Tracking and Reporting Elements
Without a proper tracking and reporting system as part of your affiliate program, it's almost impossible to determine the performance of your affiliate network and the effectiveness of your marketing department's selling strategy. Your affiliates need a way to see how much they've earned with your programs, and you need a way to calculate their earnings in order to pay them. Any good affiliate will require daily performance reports, so your reporting system must provide this capability.
Here's the bottom line: Your organization needs to know what traffic and/or sales come to you from your affiliates and, in turn, you need to report this activity back to them.
This information has to be both timely and accurate. Good affiliates will not sign up for or stay in a program that has the slightest hint of impropriety. You must provide affiliates with objective, reliable, and credible reports on a daily basis. It's also very important for your marketing staff to know which affiliates are performing well and why. That's why it's so important to design a tracking and reporting system that meets both your needs and those of your affiliates.
A tracking and reporting program has three primary objectives:
Giving your organization a picture of how your affiliate networkand any particular affiliate in that networkis performing
Providing the necessary information to compensate each affiliate for traffic and/or sales generated by that affiliate
Providing an easy and timely manner by which affiliates can obtain reports on their individual performance
The basic elements of any tracking and reporting program consist of the following information (see Figure 1 for a sample report):
- Number of impressions
- Number of click-throughs
- Number of sales or sales leads
- Compensation earned for sales or sales leads
- Orders shipped (where appropriate)
- Total compensation to be paid
Figure 1 A sample affiliate report.
All of these elements must be tracked and posted on the web for your affiliates to see, in an easy-to-reach location. Let's consider the elements one at a time.
Number of Impressions
The number of impressions is one of the most important bits of information you can capture. It gives you a clear picture of how many times potential customers view your product or service offer on your affiliate's web site. This component of your tracking program will tell you how many times your banner, graphic, or text link is seen by a visitor to an affiliate's sitethat is, how many times an affiliate's visitor has seen your offer. The number of impressions of your offer from an affiliate site forms the basis of how well your program is performing. Even though you can't accurately determine the amount of traffic that an affiliate site attracts, by tracking impressions on the individual affiliate and network level you can determine a number of things:
Your marketing staff can look at an affiliate's application to your program and see what total traffic numbers they claimed their site generates. Keeping in mind that the numbers could be exaggerated, you can compare those numbers to the number of impressions that are being reported for that affiliate. See if there's a wide discrepancy between their traffic and the number of impressions.
If there is a wide discrepancy, perhaps the affiliate is not placing your program links on many of the pages of their site, or not on the pages most frequented by their visitors. If so, it would warrant a visit to their site from your marketing staff to see where your links are placed. Your marketing people can remind them that it's in the affiliate's best interest and will generate more potential revenue if they would place your program links on the high-traffic pages of their site.
If the affiliate is providing all the impressions they can but the number of impressions is still very low, does that mean that the affiliate should be dropped from the program? Not necessarily. The number of impressions is important, but what's more important are the click-throughs that follow.
Number of Click-Throughs
If the importance of generating impressions for your offer rests on the shoulders of your affiliates, the number of click-throughs rests with both your marketing staff and your affiliates. A click-through is the number of visitors to an affiliate's site that actually click your program link. There are a number of important variables here that determine whether a site visitor will click your offer. The first, of course, is the offer itself. Is it strong enough to make a site visitor click it to either find out more about the offer or make a purchase? That's the responsibility of your marketing staff; the click-through report can give them the information they need to determine the effectiveness of the link.
The click-through metric is important for another reason. You may have affiliate sites with a very low number of impressions, but their click-through rate may be as high as or even higher than those affiliates whose sites generate a larger number of impressions. What's important in the affiliate game is not so much the number of impressions that a site delivers, but the number of sales, leads, or actions it produces.
Number of Sales, Leads, or Actions
This is where the rubber hits the road. The whole objective of your affiliate program is to provide a cost-effective way to generate sales, produce leads, or encourage a consumer to perform some kind of actionfilling out a form, joining a club, entering a contestso you can capture the consumer's marketing information in the process. Capturing and recording the number of orders and their dollar amount, or the number of clicks-throughs or actions taken, is vitally important for both you and your affiliates. If you want to see how well your program is performing and you want accurate information to compensate your affiliate, you must capture and record this information. Of course, your affiliates will be equally interested in seeing this data on a daily basis.
The metric of most interest to your affiliates is the amount of compensation earned from the actions taken by visitors to their site. Your tracking and recording program must report to affiliates the amount of money they have earned on a daily basis through your affiliate program for sales made, clicks recorded, and forms filled out by their site visitors. The reports should be timely and made easily available to affiliates.
Keep in mind that this metric shows the amount earnednot necessarily the amount that will be paid. For example, an order can be taken and a commission earned on the sale, but that compensation amount might not be the amount finally paid to the affiliate. The amount earned could be less after all deductions are made, such as amounts collected for sales taxes, duties, and shipping and handling. Make sure that you build this element into your program.
Number of Orders Shipped
If your affiliates are earning commissions on products, they understand that they'll be paid only on orders that are actually shipped. This metric should be included in your reporting program for affiliates to see.
Actual Compensation To Be Paid
After all orders have been shipped, click-throughs recorded, and any and all actions required taken by an affiliate site visitor, the actual amount of compensation paid should be made available to the affiliate for review. This amount would be exclusive of amounts collected for sales taxes, duties, shipping and handlingeven credit card fraud and bad debtand reflects the actual amount paid to the affiliate.