Targeting the SaaS niche?

Hey guys,

I was scratching my own itch and built a tool to manage and track affiliates/partners for my SaaS. Tools I found so far are either expensive like getAmbassador or doesn’t have good support for subscriptions…most of them are built for ecommerce and recurring commissions look like a hack.

Even though I know the SaaS market quite a bit, i’m not sure about its size…

I know that any growing SaaS will eventually get affiliate requests(some of them a few a week) and they turn them down because they don’t have a solution to track and handle affiliates. However, I’m not sure if there are enough SaaS companies who don’t have an affiliate program, so can I aim for at least $10k MRR ($50-$150/month pricing).

An idea is to offer a hybrid, SaaS + Done For You services to increase the revenue, like LeadFuze does. Many guys in the SaaS space do affiliate marketing really bad(mostly because they consider it more of a distraction) and obviously they give up. I worked in the SaaS and affiliate marketing for the last 6 years and I can provide some useful services.

Another idea is to go wide and target all subscription businesses that use Stripe/Recurly/Braintree…

What do you think about this? Any suggestions?

As a SaaS business owner, I can tell you that setting up an affiliate program is definitely a pain point that is worth solving and I think you are underestimating the market size (it’s way way more than $10k MRR).

These are the steps and specific pain points that any SaaS business owner has when he is trying to setup and run an effective affiliate program. Each of them is a specific pain point that needs to be solved.

  • Changes in existing system to track affiliate ids
  • Creation of an affiliates management system (let affiliates sign up and setup their accounts)
  • Monthly payments that need to be made to affiliates (tracking recurring commissions)

My ideal affiliate system would automate all of the above. I am not sure how exactly this would work as you would need to integrate with different payment gateways. For e.g. I use PayPal + 2Checkout - but if you can make the first step (code changes in current system) as easy as possible, you will have a much easier time getting customers on-boarded.

Pricing Concerns: I think the $50-$150 pricing plan might actually be too low. But you could start with that and see what the market likes. I would add some kind of “setup fee” to help validate the commitment of your customers.

A year or so back, GetAmbassador had a starting pricing of $100/mo. Now their lowest pricing is $300/mo (billed annually). I am willing to bet that the reason for this change is the cost of user on-boarding. They probably had loads of customers who signed up at $100/mo, but never on-boarded completely and then cancelled immediately. By keeping the initial price at $3600/yr, they are making sure to filter out those business owners who are not committed enough to the process.

Thanks for your reply.

I’m having a hard time judging the size of the market because of lack of data. In AngelList there are about 9.5k SaaS and I don’t have a good idea of how many are the target market, like not having their own in-house affiliate system, don’t use 3rd party tracking tools or networks like ShareASale and are not enterprise level.

Probably I could convert some of them who are already using other services or their own systems, but not sure how much.

When I started my first SaaS business 5 years or so ago, I had this pain and struggle to solve it. Because I was in the internet marketing niche I got lots of request from affiliates so I started building my own platform which I improved over time.

Now I have most of the features that companies like getAmbassodor have, like calculating, approving/denying commissions, multiple campaigns, custom commissions for affiliates/partners that perform better, create payouts, download mass pay txt to pay affiliates via Paypal, an affiliate section where they can sign up, login or view their stats, etc.

I’m not sure if on-boarding is the hardest, in my case you just need to add a script to the website and a webhook url to stripe. I think the issue is that people give up quickly because the affiliates don’t bring enough revenue as they expected in the first few months. With whom I talked and gave up said it’s a distraction, too much hassle, etc but they didn’t do anything to actively make it work, they didn’t have any plan, they just throw it out there and expected to boost sales out of nothing.

When you are paying a decent sum for a year you are making a commitment to at least try doing it right, not giving up after 3 months. Another reason for their pricing(referralsaasqutch as well) is because they use sales people to scale…

You are correct - finding & retaining good affiliates is a bigger issue than the on-boarding. I can see an affiliate program being canceled because the owner did not wait long enough to see whether it works well or not.

Who not create a landing page, buy some ads and get visitors to signup for a free consultation. Speak to a bunch of them on the phone and see if a pattern emerges with respect to type of business & what they want. Since you already have your own platform in place, you could select a bunch of business owners that have common needs & businesses and build something for them.

And if you decide to do this and support PayPal & 2Checkout (No Stripe), let me know. I could be your customer#1. I have an unfinished task called “create affiliate system” in my todo list for the last 2 years, that really ought to be completed some day :slight_smile:

So the problem with affiliate marketing is

  • Its seen as the shady side of the internet (maybe fair, maybe not but thats the perception of many).
  • Its hard to do right - its not a quick win you have to put some effort in place to run a good program.

That fair? So in addition to your main product, and assuming that you do actually know how to run a successful affiliate program outside of the ‘internet marketing niche’ you’ve got an obvious 2 pronged attack for inbound marketing :

  1. Write an ebook/email course (for lead gen) teaching people how to do this right - best template for this would probably be Brennan Dun -
  2. Provide (mandatory or optional) onboarding service that includes coaching/consulting. Infusionsoft and Hubspot used to do this (not sure if they still do) and I was a bit shocked at how much they charge - but it must be working for them.
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Thanks Rhino, good suggestions.

Yea, the term affiliate is perceived negatively on some communities, including startups and SaaS. I might be subjective on this, but the perception of a shady strategy is mostly from people who don’t know much about it…it’s like the sales people perception, because some of them push the boundaries(or cut across) doesn’t mean all of them are bad. However, I’m not sure if is more effective to fight this or just change the term.

In the last few years companies that are entirely focused on this type of marketing tried to change the term to performance marketing to avoid the bad connotation. Some use referral or partnership marketing as synonym to affiliate marketing.

I agree that if you are not related to the internet marketing niche, it requires a bit more effort and in some niches it may not work from the start. But for those that work…it can bring up to 30% of the total revenue.

I see Ambassador does initial coaching as mandatory, there is a huge lack of learning materials on this space for the vendors side. The bad connotation and lack of information contributes to the low adoption of this tactic, which is sad since your a building an external sales force if you do it right.

Thats your IN then I would think.