One thing that many merchants with Affiliate programs wonder is if their Affiliate program is actually adding value. There are tons of things to think about like coupon sites (remember that not all coupon sites are bad) that only send sales from people leaving your site when they see your coupon code box and search for terms like yourdomain.com + coupons. The sites that use adware to take credit for sales that they never earned (which are always bad in my opinion) and trademark bidders who are poaching sales off of people who already knew about you and were already going to your site. Each of these can be good and bad (except for the Toolbars, reminderware, couponware, adware, etc…), but there is more to it than just poaching sales to try and figure out if your Affiliate program is adding value to your company. Because this is one of the most common questions I get asked at trade shows, I wanted to do a series of posts to help you determine if your Affiliates are adding value or stealing sales and costing you money. The first in this series is Traffic Patterns.
What do traffic patterns and Affiliates have in common? Affiliates are supposed to be able to drive their own traffic to you without needing you to send them a visitor or having to poach your cart. They drive their own readers and website visitors, which could include past customers, if yours aren’t loyal or people who may have forgotten about you. In a pure value add, Affiliate traffic is independent and should always be independent of whats happening with your website. When your traffic and your sales grow, their traffic and sales should stay the same (unless you recruited new Affiliates with large traffic sources, but that still wouldn’t actually match your site’s pattern and would be independent). If your Affiliate channel is actually driving its own traffic, the traffic patterns should not match your site’s traffic patterns. If Affiliates are matching your site’s traffic patterns, then chances are some of your Affiliates are poaching your sales. You can find them by looking who grows and shrinks as your site traffic and sales grow and shrink (this isn’t always 100% true but from what I have seen it holds true most times). There are a few small exceptions so lets go over them and the traffic patterns you should look for and a few tests you can run.
Seasonal Sites and Sales:
If you are a pool merchant or a Christmas ornament merchant, you obviously have different patterns based on seasons. Chances are that certain Affiliate sites which are also in that same seasonal niche will have more or less traffic at the same time as you. That doesn’t mean that they are poaching traffic, they just have the same busy season. If you take out the niche sites which are all content based and do not show up for any of your trademarks or extensions in the search engines, like yourdomain.com + coupon codes, then you have a base of Affiliates to remove and a group to watch closely. The first test (or second because many people enjoy the reverse test first) I recommend running is a large sale.
Obviously you are going to market this sale to your customers and you’ll see a large increase in sales. If your Affiliate channel also has a large increase in sales, there is a good chance that those affiliates who rose and fell with you during the sale are poaching from your site. Some Affiliates will try and argue out that their visitors were just waiting for them to post the sale deals. You can survery the customers who came through or spot check the list with actual calls to ask where they found out about the sale. If they mention that Affiliate’s site then that could be the truth. There are also a few more ways to check and make sure the growth and shrink wasn’t associated with people who would have already shopped on your site. The most common way my Clients have tested this theory is to have the sale and then a few weeks later have the same type of sale, but don’t announce the sale to any of your customers so your traffic remains steady and only those Affiliates that rose and shrunk the discount codes for their traffic. If they can match the traffic and sales volume during your promotion, it should be at a similar level to where you had a traffic increase because you marketed to your customers, then they were probably adding value. You do have to consider one thing though.
Because they just pushed you, they may not be able to reach the same volume of sales. However, they should be able to drive at least a nice sized increase in sales, possibly 50 to 75% of what they sold during the huge sale where you marketed to your own customer base. If their sales stay regular during the new sale or don’t even have a minimum 30% increase, chances are that they aren’t adding value. The true test is to see if these same Affiliates can always increase in sales to that higher volume when your site isn’t increasing in sales. Their sales and traffic should mostly remain steady and not have the same pattern as your store since they are supposed to be sending their own traffic and not trying to attract people who are already on your site. You can also run this test in reverse where you give these Affiliates the coupons or deals that would be offered during the sale a couple of weeks ahead of time.
What you do is keep a record of how many sales they had with the deal before the sale and measure if there was a huge increase in volume from them and no one else. Two weeks later when you push the large sale out to your customer base, see if the Affiliates also had a rise in sales that matches or was close to your own rise. Then compare it to when you didn’t have a huge spike in traffic from your own marketing efforts around the sale. If the giant rise happened when you did the official sale, chances are the ones who rise when the big sale happened are poaching some of the people from your site. Having the coupons or specific Affiliate deals before the big sale and then seeing if they can drive a large volume, or if the volume comes when you have the sale because you marketed to your own customer base, you now know who is adding value and who is poaching your shopping cart.
A final test is to pull the coupon code box off your site completely, place coupons next to the box so people don’t have to leave to find a code, or rename the box to say tracking codes and show a couple of discount codes next to it. If you do this you should see a drop in sales with certain Affiliates. If by stopping people from leaving your site to find coupons causes drops in Affiliate sales from specific Affiliates, you’ll now get a better gauge for how many sales you shouldn’t have paid commissions on and who may have been poaching sales from your site. This is also a great way to measure the effectiveness and value add from these certain types of Affiliates.
There are a ton of other things you can do with traffic patterns and Affiliate traffic to measure if your Affiliates are adding value or not. As Merchants get smarter and watch their revenue streams it becomes more important to realize who adds value and who does not. When you remove the partners who poach sales, you’ll not only find that other channels rise, but you’ll probably have an easier time recruiting pure value adding sites because they may feel more confident that they will get credit for the sales they refer. The next post is going to be Trademark Bidders that add value and Trademark bidders that don’t. Subscribe to the newsletter if you want to receive these posts and more via email.