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Raise the Stakes on Affiliate Investment: Part 1

October 16, 2017

As a channel, we’ve written about how affiliate has traditionally delivered strong revenue, a very strong ROI, and a healthy, high-value new customer rate.

But there remain unanswered questions that have not received enough coverage about the channel, how its customers and performance compare to other marketing channels, and the full impact of those implications.

Jenny Gibson, Product Manager at CJ Affiliate, did a terrific job presenting on this topic at CJU17 this year. In this two-part series, we’ll dive deeper to reveal the key information you need to understand the true value of the affiliate retail customer so you can make informed and strategic decisions concerning your marketing mix.  

In part one, we delve into the purchase and brand engagement behavior that affiliate customers exhibit. This is important, because it underlines the kind of customer the affiliate channel delivers, the key KPIs they feature, and how the channel itself addresses the value a brand looks for. We understand that data is a critical component to uncovering the true value of the channel, particularly as it compares to other marketing channels. By combining 75 million daily online and offline purchases via 160 million+ anonymous consumer profiles with publisher referred order data, our data provides unparalleled reach, accuracy, and persistence into the affiliate consumer.

Data Speaks Volumes on Value of Affiliate Customer

The data reveals that customers who are introduced to a given brand through the affiliate channel deliver more long-term value for a brand when compared to consumers driven through other marketing channels (such as CRM, SEM, display, direct marketing, etc.) (1). This is a game changing and truly exciting discovery. In the past, while marketers understood affiliate to be a strong revenue player, they may have been hesitant to heavily invest in the channel since there was scant data that spoke to the channel’s contribution to high value consumer segments. That is not the case today. Through our data, we’ve learned that affiliate customers have a 23% higher AOV, and place 5% more orders per customer than those acquired through other marketing channels, leading to a 29% higher revenue per affiliate customer when all subsequent purchases are taken into account. We also see that affiliate customers are 1.5 times more likely to engage in moderate product research and 1.75 times more likely to engage in heavy product research prior to making a purchase (2). That means affiliate customers are spending a good deal of time  leveraging the affiliate channel as a source for product research. They engage with a variety of publisher sites (content, social, loyalty, product review, etc.) to learn about products before transacting, this is especially true for high price-point purchases. The more affiliate engagement a customer has before making a purchase, the higher the purchase value. (i.e. 1 click equates to a $115 AOV, 12-24 clicks equate to a $229 AOV).  

Using the metrics above, an affiliate customer will spend $123 (23% higher) compared to the $100 of another channel driven customer. With that affiliate AOV known to increase almost two fold with heavy affiliate engagement (12-24 clicks) the savvy marketer can quickly grasp how a diversified, well-funded affiliate strategy would positively impact their bottom line over the course of a year, often at a higher ROI in contrast to other marketing channels.
 

Affiliate Drives High Rates of New Customers

Now that we know affiliate drives a more valuable customer, let’s put that into context with the relationship segments those consumers fall into, and how those segments match the kinds of value marketers look for. Acquiring new and retaining repeat customers (in a profitable way) is paramount to almost every business. On average, the affiliate channel delivers a 33% new customer (3) rate as compared to other channels’ 29% new customer rate (a 14% difference). The Content and Social publisher verticals have a 50% new customer rate, which speaks to the appeal and growth of those verticals within the affiliate channel. The new customer segment affiliate drives, across all verticals, becomes more compelling when you consider that they have a 27% higher AOV, and make 3% more orders per customer, leading to 30% higher revenue per customer (when factoring all subsequent purchases) than other channel’s new customer segments.

But it’s only started to get interesting! We’ve also found that affiliate drives 22% higher rate of new customer acquisition than other channels during the critical holiday lead up (September through November). This is the timeframe that businesses acquire most of the new customers that will contribute to their buying file and CRM efforts in the year/s to come. That also means additional investment in the channel offers the opportunity to incrementally grow your new customer base and yield a higher return from that valuable segment. In sum, affiliate is offering a higher rate of more valuable new customers than other channels, making it apparent that investment in the channel enables many marketers to achieve their new customer and overall revenue goals.

Highest Value Repeat Shoppers Engage with Affiliate 

New customers are important, but we ultimately want to encourage them to buy often and become loyal shoppers. Our data found that 51% of affiliate customers are repeat shoppers, and in comparison to other channels, these customers deliver a 21% higher AOV and a 7% higher order per customer rate. This further proves the affiliate channel offers marketers the chance to drive stronger revenue than other channels, both from new customers and their existing customer base.        

There’s another customer segment that hasn’t received the right amount of attention: the “lapsed” customer. Too often, we tend to divide customer segments into new and repeat, but there’s also a customer who hasn’t “re-engaged” with a brand in over 12 months. They aren’t a new customer but they also don’t quite fit into a repeat bucket. Getting lapsed customers to reactivate with the business is just as valuable for marketers and that’s where some eye opening data emerges.

Our data shows that 16% of all affiliate customers are lapsed, or “reactivated”, shoppers, compared to 8% for other marketing channels. This means that brands investing in affiliate are twice as likely to re-engage with lapsed shoppers. Here it gets more interesting: those lapsed customers account for a 46% higher annual customer revenue than other channels’ lapsed customers (considering a 16% higher AOV and 20% higher orders per customer, plus all subsequent purchases). When marketers work through the affiliate channel, they not only bring lost customers back into the fold, but they do so at a more valuable rate than any other channel they employ.  

The data is clear, the affiliate channel’s customers exhibit the right behaviors for accomplishing your marketing goals and challenging profitability targets. Furthermore, the channel’s consumers routinely outperform those of other marketing channels. Invest wisely by investing in affiliate.

Stay tuned for part two of our series where we’ll discuss the affiliate channel’s influence.

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Sources:

1. CJ Affiliate Customer Insights Network Findings, Retail Vertical, 2016 & 2017 Monthly Customer Analysis; First purchase with the brand is through affiliate

2. MarketingSherpa Benchmark 2014

3. New customers are based on an individual company’s definition; for these purposes it’s customers who haven’t shopped with a brand in 24 months.

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Dirk Mieth's picture
Dirk Mieth (not verified)
October 20, 2017
Great article @ChrisBass

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