In an increasingly competitive retail landscape, with every channel competing for a piece of the budget pie, partnership managers need to advocate for their channel and demonstrate that they are driving value. The key to doing so is the right actionable data that proves which partners are providing incremental value and helps uncover opportunities to optimize the overall partnership channel.
For example, there is often more to revenue than meets the eye. Legacy metrics such traffic, clicks, conversion rates and average order value can only show the efficiency of revenue, not its incremental value. Incremental value is subjective. For example, some brands may define it by revenue considered valuable to the brand that is unique to the partner, including no other paid media such as search, email, social or display. Ultimately, the definition comes down to what metrics the brand prioritizes, and the resulting data helps shed light on this high-value revenue that would disappear if the partnership ended.
The best way to address this problem requires brands to determine what makes one sale more valuable to a brand over another virtually identical sale. The question is, what data can marketers layer onto their revenue numbers that will help them see the true value of these partnerships beyond just revenues?
To discover the answer, marketers need a holistic understanding across channels and devices. In the past, affiliates were simply credited for being the last click and earned commission for the sale. However, today’s consumer journeys include many other touchpoints between the first and last click. Therefore, it is essential to have a perspective of how the partnership channel sits within the entire marketing mix. In addition, partnership data must be tracked across devices: Consumers no longer interacting on a single device but move fluidly between home and work computers, smartphones and tablets.
The new approach to uncovering incremental value: Align your objectives and KPIs
With historical data, it may seem on the surface that two partners drive the same amount of revenue. But that does not mean they provide the same incremental value. With the new approach, you should start by determining the most valuable metrics for your brand. For example, do you value new customer revenue greater than returning customer revenue? If so, that data point will help clarify which partner offers more incremental value.
Next, consider the revenue contributions associated with each partner. Did the partner assist in sales they were not credited for? Was the partner’s revenue unique, serving as the only touchpoint, resulting in revenue your brand cannot otherwise buy? Which partners drove the highest profit?
Finally, be certain the metrics associated with partnerships are valued in the same way as other marketing channels, such as paid search and social, so that every measurement is well-understood and clearly comparable.
The result: A data-driven KPI scorecard that proves incremental value
By meticulously tracking the metrics your brand values the most, you can create a KPI scorecard that clearly shows the incremental value for each partner. A scorecard is helpful because it can combine multiple data points that when viewed together, help paint a more comprehensive view of the value they are driving (vs. relying on a single data point to determine value).
However, you may not immediately be able to gather all the data you need to execute this new approach. But you should immediately begin to lay out a plan to get the technology you need to help you get the right data for your KPI scorecard.
Keep in mind, though, that even with a great deal of the right data, there can still be challenges to overcome in order to fully understand the incremental value of your partners. There may be data discrepancies where even the same metrics are not measured in the same way across channels, because of biases or different viewpoints. For example, if the search team is the number one brand channel, that group may have more of a say in what data all other channels are measured against, and partnerships may not be fairly painted.
In addition, last-click measurement is not always crystal-clear, so you may not be crediting partners when they deserve to be. Finally, commission-splitting, when more than one partner is credited for a single conversion, tends to muddy the data waters, so it should only be used when and where necessary.
A clear path to discovering true incremental value
By discovering the unique, incremental value of each of your partners, as well as the partnership channel as a whole compared to other marketing channels, you can provide an entirely new perspective to the organization as well as make sure that you properly compensate your partners based on their true value.
The right technology platform allows you access and leverage the ideal data based on what your brand value most, and helps you measure partnerships against other channels in an objective and fair way. As a result, you have the opportunity to optimize every partner relationship as well as your entire program.
To take a deeper dive into the questions most pressing to retailers with partnership programs, and determining which metrics they should be looking at to understand the true value that their partners are driving, watch this!back to all blogs