Affiliate Marketing

How to recruit affiliates – the matrix

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Sorry to disappoint you, the Matrix is not the movie, we are talking about another Matrix, the one that helps you to select affiliates that satisfy your needs. Now if you want to stop here, I perfectly understand and it won’t be personal.

Jokes aside, there is a management tool which you probably already know, called Balanced Scorecard (or the Matrix) which enable you to weight the importance of each requirement when choosing something that can change your business, normally a software.

Already back in 2006, an academic research of Cranfield School of Management (B. Marr & A. Neely: Automating the balanced scorecard – selection criteria to identify appropriate software applications. Measuring Business Excellence, 2006) demonstrated how the Balanced Scorecard helped organizations in selecting appropriate softwares.

In this article, we will apply this selection methodology to affiliates in the effort of making it easier for a company to select the right affiliates for their strategy.

Why this matrix?

The reason for this balanced scorecard is that not all affiliates that send you sales and produce traffic are appropriate for your business. Some of the affiliates can send expensive sales (they cost you too much); sometimes it takes a lot of money to acquire a new customer, and it’s simply not affordable for your company. Sometimes it takes a long time for an affiliate to start sending sales and produce revenue, whereas you need instant traffic instead.

In order to navigate easily into these possible variables that can become a big headache, we recommend using the scorecard below to test new affiliates according to the requirements of your business. This is not a “must use” tool, but it’s a just a suggestion that can help you understand an affiliate performance against your company’s requirements even before a real affiliate partnership will start, thus saving your time and efforts while recruiting affiliates.

Think about your requirements

Note: this matrix is recommended for use only when you are in front of a choice of recruiting or not recruiting a “super affiliate”, that person/ company that can potentially be a game changer and fall within the 20% of your total affiliates responsible for 80% of your total sales and revenue.

To help you with the selection process, you can build the Balanced Scorecard by starting from the following requirements for traffic quality and costs. Note: we only list 7 requirements, but your company is free to adopt more as needed.

 

  • Information about the affiliate

First of all, you need to know how much an affiliate is asking in terms of commissions, affiliates normally charge per lead. But this is can be negotiated and turned into a new deal on pay per sale (CPA). This stage can be difficult to complete because CPA affiliates are not always keen to take all the risk of not generating sales for you and thus not being paid.

  • Quality of traffic

Under this heading, you need to check what type of traffic the affiliate is going to send you and this is very important. Your organization can decide that the quality of traffic is determined by a list of factors such as traffic source, cookie length, traffic medium, geo, channel or device. This is really up to your organization to know what you define as “quality”. In general terms quality is defined as the likelihood that traffic is converting into sale, so keep an eye to the traffic CTR.

  • Traffic volumes

Under this heading you need to check the amount of traffic the affiliate is going to send you on a daily basis. The reason for this is that you have to make sure you can afford to pay the affiliate for the traffic he is sending, even if it’s on a performance basis. Some companies do not have a limit on traffic as long as it’s producing sales and conversions. But if you have a limited affiliate budget then you need to put a cap on a daily traffic volume.

  • Commission request

The commission request from an affiliate is very important for the affiliate and for a company as well. Once the commission is agreed and traffic starts to flow to your website, you cannot change the agreement so you need to make this right from the very beginning (have a look at the attached P&L spreadsheet). Commissions can really motivate an affiliate in working harder to produce your company conversions and this means revenue for you.

  • Affiliate Type

Affiliate are not created all equal. There are those who know your industry very well and have several channels on which to promote your products. An affiliate can have a popular blog, can do PPC and has a huge following on social media, while others can only refer you to friends and family.

  • Sales funnel (top vs bottom)

Under this point companies can discuss with the affiliate what type of traffic they can send or how close is their audience in buying a product. Normally, reviews are the closest to sale in the sales funnel because the potential customer is very interested in a product to the point where he reads a review. While Google searches are at the top of the funnel because users are in the search stage of their journey to buy something. Your affiliate is able to tell you where his traffic is positioned in the sales funnel.

  • Traffic speed

With this I am referring to the time it takes for the affiliate to start sending traffic in good volumes and in good quality to your website. From the time you make an agreement to the point in which the traffic will flow, it can be 1 day or several weeks. You can discuss with the affiliate beforehand to suit your needs.

 

Give a score to each requirement

The second part of building the balanced scorecard is giving a score to each requirement to understand both their value for your company and the performance during the first stages of your cooperation.

So I recommend you give each requirement a two -way evaluation:

  • In terms of importance weight (A), which means how important is for your agency.
  • In terms of score (B), which means what in reality each supplier scores for each requirement.

The importance weight is measured in numbers, from 1 to 4 where:

  • 1 = not important
  • 2= important
  • 3 = very important
  • 4= extremely important

 

The score (B) is measured with a number from 1 to 3 where:

  • 1= low score
  • 2= medium score
  • 3= high score

 

Start the traffic as soon as you can to have a clear idea of what the affiliate can achieve for you, this allows you to understand what the main weaknesses and strengths of each affiliates are. You should be able to determine importance weight (A) and score (B).

 

Once you have done assigning weight and grades to each requirement and platform, you are ready to build the Balanced Scorecard table, which should look like something below.

 

Affiliates

 

Requirement   

(A)

Imp.

Weight

Performance on requirement

 

(B)

Score

(A)*(B)

Weighted Score

High

(3)

Medium

(2)

Low

(1)

 

 

 

Affiliate #1

 

 

 

Information

 

 

4

3 12
Traffic quality 3 2 6
Volumes  

4

2 8
Commission 2 2 4
Affiliate Type 3 3 9
 

Sales funnel

 

3

 

 

 

3 9
Traffic speed 2 3 6
Total Score             54
 

 

Affiliate #2

Information

 

 

4

2 8
Traffic quality 3 3 9
Volumes  

4

3 12
Commission 2 1 2
Affiliate Type 3 1 3
 

Sales funnel

 

3

2 6
Traffic speed 2 1 2
Total Score             42
 

 

 

Affiliate #3

 

Information

 

 

4

3 12
Traffic quality 3 3 12
Volumes  

4

3 12
Commission 2 3 12
Affiliate Type 3 2 6
 

Sales funnel

 

3

2 6
Traffic speed 2 2 4
Total Score             64

 

From this evaluation it emerges that two requirements are important: information about the affiliate and volumes, this is how I define my affiliate strategy goals. These are the criteria that make the difference in the quality of my strategy and in terms of available budget.

Affiliate #3 is clearly the winner after this evaluation, if it were a real scenario, your next move would be to reward this affiliate more to motivate him to send more traffic and increase volumes.

This is a very smart tool to use when choosing an affiliate that will save you time and money.

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