As a SaaS company, you may be wondering how affiliate marketing can help you. After all, isn’t affiliate marketing all about selling physical products? Wrong. Affiliate marketing can actually be a great way to sell your software products. Here are five common challenges that SaaS companies face and how affiliate marketing can help resolve them.
How can affiliate marketing help your SaaS company?
1. Low Customer Acquisition Costs
One of the biggest challenges SaaS companies face is customer acquisition costs. With so many options available, it can be difficult to stand out from the crowd and get people to sign up for your service.
Affiliate marketing can help by providing a source of high-quality leads that are more likely to convert into paying customers. By partnering with affiliates, you can reach a larger audience with your marketing message and increase your chances of getting people to sign up for your service.
Affiliate marketing works as a no cure no pay method. We only pay affiliates for the sales they bring in. This makes affiliate marketing one of the most profitable marketing channels.
2. Churn Rate
Another common challenge SaaS companies face is a high churn rate. This happens when customers cancel their subscription or don’t renew it after the free trial period.
Churn can be a major problem for SaaS companies because it’s costly to acquire new customers. If you’re losing more customers than you’re gaining, it can be difficult to sustain your business.
Affiliate marketing can help by providing recurring commissions that give affiliates an incentive to promote your service to their audience on an ongoing basis. This can help keep your brand top-of-mind and increase the chances that customers will stick with your service.
3. Low Average Revenue per User
Another common challenge SaaS companies face is a low average revenue per user (ARPU). This happens when customers don’t use all the features of your service or don’t upgrade to a higher-priced plan.
Affiliate marketing can help by providing a way to upsell customers on higher-priced plans or additional features. By working with affiliates who have a high-value audience, you can reach people who are more likely to be interested in upgrading their subscription.
4. Long SaaS Sales Cycles
Another common challenge SaaS companies face is a long sales cycle. This happens when it takes a long time for customers to make a decision about your service.
Affiliate marketing can help by providing a way to reach potential customers earlier in the sales cycle. By working with affiliates who have a high-traffic website or blog, you can get your message in front of people who are starting to research their options and are more likely to be interested in your service.
5. Seasonality
Another common challenge SaaS companies face is seasonality. This happens when there are dips and peaks in customer demand during certain times of the year.
Affiliate marketing can help by providing a way to reach potential customers during these lulls. By working with affiliates who have a high-traffic website or blog, you can get your message in front of people who are more likely to be interested in your service.
These are just a few of the challenges that SaaS companies face. If you’re facing any of these challenges, affiliate marketing could be the solution you need to take your business to the next level. So, if you’re not already using affiliates to help market your products, now is the time to start. Let’s take a look at the different types of affiliate programs you could choose from.
Types of Affiliate Marketing Programs
There are two main types of affiliate programs: In-house and network affiliate programs.
- In-house affiliate programs – An in-house affiliate marketing program is when a company has its own affiliate program that it manages internally.
- Network affiliate programs – A network affiliate marketing program is when a company uses a third-party platform that connects advertisers and publishers.
In-house Affiliate Programs for SaaS
There are a few key things you need to do in order to set up an effective in-house affiliate program.
Setting up the affiliate platform
To get started, you need to choose an affiliate platform (software solution). You can either build one from scratch or go with a third-party affiliate platform. Building your own affiliate platform has its advantages. For one, you can tailor it to your specific needs. However, it takes more time and effort to get it up and running.
A third-party affiliate software soflurion, on the other hand, is a ready-made solution that you can use right away. For example, Idevaffiliate, or Impact Radius. However, you’ll need to make sure that the platform integrates with your eCommerce solution. Also, ensure that it provides the functionality you require.
Find reliable affiliates
After you step up your affiliate platform, the next step is finding reliable affiliates. Who you choose to partner with will make a big difference in the overall success of your affiliate program. So, look for those who will be a good fit for your business.
Marketing experts suggest looking at bloggers and influencers who already have an audience that is interested in what you have to offer. Make sure they have an excellent reputation and are known for producing quality traffic. The best to vet possible candidates is to have a standard application form.
This should include questions that will help you determine if they are a good fit for your business. For example, their areas of interest, blog or website URL, social media following, past experience, and so on. Also, consider setting up a screening call to get to know them better and see if they are truly passionate about what you do.
Create attractive offers
Affiliates are more likely to promote your products if you offer them attractive deals. Once you’ve found some good affiliates, the next step is to create attractive offers that will convert visitors into customers. Your offers should be relevant to your niche and target audience. They should also be competitively priced and offer a good value proposition.
In addition, your landing pages should be well-designed and user-friendly. By creating attractive offers and landing pages, you can increase your conversion rate and generate more sales. So, create offers that will incentivize them to want to promote your business. For example, you can offer a higher commission rate for those who perform well.
Track Your Results
The final step in setting up an in-house affiliate program is tracking your results and optimizing your campaigns accordingly. You should track your click-through rate (CTR), conversion rate, and average order value (AOV).
By tracking these metrics, you can see which offers and landing pages are performing well and which ones need to be improved. You can also use this data to adjust your commission structure and payouts. By tracking your results and making changes accordingly, you can maximize your profits and grow your affiliate network.
Pros and Cons of creating an In-house Affiliate Program
Pros
1. Increased control
When you run an in-house program, you have complete control over the terms and conditions, commission rates, and other aspects of the program. This allows you to tailor the program to your specific needs and objectives.
2. Greater flexibility
In-house programs also tend to be more flexible than network programs. For example, you can easily change the commission rate or alter the terms and conditions if you need to.
3. Better branding
An in-house program gives you full control over your branding and how your affiliates promote your products or services. This can be a great way to build a strong brand identity for your company.
4. More personal relationships
Since you have total control of the program, you work with affiliates directly. As a result, it can be easier to build solid, personal relationships with them. This can lead to better communication and a more effective partnership.
Cons
1. Requires more work
Setting up and managing an in-house program can be quite time-consuming. You’ll need to recruit affiliates, set up the program, and track results yourself.
2. Limited reach
An in-house program will only be successful if you can attract a good number of high-quality affiliates. Finding and recruiting affiliates is hard work and requires patience.
3. Logistics and management
Running an in-house program requires an in-house affiliate manager and infrastructure such as software and processes to support their work.
Choose the right affiliate management software.
To effectively manage your own affiliate program, you’ll need to invest in technology. This includes software that tracks affiliate sales and commissions, as well as email marketing tools to communicate with affiliates. You also want fraud detection software to prevent affiliates from artificially inflating their sales.
Monitor performance and adjust as needed
Once you’ve set up your affiliate program, it’s important to monitor performance and adjust as needed. This includes regularly reviewing sales data, as well as communications with affiliates. If you see that an affiliate isn’t performing well, you may need to adjust their commission structure or remove them from the program altogether.
Using Affiliate Networks for SaaS
Affiliate networks such as MaxBounty, are used to have direct access to a pool of affiliates that can start promoting your products.
Networks are mostly used for other niches then SaaS, such as dieting/nutrition and ecommerce. This is because the sales cycle of these niches are shorter; people look for a solution click an affiliate link and sign up / buy the product. Many network affiliates work with PPC traffic.
The sales cycle for SaaS companies is usually longer and more complex, and often bans PPC affiliates to not have channel conflict with their own paid marketing efforts.
Therefore its usually not interesting to use networks over in-house affiliate programs for SaaS, but always take into account your own customer cycle, company goals and resources.
Pros
1. Easy to set up
Joining an affiliate network is quick and easy. You simply need to sign up and create your account. There’s no need to spend time recruiting affiliates or setting up the program.
2. Reach a large audience
Affiliate networks give you access to thousands of potential affiliates. This gives you a chance of finding affiliates who can start selling your products, if they suit your product and allowed methods for promotion.
3. Less need for recourses.
With a network, you outsource a big part of affiliate managemengt. The affiliate network will handle all the details, including recruitment, tracking, and payments.
4. Professional support
When you join an affiliate network, you’ll have access to a team of professionals who can offer support and advice. This can be incredibly helpful, especially if you’re new to affiliate marketing. Running an in-house program will require you to get this expertise in your team.
Cons of Affiliate Networks
1. Less control
When you use an affiliate network, you’ll need to abide by its rules and regulations. This means that you won’t have as much control over the program as you would with an in-house program. You also wont have direct communication with your affiliates.
2. Inflexible terms
The terms and conditions of affiliate networks are usually set in stone. This means that you have to go with the rules the network has for the affiliates including their processes for fraud detection.
Conclusion
Both in-house and affiliate networks have their own set of pros and cons. There is no one-size-fits-all answer when it comes to choosing the best affiliate program for your business. However SaaS companies can benefit greatly by setting up their own in house affiliate program and many choose that route.
You can read our full guide on setting up an in-house affiliate program for SaaS here.