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The Definitive Guide to SaaS Affiliate Marketing

When it comes to setting up your affiliate marketing program as an SaaS provider, you need to consider a lot of things. For example, what incentivization model will you follow? How will you structure the program for long-term growth and not just attract people looking to make a quick buck?

In this guide, we’ll show you exactly how to set up an SaaS affiliate marketing program, as well as discuss what you should keep in mind as you develop your program. You’ll also learn some essential tips for making sure your affiliate marketers promote your product as effectively as possible for the long term.

affiliate marketing scrabble

Can You Sell Your Own Service?

This question is perhaps the first and foremost asked by SaaS providers. If you have a sales funnel that isn’t converting, starting your own affiliate marketing program isn’t going to make it better magically.

With that being said, you may wonder what the point of recruiting affiliates is if you’re able to sell your software by yourself. But the answer to that is simple: It’s all about growth and scale. You could double or triple your sales.

Affiliates can work like a finely oiled marketing machine and are good at selling the product to their audience. In fact, some affiliates do a better job of targeting and marketing the product than the actual company does. These are the types of marketers you want in your affiliate roster!

What Makes Affiliates Different From Resellers?

There are some important distinctions to keep in mind regarding affiliate programs because there are other types of programs that function similarly, often known as reseller programs.

Reseller programs revolve around having an intimate business relationship with the product, such as white labeling it or otherwise managing it as if it were your own. Many web hosting programs, for example, offer reseller programs to allow other users to become their own web host without the need to invest in things like server infrastructure or management.

In terms of SaaS affiliate programs, the reseller model is more common for higher ticket services, whereas those with lower price points (which includes many SaaS products) tend to benefit more from traditional affiliate programs.

Success or Failure in SaaS Affiliate Marketing Depends on Answering One Question

Oftentimes, when setting up an affiliate marketing program, SaaS companies look at things from this perspective:

“What’s the least amount of money I can pay my affiliates while still getting sales?”

It doesn’t matter which payment model you elect to use (more on those in a moment). Instead, to get the attention of the very best marketers—those that know not only your product but also your audience—you have to reframe the question to ask:

“What’s the most amount of money I can pay my affiliates while still being profitable?”

Some successful affiliate programs pay up to 50 to 100% of the first sale to the affiliate. That’s because that large commission will incentivize affiliates to join their program, and they can still make a good profit through upsells, cross-sells, and recurring revenue later.

Now, that’s not to say that your affiliate program marketing strategy should be to throw a giant commission at affiliates and expect them to promote anything and everything. There are plenty of failed SaaS affiliate programs out there with excellent commission structures that fell flat on their faces when it came time to promote the program simply because their funnel didn’t convert, and their product wasn’t great.

If you can’t take a hot, eager, ready-to-act lead delivered to your site on a silver platter by an affiliate and turn them into a customer, it’s time to go back and take a hard look at your funnel and see where users are falling through the cracks.

Setting up a Payment Structure

One of the biggest sticking points for many SaaS affiliate programs is the payment structure. There are several affiliate payment compensation models out there, but as SaaS is a relatively new field, there’s no single approach that works for every program.

Man using calculatore
Work out the math so that you know the best rate to pay your affiliates!

With that in mind, it’s important to understand that the decision you make here is definitely not one to take lightly. It all boils down to two distinct parts:

  1. Do you want to offer a one-time payment or a recurring payment (or both?) Just because your service is recurring doesn’t mean that you have to pay your affiliates a recurring payment. That said, it’s not a bad idea to pay out recurring revenue to your affiliates—you’re getting paid, they’re getting paid, and everyone wins. Many email marketing software companies offer this type of payment model. Likely, this model helps incentivize affiliate marketers to attract leads that will stay for the longest time rather than leads that are most likely to make their first (and potentially only) purchase. On the other hand, you can give your affiliates a larger one-time payout, which could be more attractive. The customer is still yours regardless. Once the customer is in your hands, it’s up to you to maintain a solid, reliable, and high-quality experience for them. Once you figure out how you want to pay your affiliate marketers, it’s time to ask yourself this second question:
  2. What do you want to pay them for? There are lots of ways to go about this decision, and it all depends on your business model. As with compensation models for SaaS affiliate programs, there’s no “best” choice here. The most common types are:
  • CPA (cost per action). This term is also referred to as CPL, or cost per lead. This metric has a simple structure and is the most common one in use. Here’s how it works: 1) The user sends you a visitor. 2) That visitor signs up to become a customer. 3) The affiliate gets paid per customer.  You can scale this model with the package that the user purchases (where higher package prices yield higher commissions), but that’s entirely up to you. When you’re just starting out, you shouldn’t try to muddy the waters and complicate things.
  • CPC (cost per click). This term is more relevant to the world of pay-per-click advertising, where you get your ad in front of X number of customers who clicked through and pay for those clicks.  Some affiliate programs follow this model, but the CPA model is far more common since affiliate marketers are held more accountable for actually bringing in customers, rather than merely directing traffic to your site.

Another point to keep in mind, because we are talking about SaaS affiliate marketing, is how much it costs for you to get and retain a customer in the first place: your CAC, or customer acquisition cost.

Many SaaS companies wonder if having an affiliate program in place will lower their customer acquisition cost. It may, but it may not. The biggest thing to concentrate on, and the thing that affiliate programs do best, is marketing at scale. An affiliate program lets you rapidly increase the amount of relevant prospects you’re getting in front of.

Marketing Your SaaS Affiliate Program

There are many SaaS programs out there that have failed to get their affiliate marketing platforms to take off because they mistakenly viewed affiliate marketing as yet another marketing channel. They might throw up a few promotional banners and quick links and leave the marketer to their own devices.

Unfortunately, with affiliate marketing programs, you get as much out of them as you’re willing to put into them.

The reason why most SaaS affiliate marketing programs fail isn’t because of a poor commission structure (although that can make the problem worse). By far, the biggest issue is that affiliate marketing is often perceived as “just another promotion initiative.” If it doesn’t pay off at the very beginning, it’s relegated to a “didn’t work” status. Then, those companies pounce on the next marketing “opportunity.” And when that doesn’t work, they shelve it and wait for the next, and the next.

Successful SaaS affiliate programs don’t do this—they approach the process with a well-defined strategy. They’re not afraid to try new things, and they don’t put all their promotional eggs in one basket because it takes a variety of tactics to reach the best affiliates and get them on board with your program. They know that marketing the program and proving that it works is just as important as marketing the business itself.

To help drum up interest in your affiliate marketing program, you should reach out directly to potential affiliates, join affiliate directories, do a press release, list your program in some app directories, get involved in some SaaS social media marketing, and publish blog posts.

In short, those who succeed with affiliate marketing have a solid marketing plan for their SaaS company. They know where they want to be, and if things don’t look good, they don’t hesitate to course-correct. That’s the essence of a winning affiliate strategy: steady, secure growth over time.

Should You Use “Affiliate Networks?”

When it comes to building up an SaaS affiliate marketing program, you’ll often be advised to join an affiliate network. These networks might seem like a good idea, but there are a few precautions you should take before you dive in.

Using an Existing Affiliate Network: Pros and Cons

Affiliate networks often give you a suite of tools that you can use to help manage your affiliate program: creating links, uploading creatives, seeing click-throughs, and verifying commission details. However, they also charge you a sign-up fee, a monthly fee, and/or a commission percentage in exchange for these resources. That can make them expensive for affiliate programs just getting off the ground.

Also, depending on the market that your SaaS serves, you may find it hard to recruit affiliates from these networks, as they generally focus on the fashion, travel, and electronics industries as a whole. That said, if you don’t feel like you can build your solution, or do so well, it’s perfectly fine to use an affiliate network. Just realize that while you get the tools and resources to help you manage your program, the actual management itself is still up to you.

Some networks have a large enough brand or so many connections that they can help you find good affiliates. These networks sometimes have directories that allow marketers who are looking for new products to match with a good fit.

Building a Network Yourself: Pros and Cons

Building your own affiliate network involves a considerable amount of time and resources, but you’ll save yourself money on setup and monthly fees. In addition, because you’re building things from scratch, you can concentrate on the custom features you want to implement rather than just “whatever works.”

There are SaaS affiliate marketing programs that use both a third-party affiliate network as well as their own. This type of hybrid management model allows you to have access to reporting tools and a large network of users but also lets you have greater control over the creatives and marketing campaigns.

The most important point is to treat your affiliate program as a core facet of your business, not as a side project.

Nurturing and Helping Your Affiliates

This stage is one of the most important aspects of your SaaS affiliate marketing program. Nurturing can make or break your affiliate program. All other things equal, taking the time to not only research prospective affiliates but also recruit and retain them properly will ultimately bring you more reliable success over time than getting a quick affiliate sign-up.

Outreach and Assessment

Before you start to send out a giant email blast to your list of prospects, you’re going to want to attract the serious players: bloggers, influencers, business owners, and users who can help you get the most leverage with their followers and friends. That means not only researching who those people are but also checking out their website.

Why bother with researching their website first? Because it helps you to better understand what they’re all about. What are they promoting? What is their strategy? They may not even show that upfront (good marketers are all about building their lists, too), but you can at least get a decent idea of what their approach is by looking into who they’re promoting, what their industry is, and so on.

This step is important because no one likes an email that was clearly sent to the masses but poorly structured to look like it was personalized. If you send emails that show you actually understand and care about each person’s unique business, they’ll be more likely to respect what you have to say, read the email, and reply.

The First Email

The next piece in the puzzle is going to be the first email that you send to them. And this step is often where affiliate marketers get things wrong because they just blast out a message to everyone without taking the time to see things from the affiliate’s point of view. If they’re a strong presence in the affiliate marketing, blogging, or influencer world, chances are they get pitched to all the time.

In addition, they may be promoting a competitor of yours because that competitor also has a lucrative affiliate program. Or they may be promoting other tools in the industry that, while not directly competing with yours, are still worth noting. To convince them that your program is worth their attention, you’ll need to approach this email in a different way depending on the situation:

  1. If they’re also promoting a competitor of yours: Show them why your program is more worth their attention and investment than the competitor’s. Maybe yours has a better payout, better affiliate management tools, better creatives, a better conversion rate, or is a better program overall. Focus on that without dragging the competitor’s name through the mud. In fact, don’t mention the competitor by name at all.
  2. If they’re promoting a similar program that’s non-competitive: You’ll want to make the case for why your SaaS program would go hand in hand with the current program they’re promoting.

The one thing you don’t want to do is to make your follow-up emails annoying and boring. Check in with them, yes, but don’t just bump an email the old “did you see this?” way. Try to get a feel for their likelihood of promoting it and their interest, and build from there.

Helping Your Affiliates

You also don’t want to start slinging links and creatives their way. Give them a wealth of tools, yes, but also show them the best ways to get the most out of those tools. Don’t hesitate to set up an onboarding program for new affiliates. Don’t just drop a bunch of tools in their lap and hope that they can figure it out.

Good affiliate programs often have personal affiliate managers for all affiliates or at least their top promoters. Affiliate managers help you find out what your marketers like and don’t like, and how you can help them more. Without that constant communication, you won’t know how you can improve your program to get more customers from your marketers.

More Tools to Attract and Retain Affiliates

There are a variety of tools you can use to help your affiliates get the most out of your new program, including:

  • Content assets. How-to videos, walkthrough guides, infographics—any type of content asset that can educate the affiliate and their users about your service and how it benefits them.
  • Deep linking options. If your SaaS solves several different problems, affiliates may want a specific link that goes to a specific page so they can focus on that aspect of your service.
  • Co-branded landing pages. If your affiliate has sent some sales your way, consider creating a co-branded landing page featuring their logo and yours as a way to further strengthen and demonstrate the business relationship and credibility. Co-branded landing pages often convert better than regular pages since visitors see that there is an official partnership going on (and sometimes an exclusive offer).
  • Personalized rewards tools. These tools will vary from one affiliate to another, but you may wish to consider offering some exclusive bonuses or discount codes for your top-performing affiliates.

Biggest Affiliate Marketing Mistakes

The most common mistakes that affiliate marketers make are the most tempting ones. Make sure your affiliate manager clearly conveys these mistakes to marketers so they know the best practices to follow.

Mistake #1: Being Dishonest

The first mistake is that people get dishonest with the products or services they promote to make more money. When you don’t put the customer’s best interests first, they can sense that. Or, if they don’t sense it just yet, they will find out after they purchase. When people are dissatisfied with a product that a marketer recommends, the marketer will get less sales in the long run as people approach your brand more cautiously and negatively.

Marketers must keep an eye on the quality of the product they promote. The product may be great right now. But what about in two years? The business should continue to keep the product top-notch so that affiliate marketers don’t leave, and marketers must keep tabs on the product so that their audience doesn’t start to distrust them.

Even after customers have bought the product, keep tabs on your audience to make sure that their experience is fantastic.

Mistake #2: Promoting the Wrong Products and Services

The next mistake marketers make is promoting a product that doesn’t make sense for their audience. Greed can take over, and a marketer can choose a product that converts or pays well but doesn’t match the problems that the audience cares the most about. They end up making less sales than they would have if they had chosen a more beneficial, relevant product to promote.

This mistake relates to affiliate network owners because they need to select the appropriate people when conducting SaaS influencer marketing. Often, the influencer with a much smaller but relevant audience will deliver more customers than the influencer with a larger, broader audience.

Mistake #3: Lacking Focus

Another mistake is promoting more than one product in the same market. Let’s say you’re promoting your software in the PPC industry. If you get the opportunity to promote the same kind of product from a competitor, you should choose one or the other, not both. Promoting the same types of products dilutes the strength of your recommendation because you’re no longer saying that one product is the best. Instead, you appear as if you’ll promote whatever makes more money. People will get confused as to why you’re promoting products in the same space, and your sales will suffer.

Focused view of NYC
Stay focused on one area!

Mistake #4: Placing All Your Eggs in the Affiliate Marketing Basket

The final mistake is that they try to earn most or all of their income from affiliate marketing. That’s risky because there are many factors, some out of your control, that can affect your affiliate income. If you’re getting all of your traffic or sales from one marketing channel, one algorithm change can ruin everything. Diversify.

Transparency, Care, and Trust Are Everything

Doing well with affiliate marketing hinges on building trust. Great affiliates are constantly giving content away in the form of blog posts, social media content, e-books, videos, webinars, and more to build trust and authority. When followers realize how much free content is available and how useful it is, they see you as an expert.

Affiliate marketers must show that they know everything about the product and how it works. A video walkthrough or blog post review of what the software looks like on the inside is a great way to demonstrate how the tool works.

Be transparent by letting visitors know that the links mentioned are affiliate links and that you’ll get a commission if they purchase. Beginners often try to hide this fact because they think their followers will trust them less if they do. But if you do it right, you’ll get more sales rather than less because visitors want to pay you back for all the value you’ve given them by going through your link to purchase.

Speak to them in their language. Don’t use terminology that makes you seem like a business entity rather than a person.

All these things will build the trust necessary to close the sale. Prospects online are naturally skeptical, so you have to do everything you can to win them over. And people appreciate honesty.

SEMrush Case Study

WebMechanix recently had a successful experience with affiliate marketing. Our team transitioned from a popular SEO management tool for agencies, Moz, to another popular tool, SEMrush. After considering many factors, we made the transition because the pros of doing so outweighed the cons.

During the transition, WebMechanix published a comprehensive article detailing the pros and cons of each tool and why we made the switch. Our article ranked well for various terms that people searched when considering which tool to go with.

Since the article was getting a good amount of traffic, we decided to sign up for SEMrush’s affiliate program and retroactively add in an affiliate link to the article. We were honest about being affiliates.

We had no idea if we would make any commissions, considering that this B2B software has a high price. But soon, commissions started trickling in. We still get sign-ups, and our company has made over $1,700.

SEMrush is well-positioned for an affiliate program because it already has a sizable brand presence in its market. The company has built its brand recognition thanks to the quality of the tool and its marketing. Hence, they have a decent amount of customers that may naturally look up their affiliate program on their own, like WebMechanix did. That’s why they can spend more time making sure their program serves marketers well.

Their affiliate platform was simple and straightforward. You could easily sign up and choose affiliate links and banners. They even offered custom assets that you could use to promote the product, which was helpful and convenient. If you look at this article, we embedded an asset at the end that lets readers interact with the tool on the page. If they end up signing up after used the embed, it gets tracked, and we get credit.

The Bottom Line on Starting an SaaS Affiliate Marketing Program

Starting and marketing your SaaS affiliate program takes a good deal of planning. By following this guide, you’ll be able to not only get it right from the start but also attract the kinds of affiliates that can truly make a difference so you can grow your program in a way that’s smart and scalable.

Remember to keep testing, get feedback, and be patient.

How has your experience been with SaaS affiliate marketing?

Want more help? Our SaaS digital marketing agency has plenty of experience growing businesses in this industry. Check out our case studies to learn more.

About the writer
William Chou
William Chou
William Chou has years of experience in the world of corporate digital marketing. He is proficient in SEO, paid media, email marketing, and copywriting.

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