Why affiliates and referrals are the top marketing channels for SaaS

Your next customer may not even know your brand exists — but they need a product like yours. If they behave anything like a typical consumer in 2022, they look for solutions to their problem by:

• Researching industry blogs
• Asking friends and business peers for recommendations
• Posting in forums like Quora or Reddit
• Checking the recommendations of trusted influencers on LinkedIn or Twitter
• Looking for discounts or free trials that might sway their choice

This search process opens opportunities for you to use SaaS marketing channels, such as referral-based partnerships — placing you above the competition.

What are referral-based partnerships? 

In referral-based partnerships, third parties receive a commission or payment in kind for driving traffic to your website. The term “SaaS affiliate programs” refers to a popular partnership type that enables influencers or brands to direct their audience to your product. Referrals, on the other hand, come from people who personally know your prospective customer. Maybe they already have a business-client relationship with them, or one of your satisfied customers refers you to one of their friends.

Regardless of whether the partnership takes place through affiliates or those who know the prospects, referral-based partnerships work so well because they rely on communities to spread the word about your product. 

5 reasons affiliates and referrals make good marketing channels for SaaS companies:

1. Minimize marketing costs

If you’re just getting your SaaS brand off the ground, odds are good that your budget is tight. That’s why affiliates and referrals have an edge over traditional forms of marketing: it’s a performance-based system.

Because you only pay your affiliates and referral partners if they make a sale, you keep your marketing costs at a minimum. 

For instance, compare referral-based marketing to paid ads. With a pay-per-click (PPC) campaign, you’ll need to spend precious marketing resources testing different keywords and strategies before you see a sustainable return on investment. 

But with affiliate programs, there’s less risk involved. Since you don’t pay your partners until they make a sale, you won’t run the risk of spending more than you earn on sales. 

If your SaaS business is in the early stages of growth, affiliate sales can improve your ROI and lower your customer acquisition cost (CAC) — which is not only good for your bottom line; it’s more attractive to investors.

2. Track important metrics and stay in granular control

Every tech startup founder appreciates granular data analytics. Affiliate and referral marketing provides a high degree of partner performance metrics. This means you know exactly who buys your product and what motivates them to buy.

The detailed nature of website analytics allows you to accurately track your referral-based marketing efforts. Whether it’s through cookies, unique links embedded in your partners’ websites, or individual discount codes, you can easily determine where inbound visitors come from.

With this knowledge, you can avoid a lot of the trial and error involved in traditional SaaS marketing channels, such as paid advertising. 

Even though you’re partnering with third parties, you stay in control of the overall campaign. You choose your partners, commission rates, and the parameters of the partnership.

3. Expand your brand’s reach

SaaS customers trust industry experts — and SaaS brands rely on word of mouth. If your affiliate program leans on the credibility of trusted authorities in your niche, your brand borrows some of that credibility and expands its reach to a wider audience. 

Referral-based marketing lets you share the work of building an audience. Since affiliates get a commission for every sale, they’re motivated to say good things about your product. 

 The best affiliates are customers who actually use your software, so offer an affiliate program to existing customers who trust your brand. That commission incentivizes already satisfied customers to spread the word about your tool in an authentic voice.

4. Generate high-quality leads

SaaS marketing channels bring a wide variety of traffic to your site. For instance, content marketing pulls in viewers who need answers to top-of-funnel questions, but may never decide to sign up for your tool.

Affiliate programs, on the other hand, have a lower risk of generating poor-quality leads. Assuming you’ve done the research to find the best affiliate partners for your brand, your affiliates are already familiar with your industry — and they’re likely already users of your product. 

Using influencer partnerships helps you skip several steps in traditional marketing campaigns. Since your affiliate’s audience is already made up of your target demographic, you don’t need to spend as much effort on top-of-funnel activities like attracting and nurturing potential customers. They already come to your affiliates’ websites expecting to be guided by expert advice, which means they’re already primed and ready to purchase your tool.

5. Meet customers where they are

Consumers would rather do their own research and purchase software online instead of buying from a reseller. In fact, a recent McKinsey report reveals that roughly two-thirds of B2B buyers prefer to make purchases through remote or self-service eCommerce.

Using referral partners and affiliate advertising aligns your marketing strategy with your target customers’ buying preferences. When a potential buyer begins researching solutions online, they’ll stumble across your affiliates’ content recommending your product. That potential buyer can then visit your website for themselves and make a purchase.

Partnerships make powerful SaaS marketing channels

In a nutshell, referral and affiliate partnerships benefit your SaaS brand by leveraging the credibility your partner has already established with their network. 

Because much of the groundwork has already been laid for you, you can minimize marketing costs, expand your brand’s reach, and generate high-quality leads — all while staying in control of your campaigns and tracking metrics essential for future growth. 

Of course, affiliate and referral marketing align with a key trend: the movement away from reseller-based purchases toward referral-based partnerships.

With the right combination of planning and technology, partnerships can bolster your business’s growth. Want to learn more about how impact.com can automate and streamline every part of the partnership life cycle? Reach out to a growth technologist at grow@impact.com or request a demo.

For more ideas and guidance on SaaS affiliate programs, check out these impact.com resources:

• Partnerships drive SaaS growth (one-sheet)
• How to run a SaaS affiliate program (blog post)
• Examples of successful SaaS affiliate programs (blog post)
• Drive growth with SaaS partnerships (video)
• How to evaluate partnership compatibility (worksheet)
• How to manage a successful affiliate program today (ebook)