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Affiliate Management: Simple Guide to Boost Sales for Marketers in 2024 [Updated]

By Leah Clark Last updated: 22 minute read Affiliate MarketingMarketing Guides

Affiliate marketing is booming due to e-commerce. In fact, it has an annual growth rate of 10%, and 80% of brands now have an affiliate program!

The benefits of having an affiliate program are huge, and it is one of the simplest ways to boost brand awareness, increase trust and credibility, build customer loyalty, and generate sales.

In the future, we may even see a convergence of referral and affiliate marketing. With the rise of influencer marketing, affiliates may leverage personal connections for promotions, blurring the lines between the two strategies.

That said, affiliate management is not simple. Excellent affiliate management is essential to running a successful affiliate program!

So, what does affiliate management involve? And what does it take to manage a profitable and scalable affiliate program? 

For this guide, we consulted the affiliate management experts at Perform[cb] Agency, an award-winning marketing agency, to bring you everything you need to know about affiliate management.

Today, we’re covering the basics of effective affiliate management, the benefits, the most common compensation models, and the best program KPIs to track.

We also examine a case study to demonstrate the power of good management and provide a detailed comparison of the pros and cons of outsourced vs. in-house management. 

What is Affiliate Management?

Affiliate management is the process of managing your program after it is set up.

It involves tasks such as recruiting affiliates, communicating with them, promoting engagement and retention, tracking program results, and continuously optimizing programs.

Businesses must use a brand-centric and organized affiliate management strategy to maximize revenue. You can also rely on the best marketing apps and tools to make it easier for your business.

Managing your affiliate marketing program is an ongoing process. You’ll have to make improvements and changes and adapt your program to your buyer and affiliate trends.

You can choose to outsource your affiliate management to a professional affiliate management agency or affiliate network or handle it all in-house. Below, we’ll discuss how each option works!

Source: Learn with Shopify

Affiliate Management Types: Direct vs Indirect

Affiliate management involves managing different types of affiliates, either directly for your own program or indirectly for other people’s programs.

There are many different types of affiliates, and every program is a little different, depending on the types and combinations of partners involved.

Whether they’re direct or indirect, the simplest way to differentiate between the different types of affiliates is how they’re compensated:

1.Affiliate Management Compensation Models

1.1.Cost Per Action(CPA)

According to Perform[cb] Agency, CPA is by far the most common and trusted type of affiliate compensation.

In this model, businesses pay affiliates the agreed-upon commission only after buyers have made a purchase from the affiliate’s marketing campaign.

Brands prefer this model because it gives them peace of mind and lowers the risk of wasting money on affiliates that don’t drive results.

The biggest factor to evaluate for CPA affiliate compensation is the cookie duration. The standard cookie duration for affiliate programs is 90 days but varies between programs.

If web visitors click on an affiliate link and purchase any time within the next 90 days, your affiliate will still be eligible for their commission.

However, the CPA model might not work for every program, so let’s explore the other compensation models:

1.2.Cost Per Click (CPC)

The CPC affiliate management compensation model is best for brands that want to drive awareness and reach. You’d pay affiliates for every click leading to their websites.

The biggest drawback of this compensation model is that many affiliates use fraudulent data to earn more cash.

Unless you have A-grade fraud prevention tools to analyze the clicks, CPC won’t work. Because of this disadvantage, CPC is the least common affiliate management compensation model.

affiliate management program stats
Source: Jon Torres

1.3.Cost Per Lead (CPL)

Brands opt for the CPL affiliate management compensation model if they want to boost lead generation.

You’d pay your affiliates a flat amount for every lead generated through their marketing efforts and strategies. Many brands combine CPA and CPL models to suit their programs.

Summary: Affiliate Management Compensation Models

  • Cost Per Action (CPA)
  • Cost Per Click (CPC)
  • Cost Per Lead (CPL)

2.Direct vs. Indirect Affiliate Management

While looking at affiliate management program types, direct vs. indirect affiliate management is another factor to consider.

Direct affiliate management is when businesses choose to build and manage their affiliate programs.

You’ll handle affiliate recruitment, program management, payouts, and validating sales as an affiliate manager. Brands opt for direct affiliate management if they don’t have the excess cash to invest in indirect affiliate management.

Direct affiliate management also works for brands with few affiliates that use a simple program that can be run effectively in-house.

Indirect affiliate management is when the affiliate program is managed by an external affiliate network or agency.

Rather than managing multiple affiliates yourself, you only have to communicate with one entity (an agency or network), and they do everything else.

Indirect affiliate management is best for high-level, complex affiliate programs and programs involving many affiliate marketers.

That said, indirect affiliate management is a great choice for new or small affiliate programs that must grow and scale quickly.

Summary: Direct vs Indirect Affiliate Management

Direct affiliate management occurs when businesses build and manage their affiliate programs; indirect affiliate management occurs when businesses hire an affiliate agency or network to do the same.

Can’t pick between direct and indirect affiliate management for your business?

Don’t worry. A little later in this guide, we will explore the pros and cons of outsourcing your affiliate program vs. managing it in-house!

But first, let’s take a look at exactly what affiliate management involves:

Affiliate Program Management Tasks

What exactly does affiliate management involve, and what does an affiliate manager do?

To some extent, that depends on the affiliate program, its goals, and the types of affiliates involved, but most, if not all, affiliate program management involves:

1.Setting Affiliate Marketing Goals

Before covering the groundwork, set SMART goals for your affiliate marketing program.

– specific

– measurable

– achievable

– realistic

– timebound

These goals will help you make strategic decisions for your affiliate marketing program. You’ll know when to consider your program successful and when to make improvements.

When developing SMART goals for your affiliate management program, consider its purpose, long-term goals, and short-term objectives.

Consistently update and track these goals to ensure you achieve them!

2.Choosing the Best Affiliate Program Management Tools

Affiliate marketing tools make it easier to manage and grow your program. Many have automated features for affiliate recruitment and screening, contracts, payments, and feedback.

There are various options for startups, mid-level businesses, and enterprises.

Startups should stick with affiliate program tools offering basic features. This approach can prevent you from paying for functionality you don’t need.

Enterprises need more advanced affiliate marketing tools, but be prepared—this can be costly in the long run!

Fortunately for your business, we scoured the web and tested all the top tools to find the best affiliate management software for maximum growth and revenue.

Affiliate management program sectors
Source: BloggingX

3.Compiling Affiliate Marketing Agreements

Once you’ve pinned down your affiliate marketing program’s SMART goals and software, it’s time to create your affiliate agreement contracts.

These agreements conceptualize and organize all the technical aspects of your program. You can detail your affiliate commission and compensation structure, affiliate criteria, and desired KPIs.

Consider all the aspects of your affiliate management program and use this opportunity to get it all on paper. This affiliate management program task makes it easy to stay ahead of your program and ensure you achieve your goals.

It will also be much easier to communicate your requirements to affiliates and give them an accurate idea of what traffic you expect them to drive.

4.Finding the Best Affiliates

Finding the best affiliates for your program is the most challenging part. However, there are some great ways to find the perfect affiliates, so check out our guide on 8 super easy ways to find affiliates!

You need affiliates who are likely to drive results and have buyers sharing characteristics with your customer base. Your affiliates must also have website authority and high organic traffic.

While you must filter your affiliate search based on your requirements, budget, and niche, you’ll only know who to work with once you start looking. There are countless affiliate networks to help you find the best affiliates.

Some of the most popular affiliate networks are:

Finding affiliates through these networks is simple. You start by creating an account and adding all the required information about your brand, website, and products.

Next, you can browse and connect with affiliates via the listings for each industry.

Are there any other ways to find affiliates?

Yes, there are!

Here are the top ways to find affiliates in 2024:

  • Reach out to niche bloggers with authority
  • Connect with industry influencers
  • Partner with similar websites that aren’t direct competitors
  • Use social media sites and channels to source affiliates
  • Build a landing page dedicated to attracting and generating affiliate marketing leads

5.Ongoing Communication to Keep Affiliates Engaged

Keeping your affiliates engaged is crucial for affiliate marketing success! 

Communication is key, and you need to contact your affiliates regularly to keep them engaged and make them feel like a valued part of your business.

You can use automatic or manual emails to all your affiliates to keep them engaged over time.

If your affiliate management program is new or small and you’re managing just a few affiliates, send them personalized emails with updates about your affiliate program and brand.

For larger programs, with more affiliates to contact, you will more advanced automation to engage a high volume of affiliates.

Triggered and scheduled emails for different segments of your affiliate program will save you a lot of time and energy!

The aim is to always be in regular contact, keep your program in mind, and make your affiliates feel seen and recognized as an important part of your business.

High-performing affiliates should receive extra and more personalized attention. Regular calls or emails to your top affiliates will help you keep them invested in your program and drive loyalty and retention in this valuable segment of it.

 But why is regular affiliate communication imperative?

Businesses must communicate with affiliates to keep them invested in the program. Affiliate communication also works to retain affiliates and engage new prospects.

Without consistent affiliate communication, your affiliates may lose interest in your business or find your product less of a priority. 

The trick here is to make affiliate communication quick, easy, and accessible and to respond to all affiliate queries or concerns. Your affiliates must always feel valued and recognized as bringing real value to your business. 

6.Create Affiliate Marketing Challenges

After securing affiliates, consider ways to keep them motivated and boost sales. If you don’t manage your affiliate relationships well, affiliates may lose interest in your brand or not feel motivated to go the extra mile.

This is where affiliate marketing challenges are handy.

Challenges are a fun and interactive way to optimize affiliate relationships and incentivize affiliates to increase sales in a gamified way.

Ensure your challenge is easy to participate in and your reward is worthwhile and accessible.

Promote your affiliate marketing challenge on all your social channels. This will give you another opportunity to reach your target audience and secure top-tier affiliates.

When potential affiliates notice your hands-on and interactive approach, they may contact you and join your network!

Affiliate management program traffic sources
Source: BloggingX

7.Involving Affiliates in Your Brand

We’ve examined two affiliate engagement tactics: communication and affiliate challenges. However, these practices don’t quite address how crucial it is to make affiliates feel a part of your business.

Give your affiliates a voice, ask them for and consider their feedback, and commend them on meeting profit targets.

Share brand updates, announcements, and achievements with your affiliates, too. For example, share news if your brand excels or you’ve achieved a milestone. Doing this creates emotional and personal connections between your brand and affiliates.

In turn, affiliates will better understand your value proposition, and it’s easier for these marketers to promote products and brands they are passionate about.

8.Performing On-going Affiliate Recruitment

After recruiting your first group of affiliates, the recruitment process doesn’t stop there.

Consistently recruit affiliates and expand your network to reap the full revenue potential of affiliate programs.

As we discussed earlier, you can use various channels and platforms to find the perfect affiliates for your business.

Streamline this process so you don’t fall behind. Affiliate recruitment demands a lot of admin, so document and track your strategy to ensure you connect with all the qualified candidates.

9.Tracking and Evaluating Your Affiliate Marketing Program

As your affiliate program progresses, tracking and evaluating become more demanding.

This step is essential to develop a successful affiliate marketing program. Markets and consumer needs always change, so track your affiliate program analytics.

If you notice declines in your program, adapt your marketing and affiliate recruitment strategies to solve this. Tracking and evaluating your affiliate program provides the data you need to make insightful, customer-centric marketing and sales decisions.

You can improve your affiliate program when required, respond to affiliate and customer trends, and leverage market opportunities.

Remember we spoke about affiliate marketing tools? Most of these tools have built-in tracking and analytics features to evaluate your program’s performance.

Summary: Affiliate Program Management Tasks

  • Setting Affiliate Goals
  • Choosing the Best Affiliate Program Management Tools
  • Compiling Affiliate Agreements
  • Finding the Best Affiliates
  • On-going Affiliate Communication
  • Creating Affiliate Challenges
  • Involving Affiliates in Your Brand
  • Ongoing Affiliate Recruitment
  • Tracking and Evaluating Your Affiliate Program

Affiliate Marketing Case Study: Alcohol Delivery Service Gains 334% Order Increase YoY

Identifying valuable program optimization opportunities requires skill and expertise, which is where great affiliate managers shine.

Now that we have looked at what affiliate management involves let’s take a look at a case study from Perform[cb] Agency to see how impactful the right adjustments to an affiliate strategy can be:

Objective

Drizly is a popular delivery service that delivers a variety of alcoholic beverages, including wine, beer, and spirits, from local retailers directly to their customer’s homes.

Drizly engaged Perform[cb] Agency to help them drive incremental new customer acquisition during peak seasonality without exceeding their set incremental customer acquisition cost (iCAC) goal.

Approach

To meet Drizly’s objectives, the Perform[cb] Agency team needed to prepare for peak season (Q4) and develop a strategy to recruit the right type of new affiliates to drive incremental customer acquisition while staying within Drizly’s low iCAC goals.

In preparation for peak season, they began building relationships with high-value editorial teams in Q3 to build momentum for Q4.

They assessed the sales funnel and identified that upper-funnel conversions were much more valuable (approximately 5X) to the brand than lower-funnel conversions. Hence, they developed a customized recruitment strategy partner for proven high-quality upper-funnel editorial partners.

They also shifted their payout strategy to focus on higher incremental partnerships and decreased payouts for lower incrementality partners to keep the iCAC down.

Results

This approach, and addressing the challenge from three angles, meant that Perform[cb] Agency could incrementally increase customer acquisition during the peak season while remaining well below Drizly’s iCAC goals.

The final result was a 41% increase in orders (month-over-month), a 53% increase in ROAS, and a 7460% increase in clicks (year-over-year)!

Affiliate Program Management Benefits

The many benefits of an affiliate program include:

Low Start-up and Operating Costs

Like customer loyalty programs, affiliate programs don’t cost much to start. You don’t need marketing agencies or digital advertising experts to help you launch your affiliate program. Your affiliates will create the content they use to promote your products.

This means you don’t have to worry about marketing materials and resources.

Because affiliate programs are commission-based, you won’t pay affiliates unless they achieve sales. You can minimize your operating costs and only pay for affiliates that drive revenue.

Affiliate marketing benefits
Source: ReferralRock

Wider Reach for Targeted Buyers

Every business wants to reach, engage, and convert as many targeted buyers as possible. Affiliate program management makes this possible.

To ensure your products sell, your affiliates’ buyers must share the same or similar qualities and buying trends. If you choose the right affiliates, you can widen your reach and boost brand awareness to expand your customer base and online recognition.

With a wider reach, you can boost your web traffic. Around 65% of web traffic comes from affiliate blogs. Of course, this leads to an increased ROI (which we’ll discuss soon!).

Optimize SEO Performance

By now, most online businesses know how vital their SEO is to drive organic traffic. If you want targeted buyers to find you through organic search, develop a sound on and off-page SEO strategy.

Affiliate marketing can make this easier, as having affiliates promote your brand through their blogs will strengthen your online presence and notoriety.

From Google’s perspective, you’re becoming more relevant and making stronger connections between your content, credible websites, and audience segments. In turn, Google will find it easier to promote your content, increasing your organic traffic.

Online Reputation Boost

This works hand-in-hand with the previous affiliate program benefits. As online shoppers become familiar with your brand and you optimize your online presence, you can improve your online reputation, too.

Having social channels like Instagram, Facebook, and Twitter add to this, as customers have more platforms to connect with your business.

To fully leverage this advantage, engage with your customers and hone your buyer relationships. Doing this will help you create more social buzz, impact your online reputation, and gain more traction for your brand and affiliates.

Affiliate marketing for new customers
Source: ReferralRock

Impressive ROI Potential

Because affiliate management requires little startup, operating costs, and marketing resources, you can earn a wider profit margin.

Established affiliate programs account for 15 to 30% of the average online advertiser’s sales.

With such impressive ROI potential, it’s no surprise why affiliate marketing is one of the best growth and sales practices for businesses!

Summary: Affiliate Program Benefits

  • Low Start-up and Operating Costs
  • Wider Reach for Targeted Buyers
  • Optimized SEO Performance
  • Online Reputation Boost
  • Impressive ROI Potential

In-house vs. Outsourced Affiliate Management

How you choose to manage your affiliate program, in-house or outsourced to an affiliate network or agency can make or break its success.

The right option depends very much on the types of affiliates you’re working with, the size of your program, what you want to achieve with your program, and the resources and expertise needed to run and grow the program effectively.

Let’s take a look at both options in more detail so you can see which one will be best for you:

In-house Affiliate Management

Affiliate management requires hands-on, consistent effort and relationship building. You can create a dedicated internal team to manage and grow your affiliate program.

This team will handle all the day-to-day tasks of running and scaling your affiliate program while finding the best strategies to optimize your performance.

To develop an in-house affiliate team, determine the ideal size of your team. Enterprises may have teams of six people or more, while startups have one or two professionals managing the affiliate program. You must also determine if your internal team has the skills and resources your program needs. 

In-house Affiliate Management Pros:

  • You can easily integrate your affiliate management and marketing teams to optimize your resources, time, data, and intellectual property.
  • Your team has direct access to all the resources they need. They can also seamlessly reach out to key decision-makers.
  • It’s easier to build an approach tailored to your brand because your team has first-hand experience with who your business is and your goals. 

In-house Affiliate Management Cons:

  • It can take longer to achieve your desired results. You may not have the resources or skilled professionals to quickly get your program on its feet. 
  • You may lose focus on other aspects of your business as you must invest a lot of attention and time in establishing a smooth-running affiliate program.
  • Connecting and developing relationships with top-tier affiliates can be challenging because you don’t have networks and authority like agencies and professionals.
Affiliate management program types
Source: DigitalGYD

Outsourced Affiliate Management

Many businesses choose to outsource their affiliate management to a professional affiliate agency or network. This method is common for large brands without the expertise or resources for a successful affiliate program. These companies prefer to invest in professionals and agencies that will guarantee results.

Be picky when choosing your affiliate marketing agency or professional. They must have worked with businesses like yours and have impressive case studies to prove they drive growth. Also, ensure who you outsource to is credible, reputable, and has good online recognition.

Outsourced Affiliate Management Pros:

  • Less risk of wasting resources as you can rely on extensive experience and expert affiliate practices.
  • They know which tools to use and have access to them, so you can leverage the best technology solutions without costly trial and error.
  • Affiliate marketing firms and professionals have established networks, making it easier for you to develop relationships and secure successful affiliates.
  • Agencies employ experts who work on numerous programs, which means your program benefits from their expertise without having to pay their full salary.
  • Using an agency allows you to scale your program quickly, as they have the capacity to expertly manage your program at all stages.

Outsourced Affiliate Management Cons:

  • It may be harder to streamline processes based on how quickly feedback is shared between you and your agency/expert.
  • Outsourcing can be much more costly, and for some programs, it makes more sense to manage them in-house until they are big enough to justify the expense.
  • The agency/expert may not understand your business and vision as well as you and your team.
Affiliate management program spending
Source: DigitalGYD

Affiliate Management KPIs

Tracking and measuring the performance of your program is a key component of effective affiliate management.

Knowing which aspects of the program are driving results and which ones need to be adjusted to perform better allows you to focus your attention and resources on doing more of what works and less of (or fixing) what doesn’t.

The specific Key Performance Indicators (KPIs) you should use may vary based on your business model, but the core affiliate programs KPIs that you need to measure are:

1.Number of Active Affiliates

Every business defines active affiliates differently. But, in general, active affiliates are affiliates that have generated traffic in the last 30 to 60 days, or sales every three to six months.

We can consider affiliates inactive if they don’t drive web traffic within 30 to 60 days or gain new sales every three to six months.

This KPI is vital to track as it gives you an insight into which affiliates are actively contributing to your program.

With this information, you can optimize your affiliate marketing and communication tactics by investing more resources in new affiliate recruitment, re-engaging inactive active or focusing solely on the active affiliates in the program.

2.Number of Active Affiliates vs. Total Affiliates

Unfortunately, not all the affiliates you recruit will impact your program. Measure your number of active affiliates / your total affiliates to determine your program’s success.

Knowing what proportion of your affiliates are active gives you valuable insight into your overall program and where it needs attention.

If you notice most of your affiliates are inactive, it’s time to refine your affiliate recruitment and management approach. Get feedback from your affiliates to pinpoint the problem.

Perhaps you’re not compensating or engaging with affiliates enough or targeting the wrong ones? Find out so you don’t waste resources on a program of inactive affiliates.

3.Average Order Value (AoV)

Some affiliates may not drive high volumes of web traffic or individual sales but their sales are much higher in value per purchase. These affiliates can be just as valuable as the ones that drive huge volumes of small-value purchases. 

Use this formula to calculate your AoV: Revenue / Number of Orders = AoV.

Measure AoV for the program as a whole, and for individual affiliates to see which ones are driving a higher AoV.

If you notice specific affiliates are pushing high AoV figures, you know you’ve picked the right ones. And you know which ones to take extra good care of!

4.Affiliate Conversion Rate

To see how many clicks are resulting in actual sales, you can measure your affiliate conversion rate with this formula: Clicks / Sales = CR.

Determine how many clicks you generate vs. your sales. Loads of clicks and low sales mean users interact with your products but don’t actually purchase them. Focus on your post-click marketing tactics to improve your sales.

But if your conversions are fantastic and clicks are low, you need to focus on attracting more traffic and clicks, so that you can increase overall sales.  

Compare your affiliate conversion rates to your other marketing channels. If your affiliate marketing program doesn’t match up to other channels or make a significant impact, go back to the drawing board!

Although you can’t expect your affiliate marketing conversion to be the same or way more than other marketing mediums, it must boast competitive conversion rates.

Identifying the affiliate conversion rate on an individual affiliate basis also allows you to identify your top performers in terms of the quality of traffic they drive.

5.Number of Affiliate-Generated Sales vs. Overall Sales

Is your affiliate program generating new sales? And is it significantly impacting your overall revenue?

Compare your affiliate sales vs. your overall marketing sales. Knowing how many sales and how much of your total revenue comes from your affiliate program is very useful.

For more in-depth insights, compare your affiliate sales vs. sales from other marketing channels. This information reveals how well your program compared to your other marketing strategies and whether your efforts are worthwhile.

6.Earn Per Click (EPC) Rates

Your EPC rate measures how much you earn per click from each affiliate, and how much commission the affiliate makes per click.

EPC rates allow you to see your top-performing affiliates and allows affiliates to see exactly what they’re earning.

You want this data to engage your best affiliates, and encourage them to become integral components of your affiliate marketing program. Businesses can also incentivize top performers to motivate them to achieve more conversions.

Summary: Affiliate Management KPIs

  • Number of Active Affiliates
  • Number of Active Affiliates vs. Total Affiliates
  • Average Order Value (AoV)
  • Conversion Rate
  • Affiliate Sales vs. Overall Sales
  • Earn Per Click (EPC) Rates

PRO TIP:

Measure Affiliate Conversion Rate, EPC, and AoV on an individual affiliate basis to identify your top affiliates. Then take extra good care of them!

Final Thoughts on Affiliate Management

Affiliate management is crucial if you want to drive program growth and increased revenue. Brands must set SMART goals, measure their program’s performance, recruit and screen the best affiliates, and create agreements.

You can choose to outsource these efforts or handle them in-house. Whichever approach you opt for, use the best affiliate strategies to scale your program in no time!

Frequently Asked Questions

What metrics does affiliate marketing software track, to give you a detailed view of how the program performs?

Affiliate marketing software tracks a wide range of metrics to provide a detailed view of how the program performs. These metrics can be broadly categorized into two sections: those relevant to sales and conversions and those that provide insight into affiliate activity and engagement.

What are the top benefits of affiliate marketing?

The best benefits of affiliate marketing include wider reach to convert targeted buyers, low start-up and operating costs, online reputation boost and improved SEO performance. Read this article for the benefits of affiliate management, the top affiliate compensation models and how to manage your affiliate program and increase revenue.

How do I set up affiliate management software?

Most affiliate management software is easy to set up. The process typically involves creating an account, configuring settings, and adding your affiliate program details.

References

FetchProfits: Affiliate Marketing Statistics: Embrace The Potential Of Partners

AM Navigator: 20 Affiliate Marketing Stats That Will Blow Your Mind