Advertising

Affiliate Programs for SaaS

Peter Hamilton

Over the last year we’ve noticed an increase in SaaS businesses stepping into affiliate marketing.  Think about it.  They’re the perfect candidate.  Software as a Service businesses provide a product that is online (no delivery required), their sales funnels are completely online (usually), and they are subscription models with monthly fees (which affiliates love).  Affiliates can quickly build their own empire of monthly paying customers, and SaaS providers reap the benefit of a massive sales team that is focused on retention and customer satisfaction.  This is why more and more SaaS companies are deciding to build their own affiliate programs and affiliates are right there to support them.  Everyone wins.

The Free Trial

The number one way to get users in the door, with any software offer, is a free trial.  Free trials dramatically lower hesitation of users to get started, and they help providers generate leads, learn more about retention, and prevent early charge backs.  No matter the level of sophistication of product, free trials are the most proven model to entice new customers, and they are often the foundation to a successful SaaS affiliate program.  Affiliates and publishers need to send users to a page that easily hooks them for the longer sales process.  Dropping them at a page of mandatory pricing is sure to have bounce rates through the roof.  Perhaps this stuff is pretty common sense, but you’d be surprised.

The next decision that will impact affiliates is whether you require a credit card number in the trial signup process or if you collect it from the user at a later point.  Requiring a credit card will decrease conversions, but not requiring and collecting it later will certainly impact retention.  This is the point where you need to crunch the numbers and figure out the best way to incentivize affiliates for your particular product.

Setting Up a SaaS Offer

For most online software products with lower pricing points, a credit card collecting free trial experience is usually the best fit.  Because the barrier to entry is already quite low, it is preferable to pay affiliates based on a percentage of revenue.  If this is the case, affiliates want the users they send your way to stay on as along as possible, adding to their monthly payout base.  However, it is also very common to incentivize affiliates for various user actions along the process, paying the most for real customers.  For example, an affiliate might receive $2.50 for every user’s name and email collected in the signup process, $1.00 for every newsletter signup, $5.00 for a free trial signup, and then 5% of revenue from the customer beyond that.  This is obviously a pretty exciting landscape for an affiliate to work in, but it also one that incentivizes them toward user engagement, rather than a single direct response.  There are an infinite number of ways to structure this, and it is entirely dependant on the type of product, type of user, and the value of each new customer.  This multiple conversion process is known as “Offer Goals” on HasOffers.  Wiki: Offer Goals

Tracking Multiple Editions

The next trick to setting up a SaaS offer is to track the various types of editions/version/pricing as well as calculating the ongoing payout based on the percentage of revenue.  Start by keeping recurring payouts (based on % of monthly revenue) separate from the user actions on the website.  Create an offer called “Offer Name – Recurring,” and assign a customer list to that offer.  Every new customer will be added to that list, and you will need to set up some quick code to ping your tracking platform’s API to show which customer has continued to pay.

The next step is to define each of the pricing editions as their own “Offer Goals.”  In this case, a different pixel must be displayed depending on the type of edition the user selected.  This may take a little work on the front end (no more than a couple hours from a knowledgeable developer), but ultimately it will allow for the most flexibility.  When all of these goals are in place, the payouts assigned to those goals can be changed at anytime, and unique payouts for each goal can be negotiated with the affiliate.

Conversion Rate Optimization (CRO)

So now your offer is in place.  Time to sit back and watch the subscriptions roll in right?  Wrong.  It is the job of the service provider to continue to optimize the user experience during the signup process, provide new targeted landing pages, and develop optimized creatives (banners).  Don’t try to test too many things on a single page at once, but instead practice methodical and scientific A/B tests to determine the factors that create the highest conversion rates.  There are hundreds of books, seminars, and software resources you can use to help in this process.
I recommend: Site Tuners, Google Website Optimizer, Crazy Egg, PageTesting.com

Once the offer is set up and the process is optimized, the age old question still remains.  Where do I find affiliates?  Do I build direct relationships or do a use affiliate networks?  I found a pretty good discussion around this subject on OnStartups.com, so this might be a good place to start.  Enlisting affiliates is certainly the most difficult part of the puzzle, but once you find just even a few pieces that fit, the payoff is incredible.  Getting the offer setup and ready to go has to happen first before affiliates/publishers can run with it.

Author
Peter Hamilton

A performance marketer by background, Peter is the CEO of TUNE, the world's leading mobile marketing platform. Peter has lead the company to 10 offices around the world and nearly 400 employees, now trusted by companies like Expedia, Starbucks, Supercell, and Uber. Follow @peterhamilton

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  • Deal sound good Will CheckUp Signup !

  • SaaS

    How do you determine the right compensation model for affiliates? Is there an industry standard for SaaS products?

    • There really isn’t an industry standard. It really depends on the age and nature of your product and the types of affiliates you’ll be working with. I always recommend being pretty agressive on price so that it is extremely attractive to affiliates. You’re gonna get that long term recurring revenue if you’ve got a great product so it’s up to you to really determine what you can afford on CAC.

    • To add to what Peter said, I haven’t seen any SaaS company offering more than 30% commission since most of the time it is recurring which adds up pretty fast. Also anything more than 30% and your company won’t make enough in short term, not to mention there is huge cost of maintaining your SaaS platform and providing sales and support.

  • Rick Stark

    I own a SAAS company. What Affiliate Software / Network should I use to handle my recurring commission management?

  • Valentin Radu

    Nicely done, Peter.

    We have a start-up SaaS in the CRO field: Marketizator. Which affiliate programs do you recommend us?

    Tx!

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