What if your business was paying a bunch of extra money to bring in sales that would have happened anyway?
In the e-commerce business, affiliate marketing promises to deliver increased sales by getting your name and products showing up on dozens of sites, blogs, and social media pages. Of course, this sounds like a great boon – more traffic, more sales, more profits. But, in many cases, the results aren’t nearly as good as you might expect. If you’re not careful, your affiliate program can cannibalize sales that were going to happen anyway…
In today’s post, I’ll show you a simple technique to figure out how cannibalistic your affiliate program is, using a specially-designed Google Analytics segment.
Building your segments
In my experience, the biggest reason affiliate sales end up being cannibalistic is coupon codes. People are just about to check out and see that coupon box sitting there… So, they Google for coupons (or head over to RetailMeNot), click through an affiliate link on some deal site, and make a purchase (with or without a coupon). In many cases, you just paid out extra cash for a sale that likely would have happened anyway.
Checking for this behavior is actually relatively easy if you’re willing to do the setup. I’m going to assume that you’ve already got your campaign parameters set up properly on your affiliate links, so the medium for affiliate traffic is getting set to “affiliate.” I’m also going to assume you’re firing an event called “add-to-cart” whenever somebody adds a product to their cart, and that you’re using Google Analytics’ e-commerce features to measure sales.
With that set up, you can start your analysis by creating a custom segment that identifies people that added something to their cart, then came in from an affiliate link and made a purchase. Simply go to the segment builder tool, click “sequence” on the left-hand side to filter users by a sequence of actions, and set up your segment with the following parameters:
Make sure that you’re setting up a filter to include all users that match these conditions. These users will be people that had an add-to-cart event before coming from an affiliate link, then made a purchase from an affiliate link. (Of course, as with a lot of things in Google Analytics, this isn’t iron-clad. There are weird corner cases where people could meet these conditions through other behaviors. But this will get you very close.)
Of course, you’re going to want something to compare this to, so go ahead and define another segment for anybody that made an affiliate purchase… This time, navigate to “conditions” in the segment builder, and set up the following:
With these segments in hand, it’s pretty simple to check your cannibalization rates!
Doing the analysis
To check for affiliate cannibalization, head on over to your e-commerce conversions overview, and set the main graph to display only transactions. Then, replace the “All Sessions” segment with the two segments you just created. Here’s an example of what the results looked like for one e-commerce site I worked with:
In this case, about 82% of this site’s affiliate sales came from people who added a product to their cart, went to check for a coupon, and then came back to check out. And the site wasn’t even offering coupon codes, so these folks weren’t being given any extra incentive to actually make a purchase. As a result, the site was paying thousands of dollars a month to affiliate partners for sales that would have happened anyway.
If you find yourself in this position, it may be time to do an audit of your affiliate partners. If the goal of your affiliate program is to drive completely new traffic to your site, you probably don’t want to allow coupon sites such as RetailMeNot to be partners. Cutting them out will drastically reduce your cannibalization rates, without hurting sales.
Of course, if you really are offering coupons, you might be OK with this behavior. You could always check to see if checkout rates are higher for those that go find a coupon on an affiliate site, then come back. If they are, you might not care about cannibalization – your affiliate dollars are still driving extra sales.
Whatever your situation, take these tools and modify them to fit your needs. Hopefully, you can learn a few things that will help you ensure your marketing dollars are spent as effectively as possible.