if you want to grow your business. It is a process where third parties refer your product or service to their audience and get a commission in return for every sale. One report says affiliate marketing is responsible for 16% of orders made online. 

How Does Affiliate Marketing Work?

Affiliate marketing has grown to be extremely popular worldwide. Many people use this technique as a primary source of revenue. For example, sites like  TopCashback and Groupon generate a significant amount of money when customers buy products they recommend. 

In affiliate marketing, the website you’ve partnered with, the “affiliate,” hosts a link to one or more of your products. When a user clicks on the link, they are redirected to your website where they can buy your product. Once the user buys your product, the affiliate marketer gets a commission for making the sale possible. 

If you run a SaaS business, there are many benefits to using affiliate marketing to sell your products or services. 

First, compared to advertising, where you spend a lot of money without any assurance that you’ll sell anything, affiliate marketing is more cost-effective since you pay a reasonable commission to the affiliate only if they make a sale. Apart from the cost of setting up the program, there is zero risk. 

Second, you can reduce your  customer acquisition costs (CAC) in advance! If you have a tight budget, affiliate marketing will help you promote your products to new markets for a more reasonable cost of entry, especially if you partner with an established affiliate network where you can find high-traffic sites at little or no cost.

Chart of most advertisers and publishers including affiliate marketing in their strategy.

Source:  Nichehacks

Affiliate marketing is by no means a fringe strategy. If you think affiliate marketing is just for small businesses, you’d be surprised to know that 81% of brands have spent on building potent affiliate marketing strategies. These include well-known names in the marketing industry such as Freshbooks, Intuit, and GetResponse. 

Thanks to its attractive business model that benefits both brands and the publishers they partner with, affiliate marketing is an effective medium that promotes your product to a wider audience and helps increase sales relatively easily.

Why Should You Get Into Affiliate Marketing?

Now that you know how affiliate marketing works, it’s time to learn why you should look into affiliate marketing as a promotional strategy for your SaaS business.

Build trust among your target customers

Word-of-mouth marketing generates sales and enhances brand awareness, but affiliate marketing gives your existing customers another reason to recommend your products and services to others. 

Proficient affiliates provide genuine information about your brand and use their audience’s trust in them to boost your brand’s credibility. An affiliate link from a trusted partner appears more like a recommendation from a trusted source than an ad. 

Aside from boosting traffic to your site, affiliate links from high-quality partners also impact your SEO. A high-authority site that links back to your home page or product page will “pass on” its authority to your site. This leads to better search result performance and more organic traffic coming from Google searches.

Reduce CAC and boost ROI

Affiliate marketing campaigns are economical as you pay commission only when your affiliate partners make a sale. Because there is little or no upfront cost, affiliate marketing can reduce your CAC. With the help of your affiliates, you can widen your customer outreach without spending a lot, helping boost your return on investment (ROI). 

Chart of people agreeing that affiliate marketing is an effective means of gaining new audiences

Source:  Referral Rock

If you are a new SaaS company and want to grow your business, affiliate marketing can be a smart choice. It accelerates your profit margin and yearly growth rate rapidly. 

Acquire your affiliates’ audience 

When you associate with affiliates who are experienced in your niche, they will help you acquire new customers that also align with your established buyer personas. Because they have years of experience in their niche, they have a built-in audience whom they can influence to give your products a try. 

Studies show that  92% of consumers trust recommendations made by people, companies, or influencers that they’re familiar with. If you partner with the right affiliates, you attract more site visits and generate more qualified leads. Keeping the affiliate partnership going will also mean winning over the partner’s loyal audience base, leading to potential repeat purchases.

How to Run a Successful Affiliate Marketing Program

To run a successful affiliate marketing campaign, you can’t afford to wing it. You need to be methodical and strategic. Most successful affiliate campaigns follow these steps:

Create your payment structure

Before starting with your SaaS affiliate marketing campaign, you need to design your payment system. Decide if you want to opt for recurring payment, one-time payment or both.

A recurring payment model suits many vendors as it provides a steady source of affiliate income, especially for SaaS products with short subscription times. On the other hand, many marketers prefer one-time payment, especially if you’re running an affiliate marketing campaign for the first time and haven’t established your brand as one that pays on time. This form of payment pays a lot more per sale, but takes a bit more work on the part of the affiliate as they’ll need to constantly produce content for their site.

Aside from the payment structure, you also need to decide what you’ll be paying for. Here are some models to consider:

  • Cost Per Action (CPA): You pay for every action taken by your prospects or leads, such as making a purchase or signing up for a free trial
  • Cost Per Mille (CPM): You pay according to the number of people reached
  • Cost Per Click (CPC): You pay for clicks back to your site

Deciding on a payment structure early will help prevent confusion later on, when your affiliates start generating sales for you.

Create enablement assets for your affiliate partners

Good affiliates don’t just post a link to your site or product and hope someone clicks on it. Creating enablement assets will help your affiliates find the best places in their site where they can add an affiliate link and make it easier for them to spread the word about your brand. You can also educate your affiliates about your products and services.

For example, providing marketing collateral such as banners, videos or images to your affiliates will help attract visitors to your site. Studies show that the human mind processes and understands visual content better than written text, so an appealing piece of visual content will tend to do better than a paragraph of text saying the same thing.

Aside from sending your affiliates marketing content, you can also give them a demo of your product. This is particularly important in the SaaS sphere, where content creators will only write about a solution if they’ve already experienced and tried it first-hand. This helps them keep their credibility as a reliable source of information about SaaS products. 

Decide between an affiliate program or an affiliate network

After deciding on your payment structure, you need to choose between using an in-house affiliate program or an affiliate network. Go for a model that makes it simple for your affiliates to promote your products or services.

In an in-house affiliate program, everything is done by you and your team, from the partner signup process to making payments. On the other hand, affiliate networks facilitate everything, including partner payment and registration. 

Many brands prefer running their own affiliate programs as they don’t have to deal with any third parties and can dictate their own rates. On the other hand, affiliate networks match brands and affiliates, which makes it easier for everyone involved. However, affiliate networks charge brands a one-time payment upon signup and other fees every time they make a sale through an affiliate.

If you want to jump-start your marketing, signing up with an affiliate network will give your brand exposure to experienced affiliates who will know how to promote your business. However, if you want total control over the entire affiliate process, you may choose to run your affiliate program in-house. 

Running your own affiliate program will be easy if you only have a handful of affiliate partners. However, as your program grows, you will need to find a way to track transactions and correspondence with them. Using Gmail extensions will help you monitor scheduled emails and give you and your affiliates assurance that things will run smoothly. 

In contrast, it’s easier to use an affiliate network since the network takes care of everything. But before you sign up for a network, double-check the rates and fees so you don’t end up paying more upfront than you can afford.

Look for affiliate partners

Once you choose between an affiliate network or an in-house affiliate program, you can start looking for partners. Many brands that use affiliate marketing search for people already selling products similar to theirs. This allows them to attract audiences who might be interested in what they have to offer.

In addition, you need to look for affiliates who rank high in Google searches for your industry. Studies show that organic searches lead to a high percentage of affiliate site traffic, resulting in higher sales:

Chart of the top traffic sources among affiliate marketers

Source: Neil Patel

To reach these affiliates, you need to get in touch with them either through your affiliate network or through email.

Track affiliate performance 

As a marketing professional, you want to ensure that your campaigns are running smoothly and you’re getting your money’s worth. However, when you do things manually, you can easily make mistakes in your calculations, and the risk gets even higher as your affiliate program grows. 

On the other hand, most affiliate networks have automated reporting and their own performance tracking tools. The most basic of these tools is the affiliate referral URL. Using the tracking URL, you are able to determine the source of the traffic that goes into your site, whether it’s social media or blogs. A typical tracking URL looks like this:

Whether you’re running an affiliate program in-house or with an affiliate network, it’s a good idea to use a business intelligence reporting tool to check how your affiliate marketing campaigns are performing, see how they are contributing to the growth of your business and find your top-performing affiliate partners.

Reward your top performers

Many brands make the mistake of considering their affiliates as marketing collateral, not people. However, treating your affiliates well will result in stronger relationships, better-quality affiliate links and higher sales. 

Why should you reward your top performers? First, they do much of the heavy lifting when it comes to promoting your products. They give your brand the exposure it needs to a wider audience and help in increasing your revenue. 

Second, treating them badly will lead them to conclude that working with you is not worth their time and effort. They might even choose to work with your competitors instead. Word gets around quickly in the affiliate marketing community, and when people hear that you don’t treat your affiliates well, they might also refuse to work with you in the future. 

How do you reward your best affiliates? Paying them on time, of course, should be your top priority. Affiliate partners rely on commissions to keep their sites operational, so if you don’t pay them on time, you risk losing their platform. 

Being open to their suggestions will also make them feel motivated. If your affiliates find it difficult to promote your product, there must be something that makes it tough to sell. Listening to feedback from your affiliates will help you come up with a better product or brand positioning strategy. 

Finally, offering incentives, such as  awards and certifications, to top-performing affiliates will give your partners the push they need to promote your products more effectively. Recognizing your top affiliates will help build longer-lasting relationships and encourage others to apply as your affiliates as well, giving you even more promotional channels.

Bottom line

The time to invest in SaaS affiliate marketing is now. Whether you’re trying to increase sales, subscriptions or click-throughs, affiliate marketing is one of the most effective channels for reaching out to new audiences and generating sales from new customers. 

Running an affiliate marketing campaign is something you need to approach with a goal in mind. If you want complete control over your marketing, you can operate your affiliate program in-house. If you want to start quickly, signing up with an affiliate network will allow you to set up a campaign and match with experienced affiliate marketers in your niche right away. 

If you do the right things in an affiliate marketing campaign, you can generate maximum clicks and leads, increase sales and take your business to greater heights.

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David Campbell

David Campbell is a digital marketing specialist at Ramp Ventures. He helps manage the content marketing team at Right Inbox. When he's not working, he enjoys traveling and trying to learn Spanish.

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