The Ultimate Guide to Promoting Your SaaS Through Affiliate Marketing

📖 Learning

Tripti Garg

Nov 29, 2022 — 11 min read

Why are affiliates so popular? Why do so many companies, including big names like HubSpot, SemRush, and Shopify have a dedicated affiliate program? The SaaS market is growing, and the need to find the right audience is rising more than ever before.

Word of mouth or partnership is the most effective way to promote your brand and boost your business growth.

SaaS affiliate programs save marketing costs for these companies and expose them to a large audience. Big brands understand its importance and leverage it effectively. So, today we will give you a detailed overview of SaaS affiliate marketing and how you can use it to boost your revenue.

What is SaaS Affiliate Marketing?
Benefits of SaaS Affiliate Marketing
How Do I Promote My SaaS Product Through Affiliate Marketing?
5 Best Practices for SaaS Affiliate Marketing
SaaS Affiliate Marketing Case Study: Moosend
Is SaaS Affiliate Marketing for You?

How to Start an Affiliate Marketing Website?

What is SaaS Affiliate Marketing?

SaaS affiliate marketing is a partnership agreement between two companies or parties where one promotes the product of another via referral in exchange for a commission.

Say you have a SaaS marketing tool that helps in tracking metrics. You ask a podcaster to talk about your product. This podcaster has an audience of 30000+ b2b professionals. In return, you give him a commission or small fee for every trial sign-up or a portion of earned revenue through their referral. Commission structures can vary depending on the product and market.

Now, there are dedicated affiliate networks as well that promote your product through their vast networks. However, the commission charges are higher than individual affiliate partners.

Benefits of SaaS Affiliate Marketing

End-User Spending on Public Cloud Application Services/ SaaS Globally (2015-2023)

B2B businesses increase conversion rate by 3.63% with the help of affiliate marketing. But what is so special about affiliate marketing that big brands also rely on it? Let us see why companies opt for affiliate marketing.

Affiliate marketing brings in targeted audiences which leads to better conversions. Since you choose the affiliates that promote your brand, you could research their audience beforehand. This way you get warm leads via referrals with better conversion rates.
Affiliate marketing brings in a loyal audience to a blog, podcast, or niche expert. They face the core pain points and eventually become brand loyalists. You need to ensure customer satisfaction to retain them.
Affiliate marketing is cost-effective as you spend a margin of what you earn (depending upon commission structure). Nonetheless, you only pay for the value generated, which also helps to drive growth. It reduces the customer acquisition cost (CAC) significantly.
Affiliate marketing is a personalized form of approaching your audience. Since the affiliates are in touch with the audience, they understand them better. As a result, the brand message passes in a very personalized form to a highly targeted audience.
Affiliate marketing is a low-risk and high-ROI marketing channel for businesses. It not only brings in leads for your business but helps in brand recognition and brand exposure. The only risk can arise when the affiliates aren't vetted.
Affiliate marketing is scalable to a large extent. You only need to add more affiliates to the network that would amplify the brand. Also, it leverages content marketing which is an evergreen source of marketing and growth.

Now that we know how your brand could make fortunes with affiliate marketing, let us see how you put this into action. How do you start with an affiliate and what steps do you need to take?

How Do I Promote My SaaS Product Through Affiliate Marketing?

Top Traffic Sources for Affiliate Marketers

Affiliate marketing could take some time to set up and generate some results. Big brands generally get affiliates who promote their product for a commission. But if you are a startup, you need to find partnerships and affiliates to do this for your business.

Step 1: Define Commission Structure

Choosing the right commission structure that incentives the affiliates and also don't burn a hole is crucial. There are four scenarios or commission structures. You could modify or club these together, whichever seems sustainable.

The first is a one-time commission. In this case, you pay the affiliate a small fee for every signup or visitor to your site. Let's say, a person landed on the landing page via an affiliate link. You would pay a cut to the affiliate partners.

However, SaaS is tricky. You as business owners earn on subscriptions and hence a small percentage of the average deal size as the commission doesn't seem fair. For example, if you get a paid user who pays $300 for your product, and you pay $30 to an affiliate. However, this $300 is paid every year. If the average LTV of the user is 10 years, you earn $3000. Out of this, the affiliate only gets $30. This seems pretty unfair. So, there are other options as well.

The second is the recurring commission. In this case, you pay the affiliates whenever the user pays for a limited time. So, if you run a SaaS product with a $50/ month subscription. You might give affiliates $5/ month for two years for 10 years of LTV. Or you could pay 5% till the customer stays with your business.

The third is the tiered commission. Under this, you give commission on some set tier levels. So, let's say you set tiers like this:

50 users- 5% of each sale

100 users- 7% of each sale

500 users- 10% of each sale

1000 users- a base fee + 13% of each sale

This way you reward the affiliates that bring more users. This incentivizes them to get more people to use your product and earn larger commissions.

The fourth is a non-revenue-based commission. Under this system, instead of cash, you offer the affiliates a non-monetary value. For instance, an affiliate can access the product’s premium features for free.

Choose a commission structure that you can pay for in the long run and scale if required.

Step 2: Look For Affiliate Partners

The next step is looking for affiliate partners or businesses that would promote your brand. These could be bloggers, influencers, podcasters, niche experts with social media presence, Affiliate networks, etc.

Based on your requirements and paying capacity choose an option. Start by looking at the audience of the desired affiliate. If it matches your target audience persona, then start by looking into their work. Analyze if their working style and product match. Having clear communication with the affiliate is crucial. If there is miscommunication about the brand or a lack of product knowledge, it would not work well.

For instance, you want a blogger who talks about marketing. You will find the best personal blog that talks about marketing. However, you target B2B companies and their main focus is B2C finance heads. See, how the audience doesn't align. Hence, vetting the affiliates to align business goals should be the primary focus.

So, look at the number of followers and the kind of content the affiliates create. Also, does the platform that affiliates use have your audience? Check these three basic things: followers, platform, and content while picking affiliate partners.

Step 3: Create Marketing Assets

After choosing the partner and a competitive commission structure, you need to help them with promotions. No, affiliate marketing is not one done game where you get people to promote, and it's over. You partner with them to promote your products.

Start by creating dedicated marketing assets, brand kits, and resources for the affiliate. Ensure that they understand the product and communicate the product value well. Additionally, you could help them with banners, images, or other ways.

Affiliate marketing is a partnership, where both parties support each other. You don't hire affiliates to promote you. Instead, you work with them to grow together.

Step 4: Track Performance

Now, this is crucial, tracking the performance and results. For this, you need definite KPIs. Analyze your main goal. Getting more traffic? Or getting more paid customers? Or getting people to contact you for a demo?

Based on these, see how the affiliates performed. You will need affiliate tracking software installed on your site. Also, you could track back using the affiliate link used by affiliate partners. Either way, this software eases the tracking process, and you can pay the commission accordingly.

Step 5: Reward

Let's say you have a recurring or one-time commission structure. Now, out of 35 affiliate partners, 10 of them bring 80% affiliate traffic. Shouldn't they be paid more to strengthen the relationship?

It is crucial to reward the top-performing affiliates to ensure good brand relations and sustainable relationships. You could do so by giving bonuses, like access to premium features of your product. Alternatively, you could give them higher commission rates or add an extra base commission.

All these techniques incentivize them to stay loyal to the product and keep referring to it. If the affiliates do not see the program’s benefit, they can decline the promotions. This means losing a big potential market and over 30% of revenue.

So, This way you can start your affiliate program. You might need to reach out to potential affiliates initially, but it will generate a lot of profit later.

5 Best Practices for SaaS Affiliate Marketing

You could get into various pitfalls when opting for SaaS affiliate marketing, such as paying more than earning, choosing the wrong affiliates, ending up with a poor or wrong brand image, and much more. Here are the top 5 tips to ensure that you extract maximum value.

KPIs

Choose the performance metrics carefully. These are the metrics based on which the commission is paid. Choose whether you will pay for each click, each follower gained, each sale, each newsletter subscription, or something else.

Choosing the key metrics and communicating that to the affiliate is vital. Measure only what matters to you. If you have a freemium + paid model, tracking just clicks or visits would not serve value. You would want more sales. However, in the initial stage, every visit matters too. Pick a metric and then pave your way through it.

Pick the Right Commission Structure and Rates

A poor commission rate (independently or with respect to your competitors) can hamper your affiliate partnership. You don't want affiliates to leave or worse choose your business rival. Hence, you need to ensure a competitive and sustainable commission rate.

Also, opting for the right commission structure can save money. For instance, if you have a big deal size, pick a one-time commission instead of recurring. This way you don't end up burning your pocket.

Choose Affiliates Wisely

What if you choose an affiliate with a completely different audience? They might bring customers and earn affiliates. However, the audience will leave due to a lack of product market fit. They won't derive much value. As a result, you would lose customers and pay affiliates as well.

So, choose affiliates after due diligence. Analyze the kind of audience they engage with and their content. Also, get a background check in case of a poor personal brand. When you pick an affiliate, they become part of the brand. So, you need to be mindful of every affiliate partnership.

Leverage Brand Assets

Don't miss the opportunity to share brand assets with the affiliates. This equips them with exclusive brand resources and better product understanding.

Communicate and build relations with the affiliate for more natural brand promotion. It's collective growth for both parties. People don't buy off from pitches even if they trust the person. They want genuine recommendations. So, provide brand kits, resources, graphics, and other material that enhances the promotion of the affiliate.

Sign an Agreement and Discuss the Terms

Sign a formal agreement with affiliates for a secure and mutual partnership. But what to include in an agreement?

Commission terms: structure and percentages
KPIs tracked
Payment terms

You could get a formal agreement through your legal team but ensure to include these three basic things. Keep healthy communication with the affiliates and discuss all the relevant details.

Also, beware of scams while running such programs. Scams? If you track clicks or visits as primary KPIs, then the affiliate might use bots to show better performance and trick you into getting more commissions.

SaaS Affiliate Marketing Case Study: Moosend

Let us look at the Moosend affiliate program that pays over $2 for each click.

It starts by highlighting the main offer for affiliates which is a 30% recurring commission for a new referral. It clarifies the commission structure and rate in the opening itself.

Apart from this, it combines it with a tier-based structure. Here, you can check the final monthly commission that you can earn. It gives clarity to the affiliate about the commissions.

It has a dedicated marketing resource kit for affiliates. It includes banners, images, logos, social media posts, email swipes, etc.

They have reviews from their affiliates about their earnings and work experience to build credibility.

All this combined, the Moosend affiliate program is enticing and gaining traction. Also, they elaborate on the affiliate process and specific stats on their landing page. You could refer to the landing page to get an idea of how to work on it. In case you go by outreach affiliate, then also having a landing page that makes it easier for them to understand will be valuable.

Is SaaS Affiliate Marketing for You?

SaaS affiliate marketing could save a lot from your marketing budget spend. But is affiliate the right choice for your business?

You just need to ensure three things before you start with an affiliate:

Good Retention Rates: If your retention rate is poor, then you won't be able to get a lot of value from affiliates. You would pay $30 for bringing in 5 customers, whilst you might only make $300 combined. Out of this, $300 is spent on setup, and other services offered to them. In this case, you would have massive losses. Hence, having a high LTV is crucial.
Profit Margins: Avoid affiliates if you are at the burning stage of your business. It will be difficult to pay the affiliates regularly and hard to manage operating costs.
Ability to Pay Cash for Each Sale: Avoid affiliate marketing if you can not pay a commission for every affiliate sale. If your product monetizes after considerable time and you have a long sales cycle, you would have a hard time paying commission right away.

Conclusion

If you can pay commissions and have good retention rates, affiliate marketing is a viable option for your business. You can opt for the method and best practices mentioned above to leverage it.

FAQs

What is SaaS affiliate marketing?