How to Use the 80/20 Rule to Enhance Your Affiliate Marketing Program

There's a lot that goes into a successful affiliate marketing program, including some of your budget. Therefore, it's important to make sure you're investing in partnerships that can actually bring in new leads and land conversions for your business.

That's why the 80/20 rule could be beneficial to your marketing strategy. It's a principle of thought that says 80 percent of sales come from 20 percent of your partners. By applying it to your program, you may be able to optimize it to maximize your return on investment (ROI).

In this article, we'll take a look at what the 80/20 rule is, and why it matters to affiliate marketing. Then, we'll offer tips on how you can apply it to improve your program. Let's get started!

An Introduction to the 80/20 Rule in Affiliate Marketing

Also called the Pareto Principle, the 80/20 rule can apply to many different areas, including affiliate marketing. In short, it states that 20 percent of your input results in 80 percent of your output. In other words, a small portion of your investment may, in fact, generate the bulk of your returns.

In affiliate marketing, this translates to 20 percent of your partnerships producing 80 percent of the sales for your program. With a discerning eye, you can determine who your top sellers are so you can reward them and encourage their efforts.

Similarly, by identifying the 80 percent who don’t perform as well, you can figure out how to work with them in a way that isn't a drain on your marketing budget. This might mean lower commission rates or fewer free samples of your products. 

Furthermore, by using the 80/20 rule, you can determine which of your partners consistently underperform, and reconsider whether doing business with them is worthwhile. In turn, this can free up resources to reinvest in those who are bringing in the bulk of your affiliate sales.

How to Use the 80/20 Rule to Improve Your Affiliate Marketing Program (3 Key Tips)

By applying the 80/20 rule, you have little to lose and much to gain. After all, it’s a widely acknowledged observation that has a strong application in any financial setting. Here are three ways you can incorporate it into your affiliate marketing strategy.

1. Use a Tracking System to Monitor Conversions and Find Your Top Affiliates

Before you can reward top-performing affiliates, you have to figure out who they are. According to the 80/20 rule, you should be able to do this by looking at conversion rate data and identifying the fifth of your affiliates who land the most sales.

With a plugin such as Affiliate Royale, you’ll be able to analyze valuable data to understand how the 80/20 rule applies to your program. By creating unique links for each partner, it's possible to see who your top earners are, and who isn't bringing in as much revenue: 

Graph displaying affiliate statistics in an Affiliate Royale report.

Once you've installed the plugin, simply navigate to your WordPress admin sidebar and click on Affiliate Royale > Reports to see the number of click-throughs, unique views, and sales for a given time period. You can also view a list of specific transactions and look to see which partners' names appear most frequently.

2. Reward Top-Performing Affiliates to Encourage Their Efforts

The success of your program can depend on the satisfaction of your affiliates. If they don't feel like their hard work is being adequately recognized, you could see a drop in their productivity.

Suitable rewards can not only help you to avoid that situation but could even motivate your affiliates to continually strive for more sales. Over time, it might also cultivate a greater sense of loyalty to your program.

With the 80/20 rule in effect, you can focus on acknowledging the top 20 percent of your affiliates. This will encourage your less successful partners to improve their sales rates, while also motivating high-performers to maintain their spots.

There are many ways to reward affiliates. One of the most common is to use tiered commissions. This involves giving partners a larger percentage of each sale once they reach a certain number of conversions per month.

For instance, affiliates who make five sales or less per month may only receive a ten percent commission. However, those who land 50 conversions may earn 40 percent of the resulting revenue.

One of the easiest ways to set up tiered commissions is with our plugin. To do so, go to the back end of your WordPress site and click on Affiliate Royale > Options > Commission:

Commission settings in the Affiliate Royale plugin.

Using this page gives you the option to create multiple commission levels with varying rates by clicking on the Add Level button and typing the corresponding percentage into the relevant field.

Another way to add a little fun to your rewards is to run an affiliate contest. The criteria are up to you, but a sales or recruitment target over a set period of time is an easy option. Prizes could include money, free products or services, or even a vacation.

3. Focus Your Promotional Resources on Your Program’s Best Affiliates

Just as commission levels help you focus your monetary rewards on your top sellers, the 80/20 rule can help you use your promotional resources more effectively, too. In particular, you may want to prioritize sharing free products or exclusive coupon codes with the affiliates who have generated the most revenue.

To get started, consider what promotional resources your program is currently using. Some common examples include:

  • Coupon codes: These are discounts affiliates can pass along to their audience.
  • Free products: You may send affiliates free samples or items for them to review.
  • Giveaways: This may be a single item or a bundle that affiliates promote to their audiences, usually as a prize for a contest or random drawing.

These resources can help expose potential customers to your products and encourage sales with exclusive offers. However, handing out items for free is a drain on your revenue, and giving coupons to every affiliate's followers could lead to over-discounting.

Research is important when providing these to affiliates. You might approach this as you would when deciding commission rates by scoping out your competition and considering your budget. This can guide who you share these resources with and which ones you use.

It's also prudent to be consistent with how free products and giveaways are used. Rewarding hard work can be beneficial, but it could be discouraging if your affiliates don't feel they're being supported equally.

Sharing your guidelines may help you avoid such issues arising. With appropriate standards in place, your affiliates will be able to see what they have to do to earn additional promotional resources.

Conclusion

For continued prosperity, your affiliate marketing program needs to invest the bulk of its efforts in the partners who are bringing in the most revenue. The 80/20 rule can be a valuable guide to help you get the results you want.

In this post, we shared three ways you can use the 80/20 rule to guide your affiliate program:

  1. Use a tracking system to monitor conversions and find your top affiliates.
  2. Reward top-performing affiliates to encourage their efforts.
  3. Focus your promotional resources on your program's best affiliates.

Do you have any questions about the 80/20 rule, and how you can use it in your affiliate marketing program? Let us know in the comments section below!

An Introduction to Affiliate Program Commission Tiers

As an affiliate marketer, one of your most difficult tasks is setting the commission rate for your affiliates. This is a crucial decision, as setting them too low will discourage joining while setting your rates too high will leave you with little in the way of profit.

That’s where commission tiers – a pre-set range of commission rates – can be beneficial. By implementing a tiered structure, you protect your bottom line while also ensuring your affiliates are happy.

In this post, we’ll discuss the three main reasons you should use commission tiers in your affiliate program. We’ll then show you how to implement them using Affiliate Royale and its dedicated Commission Levels feature. Let’s get started!

3 Reasons to Use Commission Tiers in Your Affiliate Program

While not all affiliate programs use commission tiers, it’s something you should consider for your own.  Let’s take a look at the benefits!

1. They Can Encourage Active Affiliate Recruitment

The Affiliate Royale affiliate signup page

Your current affiliates can help increase signups to your program.

As a program manager, it’s your job to continually recruit new affiliate leads to your program. However, you can also get your current affiliates in on it with the use of commission tiers. With tiers in place, you can set up ‘parent’ and ‘child’ affiliates. This enables you to continually reward your ‘parent’ affiliate (the recruiter) for their efforts by giving them a share of their recruit's earnings.

The key to such an enticing offer is to publicize it among your affiliates. Here are a few tips for doing so:

  • Advertise your parent/child commission rates. Since not every affiliate program uses this structure, letting your affiliates know it exists can increase recruitment efforts. For example, WP Engine makes clear mention of their tiers on their Share A Sale program page.
  • Provide your affiliates with the appropriate resources. For example, create a FAQ page or landing page for potential recruits. Your affiliates can then point potential leads to it and improve their efforts.

By providing your affiliates with incentives to recruit, you can spend less time doing that and more time on running your program. You're essentially delegating an essential task while sharing the rewards.

2. They Can Increase Affiliate Productivity

Affiliate Royale's affiliate reports page

Tiered commissions can give affiliates the motivation they need to make more sales.

The number of sales your affiliates make is directly related to the success of your program. Your affiliates, however, may not always be as motivated as you'd like. This is where commission tiers can help. When your affiliates know they have a profitable path forward, they’ll strive to perform better (i.e. make more sales).

While a tiered structure is a good start, there are a few other things you can do to motivate your affiliates. For example:

  • Advertise affiliate achievements. You don’t need to go into specifics, but highlighting different affiliates within your newsletters or on the affiliate dashboard can ensure a dose of healthy competition.
  • Set monthly team goals. While competition can work for some, others work better as a team. With this in mind, set team goals and keep your affiliates updated on the progress.

In the end, your affiliates will generally work harder for your program if they get something in return. By offering performance-based rates, you give them something to work toward. This benefits them and your business.

3. You Can Protect Your Business’ Profit Margin

The Quickbooks homepage

With tools such as Quickbooks, you can track your program's profit margins.

Your affiliate program should function like any other business. You should keep a close eye on its finances, including what’s coming in and going out. However, that’s not always enough to keep your profit margin high. By offering a higher commission rate to higher-performing affiliates, you ensure your money is being spent wisely.

Aside from using a tiered structure, there are additional steps you can take to ensure your profit margin is protected. These include:

  • Setting your commission rates carefully. This means considering the maximum rate you can pay out, and setting tiers based on that.
  • Keeping an eye on expenses. In addition to affiliate payouts, you’ll want to know exactly how each dollar of your revenue is being spent. You can do so with a simple spreadsheet, or use software such as Quickbooks.

It’s not selfish to protect your profit margin. By running your program as a business, you can ensure its success now and its survival into the future.

How to Set Up Commission Tiers in Affiliate Royale

The Affiliate Royale plugin.

Affiliate Royale is an affiliate program plugin that enables you to manage your business effectively and efficiently. Its variety of features – including Commission Levels – makes it easy to keep your program running, no matter its size.

Setting up Commission Levels with Affiliate Royale is simple. Once you’ve purchased a plan and installed the plugin, go to your WordPress dashboard. Find Affiliate Royale on left side menu, and go to Options. Locate Commission Settings:

Affiliate Royale's commission settings

You can add levels by clicking the add level button, as well as customize the percentage earned by an affiliate of this level. Once this is set, you’ll need to assign these new levels to your affiliates. Go to Options > Affiliate Settings, and set it as you’d like.

Conclusion

While you want to provide your affiliates with appropriate compensation, you also want to be sure to keep your profits as high as possible. A tiered commission structure – one that enables you to reward high-performing affiliates – is your best solution.

In this post, we’ve shown you three best reasons for using commission tiers in your affiliate program. To offer a quick recap, commission tiers can:

  1. Encourage active affiliate recruitment.
  2. Increase affiliate productivity.
  3. Protect your business’ profit margin.

Do you have any questions about commission tiers, or how to set them up using Affiliate Royale’s Commission Levels feature? Let us know in the comments section below!

Affiliate Royale Version 1.3 Released

We just issued our 1.3 release of Affiliate Royale. This release addresses some of the most requested features and issues that have been reported.
Here's what's new in the 1.3 Release of Affiliate Royale:

  • Added fixed amount commissions
  • Added WooCommerce integration
  • Made MemberPress integration available to all users
  • Fixed some minor issues with Affiliate Royale running on WordPress 3.5
  • Fixed an issue with declined credit cards in WP-E-Commerce
  • Added some actions and filters
  • Retina display compatibility in the Affiliate Royale admin
  • Added some enhancements to the Affiliate Royale update mechanism