How does one make the most of their affiliate marketing program? On what areas of affiliate management should one focus to optimize the ROI of an existing affiliate program? These and many other questions are answered by today’s guest.

Today’s Q&A is with Carolyn Tang Kmet, former Director of Affiliate Marketing for Groupon, currently VP of Performance Marketing at All Inclusive Marketing Inc and holds Affiliate Summit’s Affiliate Manager of the Year 2010 Pinnacle Award. Carolyn is also an adjunct lecturer at the Loyola University of Chicago, where she teaches both undergraduate and MBA level e-marketing courses

What are the major challenges with which you see affiliate managers struggle?

There are a lot of challenges with affiliate marketing.  However, there aren’t any that can’t be overcome. 

The first one that comes to mind is spend management, which encompasses fraudulent transactions and accounting for reversals and returns.  In order to identify potential fraud within an affiliate program, managers need to set up alerts based on several key metrics such as conversion rate, average order value, click frequency, reversal rate, etc. Alerts aren’t provided by the network, but can be something that the affiliate manager can set up within a proprietary dashboard. 

Another challenge would be proving incremental value.  The standard model in affiliate marketing is based on performance.  So if you are paying commission on a transaction, the question will always be, “Would we have gotten that transaction on our own?  What value did the affiliate add?”  With incentive sites, you would look for evidence of higher average order values or a higher frequency of purchase. 

With any site, you would look for a new customer percentage.  There are definitely ways to prove incremental value.  It all goes back to the idea if you are a pro-active affiliate manager, you should have your own, custom dashboard that tracks metrics that are specifically important to you.

What do you view as the main affiliate program growth opportunities?

Mobile is a big one for me.  According to Forrester, mobile purchasing grew by 80% in 2011, and is expected to double by the end of 2012.  Why mobile?  First, it is the only device that is continuously attached to a single consumer.  It’s the only channel that truly bridges online and offline consumerism. 

You can walk into a store, see a product, and either order it via your cell phone, or find a different distributor.  It’s driving price transparency, and the retailers and affiliates that can figure out how to harness this characteristic will make a killing.

Nearly two years ago you transitioned from being a affiliate network-based affiliate manager (on ShareASale) to managing Groupon’s affiliate program in-house. What are some of the things that affiliate program managers that didn’t have in-network experience (i.e. working for an affiliate network) don’t know (the things that can help them improve their program management)?

A lot of people see discrepancy between network metrics and internal data, and assume that the reason for this is poor tracking technology on the network side.  However, most discrepancies can be explained if you dig into the data enough. Perhaps internal metrics attributed the transaction to a different source based on some pre-determined criteria.  It simply is not in the network’s best interest to have bad tracking mechanisms. 

Most networks are also performance based, so they only get paid if the sale tracks properly.  The other benefit that comes from working with a network, is that you can see overall trends in the affiliate base.  So if one retailer notices a downturn in clicks, the network can see whether or not this behavior was isolated to a single merchant, or if it was cross-network.  However, affiliate managers can compensate for this on their own by asking another affiliate manager. 

The good thing about this industry is that, for the most part, everyone is approachable and willing to share what knowledge they can.

Give us 5 tips that affiliate managers (and/or merchants) could implement right away — to maximize the performance of their affiliate program(s).

  1. Sales incentives and promotions really do work!  Schedule an hour in your calendar right now to sit down and figure out your promotion schedule for 2013. 
  2. Give a fixed bonus for hitting a certain sales tier, increase commission on a specific product category, provide a first or second sale bonus to activate new affiliates.  Come up with a new promotion for every month, and then commit to implementing it. 
  3. Also, take some time to create a custom reporting dashboard for yourself that tracks key metrics that you find valuable: number of click active affiliates, number of sale active affiliates, top 10 affiliates, etc. 
  4. My other suggestion would be to rank your top 100 affiliates, and then track their ranking over time.  Week over week, quarter over quarter, so that if someone who used to be in your Top 20 is suddenly in the bottom 10, you’ll know to reach out. 
  5. Finally, know what your benchmark averages are: conversion rate, average order size, return rate, and set up alerts so you know to take action when some metric exceeds the standard band.

What’s one good reason why etailers and affiliate managers should engage affiliates around special promotions?

Every affiliate program has affiliates who joined and aren’t doing anything.  However, with most affiliate programs, the choice to join is entirely affiliate driven. 

If an affiliate joined your program, then there was some reason, some idea that they had, that made them join your program.  If they’re in your program and are inactive, all you need to do to activate them is give them a little incentive to get them rolling.