As a SaaS founder I know that many of you wonder if you should start or not a referral or affiliate program. I will try my best to answer because I feel there are a few things left unclear. I hope it will save some time and clarify some things for a few of you.
Last year I launched a tool that help SaaS run affiliate and partner programs. I closed it after a few months because it required a lot of my time and it didn't produce enough to focus only on it or to hire.
I had a few users and this led me to run an "influencer recruitment" service for companies, where I recruited social media influencers, bloggers, forum owners or facebook/linkedin group admins and kept them active. I was doing quite good, but again, this takes a lot of time even when outsourcing and I don't like services where you trade your time.
Most of my clients were SaaS or eComm, like subscription boxes, wearables or marketing SaaS companies. Together with my affiliate marketing experience of over 7 years and startup founder of tools for affiliates, I learned quite a few things about this space.
1. What are the benefits of a referral, affiliate or influencer program?
Referral and affiliate programs can bring from 0 to 30% lift in sales(for some even 50%). Moreover, the cost of customer acquisition is much lower than other channels and user retention for referral programs is usually higher. There are other indirect benefits like SEO and increase in social-proof that can't be easily measured.
2. Should you start any of these programs?
Before going further you should know that referral program, influencer program and affiliate/partner program are not the same thing.
Affiliate program - pay monetary commission to marketers or people with an audience who promote your product
Referral program - reward customers by credits, discounts or small amounts of money when they refer friends or companies
Influencer program - influential people in your niche are promoting the product to their followers, for money or perks(like free product)
Which works for you? It depends:
Are you an early stage startup?
You don't have enough customers to run a very successful referral program. Most likely your conversion rate is low and the product not ready yet, so affiliates will stop promoting it if they don't get enough profit + you have other things to worry about.
What works the best is finding influential people with an engaged audience to try out your product and make a review. It works wonders if you put some time into it. The biggest benefit is the social proof, trust and exposure you are getting, which is very important at the beginning. Contacting Facebook/LinkedIn group owners with an offer for their audience also works.
I'm not saying you should not try referral and affiliate marketing, it will work at some level to keep it running, but you should not expect much...many founders expect this channel to bring most of the sales, which it won't and they get disappointed. One of the tasks that took unnecessary time was to manage expectations for my customers.
Are you a growing startup or an established business?
The thing is, at this level it depends on your industry and business type.
- Referral programs(giving people free-months or credits for referring friends) work best in B2C, no doubt... that's why Paypal, Dropbox, Uber have such successful programs. Also works in B2b, but when targeting SMBs.
- Influencer programs work the best on e-commerce, B2C and B2B that sell to marketing(the best), hr or sales, there are tons of influencers in these markets
- Affiliate programs quite the same as influencer programs, for B2B there are lots of consultants and agencies
In conclusion, If you have a growing startup in e-commerce, B2C or B2B related to social media, marketing, hr or sales, you should consider at least one of these programs.
When should I start one of these programs?
Influencer programs early on to build trust and get exposure from industry leaders. Affiliate and referral programs after your find product/market fit, after you get a relatively high NetPromoter Score and your retention and conversion rates are "fixed".
Other questions I get often:
Does it worth it to build the tracking system myself?
Rarely. Even when I was an affiliate marketer I avoided companies with in-house system because they are buggy, many companies build crappy ones just to save resources which they replace with paid ones when the program gets bigger... good luck migrating current users with running cookies to the new system.
Even if you mange to implement a very simple one in a week or 2, what about maintaining it? What happens when you need extra features?
How much money and time these programs cost me The more time you put, the better results you get. You can get away with a few hours per month to manage it, at the beginning and if you are not doing any pro-active recruitment. You need to spend money on a tool + the cost of the rewards. For bigger companies, you might need someone to mange the programs full-time.
Should I worry about fraud? Not at the beginning. Affiliate programs have the highest chance of fraud, but nobody closed the program because of this. To avoid this you can run a private program and have strict requirements who gets in.
Which are the best affiliates/influencers? Those who are also your customers, no doubt.
I hope this is useful for some of you.
If you guys are looking to launch any of these programs I can help. I'm re-launching my SaaS which handles the tracking, management and payments/rewards for all 3 program types and I'll be giving it for free while in beta + heavy discounts after that.
Not only that but I will help you as much as possible to make the program successful, with advice, tips and so on. I'm focusing on SaaS using Stripe now, but I will integrate with Shopify and other platforms soon.
Here's the link if you want to get early access: http://www.firstpromoter.com (feedback on the landing page welcomed)
If you have questions, please let me know.