Unleash the Affiliate Performance Metrics

Affiliate performance metrics are probably the single most important tool that is ignored by both (un-successful) affiliates and merchants. If you go to any affiliate forums you'll see that the most desperate help calls are about getting more leads on one hand, and getting them to convert on the other.

If you are an affiliate or merchant looking for ways to improve your site (or marketing efforts) to have more visitors with better conversion rates, you should start by looking at your metrics.

For the Merchants

Affiliates are an important (and often misused) force in marketing software products in order to penetrate new markets and increase sales in a cost effective way. If you want to have successful affiliate sales, you should know that affiliate marketing is about performance metrics - affiliates get paid only for successful sales. Their results depend greatly on controlling and influencing affiliate efforts as they need your help to sell your products.

The starting point in taking advantage of the true Affiliates power is having accurate performance metrics on their activity.

For the Affiliate Marketers

If you truly want to check and understand how sales are made from your site and the best ways to improve the results, you should analyze the metrics of the entire buying process, from the moment the visitor enters your site and until he pulls his card out and makes the purchase.

The biggest challenge for any affiliate marketer is to have as many visitors as possible and convert them into buyers. Getting more visitors to the site is widely discussed in the industry and probably the easiest statistic to check either with Google Analytics  or Statcounter (or any other web metric service).

Once the visitor leaves your site, is up to the merchant to track and report what happens in the purchase process. There are several metric parameters the merchant should track and make available to the affiliate as well:

1. CTRs (Clickthroughs) - unique clicks sent by affiliates (or how many visitors have clicked on the buy button). Probably it would be a good idea to compare this number with the one from your site's Web Metric service to be sure everything is ok. Once a visitor enters the affiliate site, the entire focus for any affiliate marketer should be the click on the buy button. It doesn't matter if you have 10 products or 20, it matters how many Clickthroughs you have.

2. Products sold - If you managed to get passed the "click on the buy button" moment and do some actual sales, I bet you are willing to know what products you have sold. Having the total number of sold products is good, but if you can also see what products have been actualy sold, it's even better - you can find out what products sell better.

3. ConvR (Conversion ratio) - percent of successful sales. Basically you can improve your sales in 2 ways: increase the number of visitors and clicks on the buy button, or transform the same clicks into more purchases.

With the number of clicks and the number of purchased products you can calculate the conversion rate: it calculates as Products sold/ CTRs X100 and it's probably the most important metric you should take care of.

The Conversion ratio can be used in many ways: decide the best promotion method, choose the best selling product or notice when something is goes wrong (and react quickly) or something is good (and you should capitalize on it).

4. Total - Total Sales. This one has an informative role, but can be used when dealing with the merchant (it shows the volume of sales you are making for him)

5. Refunds - Total refunds. Refunds are usually handled by the merchant, but the bad part for an affiliate is that he loses the commission if the sale turns into a refund. You should have control (or at least reports) on everything that could help and hurt your commissions.

6. ComR - Affiliate commission ratio. Once again this is a parameter to decide if a program/product is worth the effort investing in pre-selling. The Affiliate Commission ratio should always be used together with the Conversion ratio in order to find the right balance between products that convert well and products that get you most profit.

Of course, we can think and evaluate a number of other metrics, but the bottom line is that most of the affiliates miss to understand the importance of metrics and how the metrics could explain their level of success in affiliate marketing.

Understanding metrics won't increase your sales, but it's the single most important thing in finding out what improvements you might need.

Copyright © 2007, www.avangate.com all rights reserved. This article was written by Cristian Dorobantescu, Affiliate Network Coordinator at Avangate B.V. Avangate is a complete ecommerce provider for shareware sales incorporating an easy to use and secure online payment system plus additional software marketing services and sales tools.