The Ultimate Guide To SaaS Affiliate Marketing
According to SaaS Scout, 15% to 30% of all sales for digital advertisers come from affiliate marketing.
That’s a lot.
Marketing, in general, is a crucial part of growing any business. You need to identify the right audience. You need to build your brand. You need to communicate the value that your product will bring into their lives.
And in the rapidly growing SaaS market, you have to do whatever it takes to stand out among your competition.
In this article, we will talk about SaaS affiliate marketing and how you can leverage it to grow your business.
Ready? Let’s dive right in.
How Affiliate Marketing Works In SaaS
First, let’s define what affiliate marketing is in the SaaS industry.
Put simply, it is when a SaaS business rewards another business or individual (a.k.a. affiliate partner) for selling its software.
This usually happens when a SaaS company allows other businesses or individuals to market its software in exchange for an agreed-upon commission on each sale.
In SaaS affiliate marketing, the SaaS company will share a percentage of its revenue with its affiliate partners in exchange for referrals.
This type of marketing arrangement is beneficial for both parties involved.
The SaaS company gets more customers and exposure while the affiliate partners get to earn a commission on each sale they generate.
It’s a win-win scenario!
The affiliate partner can create banner ads, landing pages, software reviews, articles, or videos to promote the SaaS product.
Once a potential customer clicks on the affiliate link and makes a purchase or subscription to any of the SaaS’ premium plans, the sale will be tracked by the SaaS company’s system and the affiliate partner will receive their commission.
Affiliate programs are usually performance-based, which means you only pay a commission if the referral leads to a sale. Although it can vary depending on your affiliate marketing program. We’ll dive into details about that later.
5 Benefits Of Having A SaaS Affiliate Marketing Program
Now that we have a basic understanding of SaaS affiliate marketing, let’s talk about the benefits of having a SaaS affiliate program.
1. It Leverages Content Marketing
Since SaaS solutions are very technical, potential customers are doing their best to understand a product first before deciding to buy it.
Most end-users don’t even go to your sales team anymore. They just do their own research.
That’s why content marketing is currently one of the most powerful tools to build your SaaS brand and sell your software.
Affiliate marketing takes advantage of that tool. Some affiliate marketing partners produce content that educates their audiences about SaaS and their niche topics.
Now that we’re talking about audiences…
2. It Reaches A Well-Established Audience
Most SaaS affiliate partners already have an established audience. Think of industry experts running a blog, or podcast, or YouTube channel.
They’ve already built trust with their audience and they’re likely looking for ways to monetize that relationship. SaaS affiliate marketing provides a way for these experts to make money by promoting a software that they believe in.
3. It Increases SaaS Brand Awareness
More exposure to a wider audience also means building your brand awareness.
When you have a SaaS affiliate program, your company’s logo and branding will be placed on the websites of your affiliate partners.
This increases the chances that someone who is interested in SaaS will stumble upon your company’s website. And when they do, they’ll be more likely to consider buying your software because they’ve heard of you before from a source they trust.
4. It Lowers Your Customer Acquisition Cost
One of the main benefits of SaaS affiliate marketing is that it can help you reduce your customer acquisition cost (CAC).
CAC is the amount of money you spend to acquire a customer. It’s one of the most important metrics in SaaS businesses to ensure that you have a positive cash flow.
Affiliate marketing can help you reduce your CAC because you only pay when you get something. Most affiliate marketing programs pay a commission for every successful sale. And that means it only becomes an expense when it actually brings in revenue.
5. It’s A Scalable Solution
If you do it right, SaaS affiliate marketing is a scalable solution. That means you can grow your program as your company grows.
You don’t need to worry about hiring more salespeople to keep up with the demand. You can simply add more affiliates to your program. And if they’re producing high-quality content, they’ll help you generate even more leads and sales.
Types Of SaaS Marketing Affiliates
Now SaaS marketing is a lot more complicated than the traditional type of marketing.
SaaS solutions can be business-to-consumer (B2C) and business-to-business (B2B).
And even for B2B, its target market can still be a broad audience. It can range from small startups to large conglomerates. Its buyer persona can be the end-user or it can go all the way up to the CEO.
There are a lot of considerations when it comes to SaaS marketing. As a result, there is a lot of variety as well, when it comes to SaaS affiliates. They can use different platforms, talk about different topics, and target different audiences.
That’s why it’s important to find the right type of affiliate for the job.
Here are some that you can choose from:
- SaaS Lifetime Deal Platforms
Let’s discuss each of them in detail.
Blog sites are one of the most common SaaS affiliate marketing platforms, especially for B2B.
Like we discussed earlier, content marketing is one of the most effective SaaS strategies today. And the most commonly used platform for it is blogs.
Long-form blogs, to be more specific.
Potential customers are looking for in-depth articles that can educate them about SaaS or even just the latest trends in the industry.
What’s more, bloggers are very passionate about their topics. That means when they promote your product to their audience, they will likely be passionate about it too.
Just be careful in choosing which bloggers to partner with. You’ll want to make sure that they have an audience that’s relevant to your SaaS product. Or that they even have a considerable audience in the first place.
Otherwise, you’ll be wasting your time and money.
Podcasts are another great way to reach potential customers. In fact, over 40% of Americans older than 12 listen to podcasts on a monthly basis.
That’s a huge potential audience that you can tap into. Podcasters, as SaaS affiliates, share a lot of characteristics with bloggers.
For starters, podcasters are also passionate about the content they provide. You can even feel it more because you can hear the tone they communicate it with.
Podcasts also tend to reach a B2B audience rather than B2C. This is because usual topics include business practices, trends, and strategies to help SaaS companies grow.
In fact, podcasters usually invite business or SaaS experts to speak during their episodes. They interview these experts, providing valuable lessons and advice to their listeners.
Just like you do with bloggers, you need to make sure that any podcaster you work with has a significant audience that’s relevant to your SaaS product.
Influencers in the SaaS industry can work both for B2C and B2B.
For B2C audiences, you can partner with social media personalities who are relevant to your niche.
For example, if your SaaS product is in the music niche, you can partner with musicians. Or if it’s a graphics editing software, you can reach out to graphic designers with a considerable social media following.
Those with B2B audiences are usually industry experts.
Industry experts are a great type of affiliate because they are credible sources of information. When they promote your SaaS product, potential customers are more likely to trust them.
These industry experts may also use social media to reach their followers. But you may find their more comprehensive content on LinkedIn or Medium.
What’s more, these industry experts could even be bloggers and/or podcasters themselves. They could very well be one-stop shops for your SaaS affiliate marketing needs.
Again, make sure that any industry expert you work with has an audience that’s relevant to your SaaS product.
SaaS Lifetime Deal Platforms
Now, this SaaS affiliate marketing method may not be as popular as the ones we just talked about. But it can be a powerful way to promote your SaaS solution, especially if you’re a startup or launching a new product.
Basically, these platforms are sites that allow you to offer SaaS lifetime deals (LTD). These are one-time purchases for lifetime access to your SaaS product.
LTDs can be a good way to jumpstart your growth by getting an initial surge of revenue. At the same time, these deals attract potential customers, especially early adopters.
Not only does offering these LTDs drive in more funding for your growth. It also raises brand awareness.
You should use your newly gained funds and hype in order to secure subscription-based customers. Go after recurring revenue, not one-time revenue. After all, that’s the design of SaaS.
But to pull off a successful LTD campaign, you need a considerable audience to hear you out.
That’s where SaaS LTD platforms come in.
These are websites that already have a lot of traffic and a big audience of SaaS users looking for good deals. You can offer your LTD on their website. And in return, they get a commission every time someone buys your product.
One of the best SaaS LTD platforms on the internet today is AppSumo. They have a huge audience and vast connections when it comes to marketing.
They can advertise your product through email marketing and social media posts. They can even create promotional videos on your behalf.
The commission rate may surprise you, though. They get 70% of each sale made on their website.
Still, it’s a good deal considering the extensive marketing efforts that they perform. If you’re a SaaS startup, the headstart in brand-building and revenue is easily worth the large commission.
One more thing about Appsumo. They can be a bit strict when it comes to the SaaS products they choose to promote.
But that’s just them ensuring that they are bringing high-quality SaaS solutions to their audience. After all, they still need to build trust and a good relationship with them.
If you’re confident in how well you’ve designed your product, you should have nothing to worry about. But to make sure that you really make the cut, check out our guide on passing AppSumo’s evaluation.
Commission Structures For SaaS Affiliate Marketing
Now that you know the different roads you can take for your affiliate program, let’s talk about how to structure your commissions.
So far, we’ve mostly talked about the flat-rate commissions given for each successful sale.
But that’s not the only option when it comes to compensating your affiliate partners.
It’s generally easier for tangible products that have one-time payments. The customer pays and the affiliate marketer gets a cut.
But SaaS solutions have recurring payments (except for LTDs, of course).
So, do your affiliate partners also get a recurring commission? Is the commission rate the same for all of your SaaS affiliates?
For the type of commissions, you can use any of the following:
- One-time commission
- Recurring commission
- Limited recurring commission
If you want a more comprehensive commission structure, you can also add the following variations:
- Tiered commission rates
- Non-revenue-based commissions
Okay, don’t get overwhelmed. I know that’s a lot of things to consider. So let’s talk about them one by one.
These are the simplest form of SaaS affiliate commissions. You give a one-time payment for every single sale that they have successfully brought in.
The good thing about this is that it gives your affiliates an incentive to continuously bring in new customers. You can expect them to be extra persuasive when trying to pitch your SaaS product to their audience members.
But here’s the thing. It may not be the best commission structure for subscription-based SaaS products. Sure, it’s a great setup for eCommerce, tangible products, and maybe SaaS LTDs.
But if you’re only paying a one-time commission to a product with recurring revenue, it may not be attractive to potential SaaS affiliates.
Imagine selling a SaaS solution that costs $50 per month. It would bring an annual recurring revenue (ARR) of $600. And let’s say that your average customer sticks with you for ten years. That’s a lifetime value (LTV) of $6000.
But if you give-say-a 10% one-time commission for the first payment, that’s only $5.
See how that can seem unfair to your SaaS affiliate partners?
This type of SaaS affiliate commission is a little more complicated than the one-time payment, but it sounds fairer to your affiliates.
Instead of getting commissions only for their referrals’ first payment, they get commissions for every payment.
That means they also get recurring commissions. Whether it’s a monthly, annual, or biennial payment, they get a commission whenever their referral pays.
This is a better setup for SaaS products because it gives affiliates a commission for the long term. It also encourages them to continue building relationships with their referrals.
After all, they only get commissions for as long as their referrals subscribe to your product.
Limited Recurring Commission
Still, remember that marketing is not the only key factor to customer retention. Your customer success and product development efforts are just as important.
How do you account for that?
You can also modify this commission system to have a limited recurring commission. This just limits the recurring commissions until the first or second year of their referrals’ subscription.
This can motivate your SaaS marketing affiliates to keep bringing in new customers.
But then again, there are still risks to this system. It can be less appealing to SaaS marketing affiliates.
What’s more, those that do take the deal may no longer see the point in retaining their referrals after their recurring commissions have expired.
So choose your strategy wisely.
Tiered Commission Rates
If you want your SaaS affiliate partners to have a little more reason to sell your product, you can give them tiered commissions.
That means that their commission rate increases with the size of the sale or the number of referrals they bring in for the month.
Take these commission tiers, for example:
Number Of Referrals Per Month
Up To 50
51 to 100
More Than 100
Another road that you can take for a tiered structure is focusing on customer retention. For example, you increase your affiliates’ commission for every year that their referrals stay with you.
Let’s say for the first year, your affiliate gets a starting 10% commission from a new referral. When that referral goes into their second year of subscribing to your product, the commission rate goes up to 12%. In their third year, it goes up to 15%.
And so on.
With a tiered commission structure, SaaS affiliate partners have an extra incentive to bring in as many new customers as they can and/or retain their current referrals.
Notice the “and/or”?
That’s right. You can combine multiple tiered structures to give your affiliate marketers more incentives. Just be careful not to make it too complicated for your affiliates to understand or for you to track.
Another way that you can incentivize your SaaS marketing affiliates is by simply giving them bonuses.
For example, you could give them an extra $100 for every fifty referrals they bring in for the month. Or you could also take the customer retention route, giving that bonus for every referral that stays with you for more than a year.
It may not be as comprehensive as a tiered commission structure. But if you do it right, it can go a long way in bringing more high-value customers to your SaaS product.
Here’s another thing about SaaS. Sometimes, marketing performance can’t be measured in revenue.
Not yet anyway.
This is especially true for SaaS solutions that have freemium models or those that offer free trials. Now, these are some of the best ways for SaaS solutions to quickly deliver value to their potential users.
And most of the time, users are only willing to pay for a SaaS solution only when they have seen the value of it. That can take the whole fourteen-day trial. Or it can take months of using the free plan.
So how about affiliate marketers who brought these customers? They may not have brought revenue. But they brought customers who can eventually start paying for a subscription.
Don’t they deserve to get commissions too?
What you can do is give commissions that are not based on the revenue. You can base it on different metrics, such as the following:
Clicks: Commissions for affiliate partners would depend on the amount of traffic and engagement they bring into your website.
Just a fair warning, though. This system is vulnerable to exploitation. Fraudulent affiliates can use click bots or pay people to click links to make it look like they are bringing a lot of traffic into your website.
Free trial sign-ups: You can pay a fixed standard commission for each customer that only signs up for the free trial or free plan. Once they start paying, you can transition it to a revenue-based commission.
Leads generated: Your affiliate’s commission would depend on the number and quality of the leads they bring. You can start with a base commission for each lead, then increase or decrease it based on the lead score.
The beauty of the last two systems mentioned above is that they provide incentives to improve your affiliates’ performance.
For the one based on free trials, affiliates can try harder to bring paying customers so that they can have a revenue-based commission. For those being paid for leads, they can strive to find high-quality leads so that they would get a bigger commission.
How To Run A Successful SaaS Affiliate Marketing Program
Every SaaS affiliate marketing program is different because every SaaS solution is different. So you need to know how to run an affiliate program effectively for your SaaS business.
You need to find the right affiliates to partner with. You need to come up with the right commission structure. And you need to have an airtight relationship with your SaaS affiliates.
If you have a SaaS startup or a new product, you may want to go the SaaS LTD route. In that case, you can apply for a partnership with AppSumo or similar platforms.
These 5 steps can be helpful guides:
- Define your commission structure
- Look for SaaS affiliate marketing partners
- Help your affiliates build your brand to their audience
- Track your affiliates’ performance
- Reward your best-performing affiliates
Let’s go through them one by one.
Define Your Commission Structure
The first thing you need to do before anything else is to determine your commission structure. You’ll need to have a rock-solid system to present to your potential affiliates.
Will you offer lifetime recurring commissions or limited ones? Will you increase commission rates based on tiers? Or will you simply provide opportunities to earn bonuses?
Still, when you do come into contact with your potential affiliates, be ready for a negotiation.
Speaking of contacting potential affiliates…
Look For SaaS Affiliate Marketing Partners
Well-established SaaS companies like HubSpot and AWeber don’t have to actually look for affiliate marketing partners.
Affiliates look for them.
If you notice at the bottom of their websites, they only provide a link where aspiring partners can apply for their referral programs.
You can do that… if your SaaS company is as big as HubSpot or AWeber.
But as a fledgling SaaS provider who is still looking to grow, you need to actively find affiliates to partner with.
As you look for them, you need to consider a few things:
The number of followers: Do they have a large enough audience to bring customers to your website?
Relevant content: Do they produce content that is relevant to your SaaS product? This is important because the needs of your target audience should match the solutions that your SaaS product provides.
Relevant platform: Are you targeting a B2B or B2C audience? Do you need blogs, or podcasts, or social media posts? You need to consider this because it determines how well you would reach your target audience.
Remember earlier when I said something about a negotiation?
Agreeing to a mutually-beneficial commission structure is crucial to starting a good affiliate marketing partnership.
Yes, you may have already created a solid commission structure. But your potential affiliate partners most likely will present a counteroffer.
So be ready with your own counters to their counteroffers. Just don’t lowball their marketing services.
After all, these affiliates have spent years building up their expertise and authority in their niches. That’s not an easy thing to do.
But don’t let yourself be pushed around either. Sure, there may be some compromises along the way. But make sure you can live with those compromises.
The goal here is to come up with a commission structure that both parties are happy with.
Help Your Marketing Affiliates Build Up Your Brand To Their Audience
Once you come to an agreement with your affiliate marketing partners, you can help them build your brand.
Wait. Isn’t it their job to help you build your brand?
Yes, it is. But that doesn’t mean you should leave them to fend for themselves. You can provide them with useful insights and marketing collaterals to help them represent your brand better.
You can send them a clear copy of your logo and your preferred banners. You can brief them about your SaaS business. You can even talk to them about your company mission and your SaaS product’s value proposition.
Remember that this is a two-way street here. The more you help your affiliates, the better they can promote your product to their audiences.
Track Your Affiliates Partners’ Performance
I almost always say this when it comes to tracking your performance: you measure what you value.
And if you really value your customers and the overall growth of your SaaS business, you would monitor every part of it.
That includes your affiliate partners’ performance.
It’s important because you want to make sure that your affiliates are driving quality traffic and leads to your website.
If you have a non-revenue-based commission structure in place, then you can’t do that without tracking your metrics.
If you want to make this process A LOT easier, you can use affiliate tracking SaaS solutions such as Tapfiliate, Everflow, or AffTrack. These tools can help you create referral links, track referrals in real-time, and even compute commissions.
Reward Your Best-performing Affiliate Partners
Once in a while, you may want to throw some goodies at your SaaS affiliates.
And I’m not just talking about cash bonuses. We’ve already covered that, along with tiered commission structures.
On top of the bonuses, you can also raise commission rates for the top performer. You can give out special discounts that are exclusive to the winners. Or even free licensing if they have performed so well that you can afford to give them a free license.
Better yet, you can ask your top-performing affiliate partners what they prefer as a reward. And then give it to them.
It’s important to make your affiliate partners feel appreciated. This boosts the morale of those who are already performing well. What’s more, it can motivate others to strive to be your best affiliate marketer.
FAQs About SaaS Affiliate Marketing
1) What are the benefits of a SaaS affiliate marketing program?
There are several benefits of a SaaS affiliate marketing program, including:
- Increased exposure for the company’s products
- Cost-effective way to generate sales
- Ability to track sales and commissions
- Access to new customers
- No need to invest in customer acquisition
2) What are the drawbacks of a SaaS affiliate marketing program?
There are some potential drawbacks of a SaaS affiliate marketing program, including
- Loss of control over how the company’s products are promoted
- Difficulty tracking sales and commissions
- Risk of low-quality affiliates
- Possible cannibalization of other sales channels
- Requires ongoing management and communication
3) How can I find a good SaaS affiliate partner?
The first step is to identify your target market or audience.
Once you know who your ideal customer is, you can start reaching out to potential affiliate partners that cater to that same target market.
For example, if you have a accounting software for small businesses, then you would want to look for affiliate partners that focus on marketing to small businesses.
Some examples could be:
- Business directories
- Industry-specific forums and discussion boards
- Blogs that write about small business solutions
- Social media influencers who have a small business audience
- Youtube channels that review business software
These are just a few examples, but you get the idea.
The next step is to reach out to potential affiliate partners and pitch your SaaS product to them.
If they’re interested in promoting your software, then you can work out the details of the partnership, such as the commission structure and other terms.
Final Thoughts About SaaS Affiliate Marketing
SaaS affiliate marketing is a powerful SaaS marketing strategy that you can take advantage of.
It’s a win-win between you and your affiliate partner. You get to start or expand your brand’s reach. It doesn’t require you to build your own marketing team. Best of all, it will only be an expense after you have gained the revenue.
All the while, your affiliates earn a considerable income for their content and marketing expertise.
Still, make sure that the affiliates you work with are reputable and have a good track record. The size of their audience and the quality of their content is key to successful affiliate marketing efforts.
If you’re just starting out as a SaaS provider, you may have to actively look for affiliate partners yourself. But if you grow as a reliable SaaS business, you may one day have your own partner program like HubSpot and the other SaaS giants do.
Imagine that. Affiliates lining up to be your affiliate partner, clamoring to promote your SaaS product.
For more strategies on growing your SaaS business, visit our blog here.