Affiliate Marketing Terms, Definitions and Abbreviations – Part 3: Metrics and Key Performance Indicators (KPIs)

Affiliate Marketing Terms, Metrics and KPIsAffiliate Marketing is a complicated industry and the various terms used don’t make it easier. In part one of our Affiliate Marketing Terms, Definitions and Abbreviations we talked about key players in the performance marketing space. In part two, we define the various affiliate marketing models that exist. This next section takes a look at the terms used when discussing common key performance indicators and affiliate marketing metrics.

 

Metrics and Key Performance Indicators

AOV / AOS – Average Order Value / Average Order Size

There are two general references to AOV or AOS. These are the overall Average Order Value of all purchases made on a website. If you look at your Google Analytics, for example, and go to your Conversions > Ecommerce > Overview section, this is the one called “Average Value”.

The other is specific to the affiliate marketing channel and shows you the AOV that affiliates are brining in. You can then compare the Average Value from your overall site performance to your affiliate partners to determine how they are performing compared to other channels. If it’s much higher, they may be doing a better job of up selling, cross selling or featuring more high value products from your site. If it’s lower, you may need to help them understand your products, services and value propositions better so they can help drive higher sales.

 

ROAS – Return on Advertising Spend

This is a term commonly used with search affiliates or internal search departments (mainly your PPC channel). The reason it’s important is search affiliates will speak with you about how well their campaigns may be converting and discuss keywords with you which will produce a higher Return on Advertising Spend.

If you have your own PPC efforts running, you will need to be strategic about your allowances with search affiliates, however there are solid win-win situations that will result in mutually beneficial relationships and dual profits for both parties involved.

 

ROI – Return on Investment

This one may be a bit simple to define here, but possibly THE most important abbreviation on this entire blog. Return on Investment tells you whether you are producing a positive return, a negative return or breaking even on your spend. I won’t go into detail about this one since it’s the basis of all business efforts – a positive ROI.

 

EPC – Earnings Per Click

Earning Per Click is a way for affiliates to understand what their earning potential will be if they join your program. EPC represents the average earnings of all affiliates in your program based on the number of sales (conversions) and clicks they send. To an affiliate it means “If I send 100 clicks your way, how much am I going to earn back?” If you have a $20 EPC, it means they will earn $20 from those 100 clicks. If you have a $0 EPC it means none of your affiliates are selling anything, which is not an encouraging figure for an affiliate to look at when considering joining your program. They would be taking a very big risk.

Alternatively, if you see a program with a $1200 EPC, either that program has an incredibly high AOV or there is something fishy going on. I tend to find the most common EPC range for e-commerce programs is usually between $12 – $45 EPC. Generally affiliates look for the programs that have an EPC of $15-20 or higher.

 

Reversal Rate 

This is a term used when a sale or affiliate commission is reversed from previously affiliate credited transitions. For example, if you have a 10% reversal rate, this means that 10 of 100 orders previously credited to affiliates were “cancelled”. It’s normal for businesses to have some small reversal rate since there are sometimes cancellations or returns by consumers, however, very high reversal rates (say 30-50%) are a big red flag for affiliates and they will be very wary to join your program – if they ever do.

 

Conversion Rate

Aside from ROI, this is likely the other most important metric used online.  Conversion rate measures how successful you are capturing the sale or lead. If you have a 2% conversion rate, that means 2 out of every 100 people coming to your website are completing a sale or lead generation form. (Note – there are other actions one can take to “convert” however these are the most common two).

There are a ton of ways to break conversion rate up to help you understand your strengths, weaknesses and opportunities. For example, you could measure your entire site conversion rate, a landing page’s conversion rate, an affiliate’s conversion rate and so on.

Very high conversion rates from affiliates could mean they are either fabulous marketers or are doing something that could be hurting you. Very low conversion rates from affiliates could mean they are not sending you targeted traffic, there is something wrong with their landing pages, another affiliate is getting credit for their sales or they may need more training about your product or brand.

 

Click Through

This is a term used to describe when a user clicks on an ad or link (whether it be a banner, text link, product image, widget, etc) and leaves the page to land on another page. They are “clicking through” from one place to another using one of your ads or creatives.

 

Impression

This is simply a term used to explain how many times your links are showing. For example, if in your affiliate program you have 100,000 impressions, it means the combination of all your creatives (banners, text links, product images, etc) that have an affiliate tracking link attached to them have been “seen” that many times across all your affiliate’s touch points.

You can also track each individual banner, text link and such to see which ones are showing the most, which are being used the most and so on.

 

Attribution

Attribution is a term used to describe which chain of affiliates or marketing channels were used to complete a transaction. With attribution tracking you can better understand the values different touch points bring to your sales cycle. You can read more about attribution here.

There are various other terms used to describe key performance indicators in affiliate marketing, especially when cross referencing other marketing channels such as in search, social or mobile marketing, however this gives you a solid place to start.

My final section of affiliate marketing definitions and abbreviations will take a look at the terms used to describe tools and overall functionally of an affiliate marketing program.

5 Ways to Avoid Shopping Cart Abandonment

With the Holiday Season quickly approaching, performance marketers are already getting ready for a busy next few months. Merchants are preparing their sites for higher traffic and creatives are already being planned to capture early Christmas shoppers.

A recent webinar  hosted by Chris Nicholls of SeeWhy Inc. highlighted 5 great ways to avoid shopping cart abandonment, which can help you prepare for the upcoming quarter.

 

Here are our notes taken from the webinar:

Shopping cart abandonment rates have been increasing year over year. From 2009 to 2011, shopping cart abandonment rates have increased from 68%, 71% to 72% respectively.  Two of the main reasons for abandonment rates are; the ability to store items in your shopping cart and that shoppers are becoming more savvy and shopping around before making a purchase. In order to capitalize on converting these customers, merchants should consider increasing their “persistent cart” length times to 60 – 90 days as well as compare their prices to Amazon.com, the “online price benchmark”. During the 2011 holiday season 60% of customers went to Amazon before making a purchase.

Abandonment rates rise and fall throughout the year but from the start of October 2011 and peaking out on November 23, 2011, the shopping cart abandonment rates increase from just over 70% to 89% and then fell to 78% on Cyber Monday and continued to decrease through to Christmas.

So why do 72% of shoppers abandon? Forrester’s interviewed over 3000 shoppers and determined the reason why they abandon their carts in order was first “Price” then “Timing”. Here’s a summary of their top 5 reasons why shoppers abandon their carts:

  1. 44% – Shipping and handling costs were too high
  2. 41% – Were not ready to purchase the product
  3. 27% – Wanted to compare prices on other sites
  4. 25% – Product price was higher than they were willing to pay
  5. 24% – Wanted to save the products for later consideration

With price being the biggest factor, a large and very small shopping cart had higher abandonment rates than a shopping cart around the $99 value. If the smaller shopping carts shipping costs were greater than 20% of the value of the goods the abandonment rate is around 80%.  Merchants need to take into account not only the price of their products compared to their competitors but, need to factor in the cost of shipping to their customers.

Because shopping cart abandonment is part of the purchase cycle, merchants need  to better understand what their customers want and accommodate their needs. The following 5 tactics try to do just that:

  1. Free Shipping
  2. Give Promo Codes
  3. Check the Product Details
  4. Mobile Optimization
  5. Remarketing

Everybody loves anything for Free. eTaling Group surveyed website users and asked them what promotional features are the most important when making a purchase. The top two were “Unconditional free shipping with purchase” and “Free returns”. With 64% of all Thanksgiving transactions offering free shipping, merchants need to find a way to accomplish this tactic. Three ways to offer free shipping is to offer it over a 3 day period, with Overnight service as a paid service.  Create a loyalty or membership club like Amazon Prime. And, offer free shipping on minimum order size, like “Free shipping on orders over $99”

Which would you prefer: ““$10 OFF your purchase“ or “10% OFF your purchase” The majority of shoppers would prefer an easy to calculate discount like $10 OFF, instead of trying to calculate what the dollar value of the % off is. Make it easy for your consumers, don’t make them think. If you are going to provide a promotion code box, make it easy for consumers to see and provide a link to a page on your site with all of your current promotions on it. Macys.com tested their promotion page and 40% of the visitors to the page converted in the same session. The promotion page make your company look very consumer orientated.

Check the product detail page. Provide your customers with a large product image, clear product details, clear call to action, phone number and if you can, a wider site equals more selling area. Clear product details include a good description, dimensions and colour options.

97% of mobile visitors abandon their shopping cart. The majority of consumers user their mobile devices to research items before buying them on a different platform. Merchants should cater to their customers on mobile by making their website mobile friendly. Focus on making your site more mobile search friendly. Include easily clickable links, easy to view and clear pictures, PayPal access for making payments easy and check the visibility on a range of devices.  Lastly, remarket to your mobile abandoners with a link back to the shopping cart so they can make the purchase easily on another platform.

Remarketing to your all ready interested customers who are showing you their intent to purchase, by having a product in their shopping cart, is easier than trying to convince a brand new visitor to your site to put something in their shopping cart. Without remarketing on average 8% of customers will return to by something. With remarketing on average 26% of customers will return to buy something. The three stages of remarketing is to remind the customer within an hour, reassure them within 23 hours and promote to them within 6 days and 23 hours. Try to include the picture of the item in their shopping cart in the email. 

 

There are tons of great stats and tips in here to help get the ideas flowing for this upcoming season, but regardless of Holiday shopping, it’s important for merchants to continuously test their site for improved conversion rates and decreased shopping cart abandons, which will result in better performance from your affiliate partners.

What other strategies have you used to help lower your shopping cart abandonment rate that have worked?

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