Rethink Commerce Blog

Should You Pay Affiliates for Subscription Renewals?

Posted on June 10th, 2015 by

Whether your business is in the SaaS / subscriptions area or you are thinking of turning your software products into subscriptions, your affiliate channel is an important vector to get more sales. The general recommendations of managing the affiliate program should be applied in this case. But, moreover, you can leverage the specifics of the subscriptions business in your affiliate program.

In this vertical, you will see 2 main affiliate commissioning models being used:

  • The “legacy” one, where merchants award a bigger payout to affiliates for the initial sale;
  • The “new” one, where merchants pay a normal commission to affiliates for the initial sale, but they also credit them with ongoing commissions for ongoing subscription renewals.

Both these models work successfully out there; some advertisers even run both of them in parallel. But when is best to apply them?

First step would be, as always, to take a look at your competitors’ offerings for affiliates and also at the successful SaaS / subscription based merchants in the networks you work with. You will have the business context to make your offer more attractive.

We’ve drafted a table below that contains our recommendations based on results from subscription-based programs in the Avangate Affiliates Network. There are 4 main variables we’ve taken into account:

  1. Stage of affiliate program – whether it’s a new program, a growing or an established one
  2. Subscription duration – daily / weekly / monthly / quarterly / yearly, etc.
  3. Subscription price – per one subscription duration
  4. Target audience

 

   Higher affiliates payout on initial sale only  Commission on initial sale + subscription renewals
 Stage of affiliate program  Established programs  New / growing program –  using this as a  differentiator.Established  programs – using this as a  reward for top affiliates.
 Subscription duration  Long duration – quarterly /  yearly.
 Affiliates prefer to receive a  higher amount in the  beginning (instant  gratification).
 Short duration – daily /  weekly / monthly
 Subscription price  High price (over $60)  Lower price (under $60)
 Target audience  B2B  B2C, B2sB

 

Of course, you should make sure that the network / platform that hosts your affiliate program is ready to support this. In the Avangate Affiliates Network, for example, you can very easily set up flexible commissioning schemes for affiliates, including payouts to them for subscription renewals.

crediting affiliates for renewals

 

To wrap this up, I would certainly recommend at least surveying your top affiliates about their interest in a commissioning scheme with payouts on renewals and leveraging this functionality that some networks / platform offer.

I would love to hear about your experiences on this matter – feel free to drop a comment.

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Cristi Miculi

Senior Manager, Affiliate Services

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