The 80/20 Rule of Affiliate Management
In managing affiliates, which of your actions make the most difference and how can you maximize your impact?
Pareto’s Law? It applies to affiliate management too.
20% of affiliates make up 80% of your revenue.
Affiliate marketing can be a good way for a company to increase traffic and revenue. However, many affiliate programs waste resources on affiliate management that doesn’t create value.
As an affiliate manager, you should be trying to figure out how to decrease the effort needed to manage the 80% of non-performing affiliates and optimize your affiliate network for the 20% of affiliates that bring in the most revenue.
Invest in affiliates that give you the most value (biggest returns). Anything else is a time suck.
Make your affiliate sign-up process frictionless
I’ve seen affiliate network sign-up procedures where an affiliate has to fill out a form, wait days for a response, fax in paperwork (fax!), and have a phone call with a human person before approval. Common thought is that having a higher barrier to entry decreases the likelihood of affiliate fraud and ensures that an affiliate network only gets the affiliates most interested and most likely to drive revenue. This is false. Even if your sign-up process has 16 layers of accountability and makes affiliates walk over hot coals before they can send you traffic, you will still find that you get 80% underperforming affiliates and you will still have to monitor for fraud. Worse yet, you’ll be driving away serious partners who could send traffic but don’t have time to jump through hoops in order to do it.
Automate fraud detection
If identifying potential fraud is your reason for hanging onto an unwieldy sign-up process, then you need to automate as much as you can. Your affiliate fraud detection should be automated so that there is a baseline of criteria whose presence (or absence) will trigger a manual review. There is a lot of affiliate software on the market and a lot of systems have excellent fraud detection built in.
Even in fraud detection, you should be paying the most attention to the 20%. If a brand new and unknown affiliate suddenly becomes one of your highest earners, then that affiliate is worth a look. Look at their site and traffic sources to see if those sales fall out of the ordinary patterns (low traffic but high sales, traffic whose source you can’t identify, etc). Crunch the numbers and use data to identify trends that point to fraudulent transactions.
Affiliate fraud detection is an important part of running a partner program, but it shouldn’t force you into processes that make your program unattractive to your highest performing affiliates. Automation plus data is a way to make sure risk management happens without interfering with commerce.
Create affiliate tools that require minimal management
Accessing affiliate tools should require minimal effort. If an affiliate has to has to have more than one touchpoint with you to set up a whitelabel solution…that, sir, is inefficient. Every partner program should have some easily downloadable affiliate tools that will serve the majority of affiliates. Once an affiliate moves into API manipulation or affiliate data feeds, then they may require more hands-on management. But an affiliate who is using your API is probably at a different level than one who just needs a few banners — she’s probably part of your 20% anyway. The majority of affiliates should be able to access, download, and use your affiliate tools with minimal effort.
Give the 80% a chance to grow into the 20%
I’m sure there are those of you who think I’m completely shitting on the 80 percenters. Not true. Every affiliate has the potential to be one of the 20% and you should respect them as such. When they’re on the phone, take their calls. Answer their emails, IM’s, and questions in a timely manner. An affiliate who takes the time to contact you is showing at least a little bit of hustle.
So how do you grow one of the 80% into one of the 20%?
Schedule regular phone calls and webinars. Those affiliates who show up consistently will be your growth affiliates who have the potential to turn into your best performers.
So if you’re not managing the 80%, what the hell are you doing?
Playing Angry Birds. Kidding.
This is the classic Shitty Sales Director question. I’d rather see a good affiliate manager figuring out how the small number of high-performing affiliates can send more and better qualified traffic than spending their day dealing with time-sucking minutiae that could be automated or flat-out ignored.
Sometimes an affiliate that wasn’t pushing a lot of traffic before, suddenly ramps up and when he starts moving numbers, you want him to think of your affiliate network first. If you’re visible on affiliate message boards, growing your social network, or actively networking and attending trade shows, then your company will be top of mind. A great affiliate manager should be spending a good part of his time looking for opportunities to further the brand.