KPI (key performance indicators) in Affiliate Marketing

Key Performance Indicator
KPIs are essential in determining the success of an affiliate campaign. Without it, 
you will also have no way of telling if a program has a high chance of succeeding.
You can choose the KPIs that indicate profitability and optimize that.

Why Use KPIs?

You need KPIs to know if a program is worth promoting. With this, you need to focus 
their energy on programs that will give you the highest return for your time spent.
KPIs allow you to breakdown certain affiliate marketing platforms and methods into 
variables. With this, you’ll be able to see the relationship between the variables. 
You will then clearly see if one variable causes another or if one variable affects the other.

KPIs can have an impact on budget and profits, a careful study must be done. 
Not all KPIs are important. Some affiliates can be overly obsessed with these 
indicators that they miss the entire picture. Indicators like conversion rate 
and earnings per click are not important. Instead, you need to focus on the 
factors that affects revenue.

New affiliates:

You must see the number of new affiliates approved. it is an indication of 
the demand of the program.

You cannot promote a product that only sells for a limited time. 
You need a program that still sells now. And the number of affiliates is a good indication of that.

Number of affiliates vs active affiliates:

An affiliate program may have millions of affiliates but that doesn’t mean 
that it is making a lot of money.Money comes from affiliate activity. 
The more affiliates that actively promote your product, the more sales the program gets.
It is not that the percent of active affiliates is not important. 
But optimizing for it is not a good option.

New customers:

To know whether a certain affiliate program is active, you have to look at 
the percentage of new customers, as customers indicate the profitability of the website.
Affiliate managers can now track this through analytics. There are now some 
tracking pixels that manage to report new customers. This can be integrated in 
the cart and backend of the e-commerce site.

Conversion rate:

Conversion rate is important for online stores and salespages. It indicates 
the rate at which the page manages to convert a visitor into a buyer.
conversion rates may vary from affiliate to affiliate. A conversion rate 
for one person may not be the same for the other. With this, it is a useless 
metric to consider if you are looking at affiliate performance.

Average order value:

Some brands have multiple products. And these are often sold at different prices. 
One affiliate may be able to sell lower priced products in huge quantities and this 
can affect the average order value of the program. With this, we can say that average 
order value is a good indication of the profitability of a program. Also, it can give 
you a clue on which products are selling and which ones are getting ignored.

Average earnings per click:

Earnings per click may not be as important as you think it is. Sure, it shows you how 
much money is made with a certain number of clicks but it is hard to determine where 
the clicks come from.

Percentage of affiliate sales versus overall sales:

If you want to know if a certain affiliate program is profitable, you have to look at its 
percentage of affiliate sales versus overall sales. This will show you where most of the 
website’s revenue is coming from: affiliates or direct sales.

Return on Ad Spend (ROAS):

Affiliate marketers spend money to get money. And they do this by spending on advertising.
A greater return on ad spend is needed if you want a successful affiliate marketing campaign. 
This is the reason why ROAS or return on ad spend is very important. It is a clear indication 
of the profitability of an affiliate program.

Average Order Value (AOV):
The Average Order Value metric is a great one to keep track of to evaluate both customer behavior 
and the efficiency of your affiliates. Since we’re already looking at revenue, this ratio of 
revenue-to-orders works as a barometer of how well your affiliate marketing is working.

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