Congrats! You’ve launched a SAAS product and you have some customers coming into the door. Despite all the odds, you have a product serving a need and people love it. You’re building new features constantly to improve the product, and you’re finally starting to see things start to “click.”
LTV, Churn, ARPU, and CAC are new acronyms you’re probably starting at every single day minute.
But there lurches something in the back of your mind.
…queue dramatic music…
Covering your bases and getting movement in your customer acquisition funnel by investing in the typical online acquisition channels, such as PPC, SEO, social provides a good foundation to most businesses, and provides incredible growth from 0.
Quickly, however, we have seen that SAAS companies start reaching a plateau in acquisition dollar efficiency. Your SEO efforts can only scale so fast. Your PPC campaigns start to increase in CPA or CPLs. Your social campaigns are looking a bit stale. Things are just not growing as fast you were hoping.
We know because we’ve been there.
It doesn’t take a genius to surmise that based on the title of this post, we are huge proponents of launching an affiliate program.
Look, we’ll be the first to admit: If your business is focused on B2B with a product that costs more than $200 per month, or if your sales process requires booking a demo and an account executive to sell, then a traditional affiliate program is probably not going to work.
But for those that are offering a SAAS that someone can try out by whipping out their credit card, affiliate marketing could be a channel that makes up a significant portion of your sales.
Let’s evaluate this a bit further.
At a fifty-thousand foot view, affiliate marketing is pretty darn simple. An affiliate (or publisher) promotes your product. When a sale is completed originating from that affiliate, they get paid a bounty. It’s essentially the same thing as a paying a salesperson only on commission. But the salesperson is actually an army.
Of course this is an oversimplified statement, and there are plenty of nuances, but at its core, that’s digital affiliate marketing.
For SAAS businesses, this presents an incredible and awesome opportunity. Time to bust out the calculator. It’s ClickThere Mad Libs time:
If you are offering a product that costs $50 per month, and the customer tends to stick around for 24 months, then they have a lifetime value of $1,200.
Easy so far, right?
Factoring out costs to serve, processing fees, that fancy new office space, let’s assume you make 50% margin which equates to $25/mo or $600 in profit over the average lifetime of that customer.
Imagine paying out a one time commission of $100 for that sale.
Let’s reword that a different way.
For $100 in marketing spend, you get $500 in gross margin. Or a 5x ROI. And it doesn’t cost you anything after that.
Many affiliate programs for SAAS companies are paid out on a CPA (Cost Per Action) basis, like the example we used above. But, there can also be other payout options and structures that can help maximize success for you and your affiliates.
BRINGING IT ALL TOGETHER
That is why affiliate marketing for SAAS businesses is awesome. Once you know your numbers, it’s easy to justify spending marketing dollars on an affiliate program.
If you’re a newer startup and frankly don’t know your LTV yet, don’t worry, we can help you put together estimates.
Here are some other sweet intangible benefits to affiliate marketing:
It’s “Free” PR: News flash. This just in! Press releases do not work. Sorry. It’s almost 2020, and they haven’t worked to generate any real interest for the last 10+ years. Instead, imagine an in-depth review on influential websites where your customers already hang out and read about your industry.
Let Affiliates Spend THEIR money: Depending on how you set up your affiliate program, you can have your affiliates bid in the PPC auctions while working on your behalf. As you will only be paying out for a successful sale generated, this puts the onus on the affiliate to drive useful and high converting traffic (spending their own money) and allowing you to sit back and relax.
Increase Branding: Affiliate marketing has been shown to generate buzz. Think of it as brand spend with performance attached to it. If your website is listed on many of the top related websites on Google, you can bet you’ll have a huge presence.
It’s Scalable: Look, we’re not going to lie. Affiliate marketing takes time! New publishers and websites are popping up every day. They want to work with the best and highest converting offers. This takes time to make the connections. But, once your program has scale, nothing can stop you. You cannot launch a program and expect instant success. But, what you will find is that over time, the channel will start to exponentially scale.
Done correctly, a well-run affiliate program can become one of your most important marketing channels for your business. Between the intangible benefits and quantifiable ones, affiliate marketing allows you to scale your business.
Talk to us today to see how we can help grow your SaaS business through affiliate marketing.
