How to Build and Scale a Successful SaaS Affiliate Program

SaaS industry is booming. With over 17 000 SaaS companies in the US alone, it is estimated to be worth $247 billion by the end of 2024.

Competing in an oversaturated space is not only difficult, but it gets expensive very quickly too. On the quest to find ways to market themselves and not go bankrupt, many SaaS businesses turn to affiliate programs as one of the more affordable and efficient marketing tools.

Affiliate partnerships seem to be made specifically for a software company with a SaaS model. Every time a potential customer purchases a monthly subscription, a partner gets rewarded, and it all ties nicely with monthly payouts to affiliates.

However, if you think that launching a SaaS affiliate program is easy-breezy, that’s not exactly right.

In this article, we’ll share the key insights and points from our latest podcast episode with Lee-Ann Johnston, an affiliate marketing professional with over 20 years of experience and the owner for Affiverse – a consultancy agency turned media company that offers its clients a full-service marketing solutions packages.

The Missing Pieces in SaaS Growth Strategy

SaaS business going into the market is most likely bootstrapping their marketing budget as most of the finances go into product development.

That’s precisely why affiliate marketing is such a hit for SaaS. You only pay your partners when they’ve made a sale. On top of that, you get loads of brand awareness for your product. You’re being placed in front of the audience, but you don’t actually pay for brand exposure.

The issue that many SaaS projects experience is when the owner or a product manager runs an affiliate program and they approach it as a technical task, so their partner programs end up dry and impersonal.

Your planning is good, but it’s how you make people feel in affiliate marketing?

Successful affiliate marketers have a collaborative mindset, which helps them grow in the industry and build impressive partner programs that generate thousands of dollars for SaaS.

Side note: SaaS companies have higher commission payouts than eCommerce, according to Lee-Ann observations, so many affiliates are now turning to this industry as they can earn significantly more per every conversion, making their total monthly commissions a substantial portion of their income.

Three pieces of the puzzle that many aspiring SaaS affiliate managers are missing:

1. You won’t magically get endless affiliate sales once you launch.
2. Affiliate partners have a wealth of choice of products and services to promote.
3. There is a limit on how many products affiliates can physically promote.

That’s why, to maximize the outcome of your affiliate marketing efforts, you need to:

• Actively market yourself
• Explain features and upsell them to affiliates

Bottom line: Launching a program and simply expecting people to come and join it is not a good affiliate strategy.

Have a clear, definitive marketing plan for your affiliate program because nobody will care if you have launched your program or not. There is so much choice these days. Don’t be fooled by the abundance of social media platforms and active users there. For every user, there are a number of companies looking to sell to them. The affiliate marketing industry is enormous, and only with a clear strategy and clear benefits can you sell your program to potential partners and make the recruitment process much easier.

Quality Over Quantity: The Best Approach to Affiliate Recruitment

The “spray and pray” approach – where you simply go out there and recruit random people can work in some cases, but it often does more damage than good.

When launching a partner program and looking to build an affiliate network, many SaaS companies automatically think that more is better. They take on the mass-recruitment approach where there is no time for one-to-one conversations or personalization.

As a result, those publishers that you’re trying to attract see your generic email or text that is practically the same as any other invite they receive daily, and they forget about you right away.

The reality is that often, you don’t need 100 affiliates. Having 5 really good partners is enough.

And the hardest part is finding those five partners and convincing them to join your affiliate program. There are many ways to achieve that, but sending mass-invites is not one of them. It’s lazy marketing tactics, and people see right through it.

Instead, niche down and focus on getting a smaller number of affiliates who are fully aligned with your product and values. Once you get the first few partners, you can replicate that success and try to scale from there.

From Lee Ann’s experience, some of the most successful affiliate programs had under 20 partners in them.

Drive Partner Performance: The Psychology of Affiliate Motivation

Once you’ve successfully recruited and onboarded your partners, the question is how to activate them. Having a large number of registered publishers and referral links issued won’t help your conversion rates.

Let’s talk about the most efficient ways to motivate your affiliates to stick with you and sell your products to their audiences.

#1 Help Them Help You

Give them content to work with. The more content they have to talk about, to use in their own content production, and to lean on in their promotion, the better.

Examples:

• Marketing assets that go beyond the standard logo and a few product images. For example, if you want to attract partners who create promotional content in video format, you can provide them with b-rolls that they can use in their videos and make them more professional-looking and informative for the end-users. Email templates for the partner’s email lists are of great help as well.
• Regular promos and offers, possibly exclusive to the affiliate network. For example, you can have a subscription sale going on but only through affiliates and their referral links. Adding exclusivity to the affiliate and referral programs will help partners close more sales with your prospects because they’ll have something unique to offer. You want them to be able to leverage those advantages, as there is no guarantee that the potential client they’re pitching to will ever buy via your other marketing channels.
• Cheat sheets and educational guides, videos, or articles about your product. Your affiliates deal with a wide range of products and solutions. Not only do they partner with a few brands at once, but they’re also constantly looking for new tools and getting those solutions pitched by other businesses. They have no resources to dig into your product, find all the key selling points and hidden gem features, and understand how everything works in general.

Simply equipping your partners with affiliate links is not enough. They need your help, guidance, and promotional materials to generate successful referrals to your product.

#2 Money Makes the World Go Round

Don’t be greedy with your affiliate partners.

Yes, you should strive to find partners who match with your values and goals, and want to work with you long-term. However, affiliate partners are not running charities, they want to have stable passive income and a fair monthly payment for their hard work.

• Offer generous commission rates, and don’t be afraid to pay over the market average. Your goal is to activate and facilitate your affiliate program. Without partners, your affiliate sales will be zero, so it makes little sense to rob them of a couple of extra dollars, especially if you’re only starting to make a name for yourself out there and there is no line of affiliates standing outside of your office waiting to be accepted into partnership.
• Create a bonus structure to encourage overperforming partners and stimulate those with little to no sales. For instance, you can offer an extra $30 for every 10th sale that an affiliate brings in. Make sure it doesn’t eat away all your margin, but make it enticing enough for partners to take action.

#3 Turn affiliates into customers

Depending on your SaaS product, you might not be able to convert 100% of your partners into clients. However, even by having a portion of them use your solution, you will be able to nurture brand advocates who will talk about your solution with more passion, expertise, and motivation.

Think about it, if you drive a Honda, exactly how confident will you be promoting a Ford vehicle? Yet, if you drive Ford, you know this car inside and out.

Similarly in SaaS, if an affiliate partner is using your budgeting software for their company, the story they’ll be telling their followers will look a lot differently than if they’ve only seen marketing presentations.

Being a client will unlock access to endless content for them. Every time they interact with your solution is a case study they can pitch to the audience.

#4 Make it Fun for Them

Your affiliate marketing program doesn’t have to be strictly formal and business-oriented.

You can add a bit of fun to the mix to create a more enthusiastic and relaxed atmosphere with your partners.

Think of all the ways companies keep their employees engaged and happy, besides the fair pay and benefits, of course.

• Celebrate anniversaries by giving partners little e-gifts or physical merch.
• Highlight your top performers in newsletters or during general meetings you run with your network.
• Share stories of affiliates who struggled but were able to turn things around.

Affiliate partners are one of the key drivers of your SaaS business growth. They’re pretty much an extension of your marketing team. If you treat them decently and fairly, they’ll appreciate you more than other brands that don’t put in the effort to establish a relationship.

Choosing Strategic KPIs for Affiliate Success

Business owners who are looking into key performance indicators (KPIs) for their affiliate program need to take into consideration the lifecycle stage of their program.

Someone who’s just launching will need to focus on KPIs that are completely different from those that have an established and well-developed program.

The core things that any company should look at, though, are:

• Chargebacks
• Client tenures

You don’t want to have affiliate partners send you clients who test the product for a couple of months. You want clients who will stick with you for two years and more. Also, you want your partners to pitch your products well, so there is minimal disappointment and no refund requests after the purchase is complete.

• Affiliate activation rates

Signing 200 affiliates every six months sounds impressive until you see that only 11 of them are activated, go live, and bring you conversions.

In Lee-Ann’s experience, you should strive for at least 60% activation rate. If that’s not happening, you need to look closely into your program, the benefits and support you offer, the marketing materials you provide, and what daily communication with partners looks like.

Tip: Make sure you’re using an affiliate program management software to run your SaaS partner program. An affiliate tracker will automatically monitor, track, and allocate all conversions and payouts, making sure each and every partner is paid fairly and on time. It keeps track of everyone’s performance, which means you can stay up-to-date with the progress on current strategies, make ad-hoc changes, and use it for retrospective analysis.  

Never used Tapfiliate to track affiliate marketing performance? Try all the features:

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Warning Signs: Common SaaS Affiliate Program Management Mistakes

There are two common pitfalls that SaaS companies make when it comes to affiliate programs:

1. Not understanding their Why
2. Not knowing when they are (not)ready to launch

Before anyone attempts to launch a partner program, they should ask themselves:

• What is my end goal with it?
• Do I have the resources to launch and manage the program?

Resources that are required to successfully manage an affiliate network include finances, time, and expertise.

Although it sounds easy, and it can be with the knowledge and a good affiliate platform in place, many SaaS businesses struggle when entering the affiliate world because they don’t really know why they’re doing it and whether or not they’re ready for it.

We’re confident that every SaaS business can benefit from additional online presence via partners. However, they need to have the right mindset and focus to make the most of this powerful marketing instrument.

Tip: As you’re figuring out your Why, get a proper understanding of your ideal customer profile. Know what these customers are like, what they do, their preferences and pains, what kind of lifestyle they’re living and who is an authority to them. Understanding all this will make it easier for you to form objectives for your partner program and to look for partners too.

Manage Your Expectations About Affiliate Marketing

It’s very common for companies to have someone from their marketing team be the dedicated affiliate manager without necessarily having any experience in the field.

When that happens, those marketers may look at direct ad campaigns or other promotional campaigns and compare them against affiliate marketing.

The thing that differentiates affiliate partnerships from many other niches of marketing is the speed of progress.

It’s not normal for affiliate programs to blow up immediately after they’re launched. If that happens, we’re usually talking about a celebrity endorsement or an established brand that has many devoted followers already.

On average, it takes six to nine months for the program to kick off, to build brand trust, and to get affiliates on board and have them actively promote your solutions.

Top SaaS Affiliate Program Challenge

Affiliate marketing is not as different in terms of industries, so many challenges that SaaS businesses are facing are the same as someone in eCommerce would deal with too.

However, there is one distinct challenge that SaaS faces these days, and it’s the endless stream of new SaaS products that are being released to the market daily.

Differentiating yourself becomes extremely difficult when the market is so oversaturated.

Research is a great help here.

• How is your product different from everyone else?
• What are the good things that competition is offering right now?
• How many similar SaaS products are you competing with?
• What are the top pains and needs of clients right now?

Make sure to have answers to those questions before you do anything or you’ll risk wasting your invaluable resources.

If your product is significantly less attractive than the ones of competition, you might miss out on good partners even if your affiliate commissions are super impressive.

The Problem with Planning

We all have long-term business goals, and any entrepreneurship book will tell you about the importance of detailed planning and goal-setting.

When you’re working with SaaS affiliate program though, you can’t realistically plan for more than 60 days.

Planning for 2-3-5 years isn’t working because everything changes to fast. That’s why you should plan, for sure, but keep in mind that circumstances will change and you’ll need to adjust your expectations and the course of action.

Tip: Your planning, data, and ideas need to be aligned with people. Partner and customer relationship management can only be mastered if you understand your target audience deeply and prioritize their needs and wants. Develop strategies with them in mind, and seek ongoing feedback to ensure you’re on the right track.

Launch it Right: Critical Advice for Affiliate Marketing Success

As you’re going into affiliate marketing, work with partners who are filling the gaps in your SaaS direct marketing strategy.

For instance, if you are running Facebook Ads, don’t focus on affiliates that operate primarily on Facebook. Instead, target those with a following on LinkedIn, Twitter, or other channels where you believe your target audience is based.

This is an advice we want you to follow as it will relieve you from a lot of effort that you’ll be putting in that won’t bring you the desired results.

Instead of spreading yourself too thin, you’ll be laser-focused on getting the partners that you really need.

Watch the Full Podcast Episode about SaaS Affiliate Programs on YouTube

Enjoyed the summary blog post of our latest post? You can watch the full version on YouTube or send it to your friends and colleagues in the industry.

Follow our channel on YouTube so as not to miss out on regular podcast episodes and helpful webinars where we talk about all things affiliate and SaaS.

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