In order to generate business, sustain growth, and ultimately improve the value of software as a service (SaaS) company, you need an effective long-term strategy. Building a high-quality product that gets people talking is a good first step, but you can do a great deal more. Instead of simply relying on passive word-of-mouth marketing to generate business, you can take an active role in promoting your business, software, and brand through affiliate marketing.
A well-planned, well-established affiliate marketing program can potentially do more for your company’s growth prospects than even the highest-priced PPC campaign. But you need to understand enough to run it effectively. Otherwise, it will simply turn out like any other mismanaged marketing initiative—an inefficient, ineffective money pit.
Let’s discuss how you can avoid that, starting with an explanation of how affiliate programs work in the SaaS space.
What Is Affiliate Marketing?
Affiliate marketing is basically a partnership between a brand and a content creator where the latter promotes the former’s products in exchange for a commission on each successful conversion. As you might expect, the majority of affiliate marketing programs are geared primarily towards physical products. With that said, a SaaS affiliate marketing program can still be immensely valuable—it just differs from the norm in a few ways:
- A different audience. Typically, but not always, the software market in a SaaS affiliate program is geared towards business users rather than general consumers.
- Your affiliate program may require more qualifications than is typical, especially if your software requires specialized knowledge or is targeted at a specific industry.
- Typically, commission rates for SaaS affiliate programs tend to be on the high end, averaging around 20%. Commissions may also depend on subscription length or tier, and some programs may even offer recurring commissions if a user renews.
What Are The Advantages of SaaS Affiliate Marketing?
Given that it’s something of a natural next step up from word of mouth, the advantages offered by affiliate marketing are quite similar. The main difference is that with an affiliate program, you have greater control, and you’re working with people who have much greater authority than a typical user. The advantages of doing so are as follows.
Brand Awareness and Credibility
You typically won’t work with just any affiliate. The people promoting your SaaS app are likely to be thought leaders and influencers—trusted experts in their field, often with a considerable audience. Working with such individuals not only improves awareness of your brand, but also improves your overall reputation as well.
Working with someone who’s known and trusted in your industry gives a huge boost to your brand’s credibility and improves trust in your software.
Low Customer Acquisition Cost
Most affiliate marketing programs are both low cost and low risk. And by low cost, we mean they cost almost nothing. Affiliates simply take a small commission from a conversion or sale you wouldn’t have made without them in the first place.
This has the added benefit of an extremely low CAC, something which can significantly improve your company’s bottom line. Additionally, from a buyer’s perspective, a SaaS company that maintains pre-established relationships with multiple trusted individuals can make for a very attractive purchase.
Reach Both Targeted Audiences and New Prospects
An affiliate marketing program allows you to target an audience that you know upfront is filled with interested, qualified leads. However, the people you’re working with have their own pre-established audiences, and not everyone in their sphere of influence fits your ideal customer profile. That’s not a bad thing, though.
It means that you’re doing more than just promoting your app to the prospects you’re actively targeting—you may also capture the attention of new demographics, as well.
When you work with an ad network or promote your company on social media, you’re at the mercy of confusing algorithms and nebulous advertising policies. With an affiliate marketing program, however, you retain control of everything. Who you work with, how they promote your software, and how your commission rate looks are dictated entirely by you.
Should You Launch a SaaS Affiliate Program?
As you can see, the benefits of an effectively-maintained SaaS affiliate marketing program are immense. At this point, however, it’s important to note that affiliate marketing may not be a good fit for every software company. Before you consider launching one for yourself, you need to ask the following questions:
- Is my customer retention rate high enough to sustain this program?
- Am I able to afford to pay a commission on affiliate sales?
- Are my profit margins high enough to justify paying those commissions?
- Are there influencers, thought leaders, or experts in my industry that I know would be a good fit for this program?
- Do I want my software only marketed to specific audiences, or am I comfortable with my affiliates marketing it to their entire audience?
- Are there other SaaS affiliate programs in my niche? What can I do to differentiate mine from those?
- Do I want to pay a flat fee or a percentage of each sale?
- Will I pay a commission on leads that renew their subscription?
- How will I pay out commissions to my affiliates?
- Can I reasonably expect this program to increase the long-term value of my SaaS company?
Strategize. Grow. Thrive.
Stable recurring revenue is good—it’s a sign of a healthy SaaS company. However, you want your business to be more than just healthy. You want to grow and scale, expanding to new niches, audiences, and markets.
Affiliate marketing provides a low-cost, highly-effective means of doing so. By working with trusted experts, you stand to increase your company’s reach, credibility, and authority. And that, in turn, ensures your business has a better long-term outlook, improved growth prospects, and ultimately, better value when you finally are prepared to sell.
About the Author
Bianca Hayes is a freelance writer who’s passionate about creating quality original content. She holds a Master’s degree in English teaching and a Bachelor’s degree in translation. With 7 years of experience in the freelance writing industry, Bianca has become proficient in creating content that captivates the audience, drives growth, and educates.