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3 Tips for Understanding, Measuring, and Growing Your Affiliate Marketing Program and ROI

February 8, 2022

Brands looking to be successful in the ever-growing and competitive affiliate marketing space need to constantly be seeking out new and creative methods of reaching their target audience. Taking shortcuts and cookie-cutter approaches in lieu of understanding the fundamentals doesn’t cut it anymore as it may have in the early days of affiliate marketing. 

Aside from creativity, for brands to truly succeed with their affiliate marketing programs they need to make sure they’ve got a firm grasp of the fundamentals so that they can effectively measure and scale their programs. 

Brands with great affiliate marketing programs masterfully implement effective tech tools to successfully measure and track their affiliate marketing campaigns and their ROIs. Aside from that, they also make sure to consistently put out fresh and creative content to stay a step ahead of the competition. 

Comprehending the importance of these two strategies and how to make them work together flawlessly is what sets apart the pros and the amateurs in the affiliate marketing space.   

Today, we’ll walk through the fundamentals of affiliate marketing and all the ways brands can increase their affiliate marketing program’s ROI.

Understanding Affiliate Marketing ROI and How to Accurately Track and Measure It

Finding your basic affiliate marketing ROI is fairly straightforward. It’s calculated by dividing your gross profit from an affiliate marketing campaign (i.e., the revenue created by the affiliate marketing campaign minus the costs of the campaign) by your costs, and then multiplying it by 100.

The formula looks something like this: (Affiliate Marketing Revenue – Affiliate Marketing Costs) / Affiliate Marketing Costs x 100 = Affiliate Marketing ROI.

Let’s look at a real-world example. Let’s say you’ve received $100 from your affiliate marketing campaign and the commission you pay to an affiliate is 10%. Your gross profit equals $90: $100 Revenue – $10 affiliate cost (10% of $100). You then divide your gross profit of $90 by your affiliate marketing costs of $10 to get $9, which you then multiply by 100 to get 900%. This means that for every $1 you spend in your affiliate marketing campaign you get a return of $9, or a 900% return.

Of course, this is a fairly simplified calculation of ROI. What exactly falls under “costs” can vary for each brand. 

To get a more accurate sense of affiliate marketing ROI brands have to take into account factors such as affiliate marketing software pricing, affiliate marketing network fees, website and hosting fees, time spent on managing the affiliate marketing program, and more. For a brand’s affiliate marketing ROI to be as accurate as possible, it’s crucial to not leave anything out that can be considered a cost. 

Only after factoring in all these costs can brand’s get a true grasp of their affiliate marketing program’s ROI.

Tip #1: Evaluate Your Affiliate Marketing Network’s Commission Structure and Fees

When choosing their affiliate marketing network, brands should take a good look at the fees that the network charges per sale, as well as the structure of the commission payouts. Brands should make sure to choose an affiliate marketing network that allows them to adjust the commission rates based on how valuable the sale is to the brand. 

Brands should take a deep dive into their affiliate marketing program and identify which sales provide the most value. To increase ROI, it’s crucial to set higher commissions for sales that provide the most value (i.e., highest profit margin) as it can incentivize affiliates to drive more high-value sales, in turn reducing costs.

Tip #2: Provide Affiliates with Meaningful Resources and Promotions

Successful brands spoon-feed their affiliates when it comes to their affiliate marketing programs. This means making the whole process of promoting their brand and products as easy as possible for affiliates. 

The concept is fairly simple and straightforward: the less work an affiliate has to do to promote a brand’s products, the more likely an affiliate will promote said products to their audience. Brands should give simple instructions for finding their affiliate links, promotional assets, guidelines, and more. They should also regularly communicate product updates and promotions, as well. 

Promotions are a great way to help affiliates drive more high-value sales. Promotions increase conversion rates and average order values and improve overall affiliate marketing ROIs. For example, setting a promotion such as “Buy 2 and get 50% off your 3rd item” provides great incentives that can drastically increase average order values and overall ROI. 

Tip #3: Improve Your Landing Page’s Conversion Rate Optimization (CRO)

An affiliate marketing program is only as effective as the landing page it leads to. 

Even though it is the affiliate that is driving the traffic to a brand’s website and landing page, it is the brand’s responsibility to take advantage of it by making sure the landing page is fully optimized to get the best possible conversion rate. The best landing pages are easy to navigate and the entire shopping and checkout process is simple and quick to execute. 

Not everyone is an expert or even knowledgeable in conversion rate optimization, therefore enlisting the expertise of the professionals is a great way of improving your affiliate marketing program’s ROI. 

The Bottom Line

Improving an affiliate marketing program’s ROI is a combination of choosing the right affiliate marketing network, setting up the right commissions, and making the entire process as easy as possible for affiliates. Refersion offers all of this, and so much more. 

Running a profitable affiliate marketing program doesn’t have to be a difficult and time-consuming process and that’s why Refersion is here to help. Brands looking to maximize their affiliate marketing program’s ROI should contact a Refersion expert today.

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Written by

Ruthie Carey
Ruthie Carey