5 Important Affiliate Marketing KPIs to Consider
As affiliate marketing continues to prove itself an invaluable digital marketing channel, marketers are increasingly asking what they can do to optimize their campaigns and affiliate programs as a whole. By determining which KPIs best represent an affiliate campaign’s performance, marketers can understand which aspects of their program need optimizing and what those optimizations could look like.
Conversion Rate (CR)
Conversion Rate (CR) is defined as the rate at which sales are generated or leads are acquired after a click on an advertisement. The CR helps to measure the overall effectiveness of CPA promotional methods, such as banner creative, program offers, and the types of affiliate partners who are promoting the campaign or program. Additionally, the CR illustrates the efficiency of the user experience on the marketer’s or affiliate partner’s websites, indicating everything from how navigable landing pages are, to whether or not the buyer’s journey is working.
Average Order Value (AOV)
Average Order Value (AOV) can be used to help measure the average revenue per order. It is also an important metric for comparing CPA marketing to other marketing methods. AOV is typically a primary KPI employed by retail brands, among others, with affiliate programs, as the affiliate channel is often a key driver for new customer or user acquisition. If selected as a primary KPI, AOV should be closely monitored, as often as weekly or even daily, since any dip or spike can be indicative of a new consumer trend. Factors such as bundling, upselling, free shipping, and minimum order value can all play a key role in the increase or decrease of a brand’s AOV.
Incremental sales account for sales or actions that result from a marketing activity that the marketer would not have achieved had that specific marketing activity not taken place. In terms of affiliate marketing, incremental sales help marketers understand how many sales are driven specifically and exclusively by performance marketing channels. It’s important to note that because CPA and affiliate marketing generally run on a last-click attribution model, incremental sales can only be attributed to such efforts when the consumer converts on an offer connected to the CPA campaign. Incremental sales would not be contributed to a conversion that was influenced by a CPA campaign, but ultimately the conversion happened elsewhere.
Also known as a chargeback rate, reversal rates can be determined by analyzing gross sales versus net sales numbers. If an affiliate partner has a high reversed sales rate, it could be an indication that the affiliate in question is not representing or marketing the brand properly to the marketer’s target audience. A marketer’s reversal rate could also increase if affiliate partners are driving fraudulent traffic to the campaign and your brand is not being properly protected. Read more about how you can protect against fraudulent traffic here.
Return on Investment and Return on Ad Spend (ROI, ROAS)
Although ROI and ROAS both measure similar metrics within digital marketing efforts, each of them can provide a variety of insights depending on the campaign and marketer. Return on Investment (ROI) accounts for the amount the marketer gains after their campaign expenses are paid, with the sole purpose of determining whether or not the campaign was worth investing in.
However, Return on Ad Spend (ROAS) is a ratio that can be calculated by dividing a marketer’s revenue by their expenses. ROAS helps to determine a marketer’s average return on overall advertising spend. Although ROI has long been a primary measure of success in marketing as a whole, ROAS has quickly become a popular metric for digital marketers given the increased efficiency it can provide for decisions regarding budget.
By understanding the KPIs available and their value to various campaign types, marketers can harness more power from their performance marketing campaigns. Educating yourself and your team as to which KPIs best fit your digital marketing goals will enable you to discern which aspects of your campaign need improvement and communicate those needs to your network partners or affiliates.
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