Affiliate Marketing for SaaS Business
We already know affiliate marketing has been very famous for Consumer B2C Business. Like Coupondunia, couponrani and many other sites are earning big with affiliate marketing for B2C Business.
Now if I look at B2B software/hardware business, the model was already there and are termed as channel business. But with evolution of cloud services specifically SaaS based players there is a big shift how IT Business has been done earlier. With this change of technology how they are delivering software or infrastructure on a subscription based model there is also a change in marketing of these products or services.
Let us take a look at new terms that came up with innovation of affiliate marketing for SaaS Business
- Aggregator : Cloud Aggregator are type of cloud brokers that provides marketplace for all cloud services from multiple Cloud Service Providers.Few examples of such marketplaces are amazon web services,oracle,getapp,serchen.
- Affiliate programs:Here, cloud or saas providers sign up affiliate partners (companies or individuals) to drive customers to their product. For every sale or lead generated, the affiliate partner is offered a commission. The affiliate partners cannot set their own prices nor do they offer support for the product. They simply drive customers to the vendor’s website. Name any SaaS/Cloud business ,they generally implement affiliate marketing within 1 or 2 years of launch if not immediately. Few of the enterprise companies providing affiliate program are Citrix Gotomeeting, Cisco Webex, Shopify etc
- Reseller programs: Here, cloud/SaaS provider sign up resellers (usually companies within similar industry that have existing customers) to help with distribution of their products in different markets. The resellers can set up their own prices and usually offer support and other value addition services to their customer. SaaS Companies focussing towards enterprises like Salesforce, Microsoft Office365 which needs customization, implementation and integration generally opt for reseller model rather than affiliate model.
- Referral Programs : This is a program to generate leads by existing customers referring their friends to their product. It is one of most powerful affiliate marketing. It is the only form of marketing that can actually stop people from doing research, and just purchase a product.Referral Program need not to be always in commission. It can be discount or providing extra service at same cost when you refer a friend.One of the most succesful example of Referral Maketing is $10 Billion Dropbox Empire. 100,000 to 4,000,000 users in 15 months with referral marketing.
How Affiliate program works?
- When any organization or individual becomes an affiliate they get a special unique tracking link.
- When SaaS / cloud service providers receive visitors through that affiliate link, that particular visitor are associated with that particular affiliate account.
- When visitor purchases a subscription (either on that visit, or on a subsequent one), affiliate get % commission. Commission can be one time or on renewal also based on SaaS provider policy.
How this affiliate tracking are done?
There are software by which saas/cloud companies can track your affiliate particular link. There are 2 types of affiliate Network.
- Public networks offer broad distribution, handle affiliate recruitment and make partner payments. Public networks can also deliver a high volume of ad placements.
- Private networks allow companies to manage their affiliates directly and concentrate on publishers driving the highest ROI.
Few of the affiliate software are ambassador,Post affiliate Pro,leadDyno etc.
Picture shown below is an example of how affiliate software can calculate commission on each sale giving a clear idea of revenue earned and total sale.
How to design a affiliate payout scheme.
Many SaaS business owner often asks this questions “What’s the industry standard compensation model for affiliates in SaaS?”
Frankly speaking there are none.
2 strategy as a SaaS business owner, you need to answer:
- Do you want to offer One-time Payment or Recurring Payment or Both?
One of the most popular affiliate program is of Shopify. Lets have a look at shopify payement model.
- 200% per sale
Per-sale commission mean that you earn 200% of the customer’s subscription fee each time you refer some one to the Shopify portal. You will be paid up to $358 per sale.
- 20% of Each Bill
You can also get 20% of the monthly bill for every customer you refer to Shopify, including the transaction fees- for as long as they stick with Shopify. With revenue share you can make up to $35 for every customer you refer.
- Frequent payouts – How soon you want to pay after your referral
Answer is here : Sooner is better because of the trust SaaS Provider can win over affiliates.Maximum of the saas companies pay their affiliate just after they receive a payment from their customers.One of the example I am taking here is Wishpond.
Example: X referred Y to Wishpond, and he pays $129.00 per month.
Each month Y uses Wishpond, X will earn $38,70. After a year, $464,40. After 2 years, $928,80. 3 years? $1.393,20.
And that’s just with one account of X! The longer Y use their accounts, the more money X will make. and each payout is made just after Y will pay Wishpond.
Hope you enjoyed the blog. For any feedback please feel free to write in the comment section.Also you may want to watch recorded session of Affiliate Marketing Webinar