Starting an affiliate program is one of the best ways for SaaS companies to gain market traction, especially in the early stages of growth.
This is especially true for crypto startups and other blockchain-related services in this day and age where crypto, blockchain, and NFTs are increasing rapidly.
But how exactly do you launch a successful crypto affiliate program in today’s crowded market? How do you stand out and compete with so many companies trying to do the same as you?
Here are the things we will cover:
Setting clear goals for your affiliate program is the most important aspect of your affiliate program alongside more specific steps you can take such as examining your competition and doing a relevant SWOT analysis of your company (strengths, weaknesses, opportunities and threats). will find and attract the right affiliates or publishers.
In this post, I will share my view as a publisher to provide 3 keys to help you find the right partners to target and tip the balance in your favor in the eyes of publishers looking for the right affiliate program.
But first, you should run some numbers to determine if an affiliate program is financially meaningful. Read on to learn how to do this.
Know your LTV and CAC
Let’s say you are responsible for growing the user base of a relatively new crypto exchange. If you serve a large market like the United States, your potential users will have a wealth of options to choose from. Even if you serve a smaller market like Australia or Canada, there will be dozens of other crypto exchanges you will need to compete for customers.
At this stage, allocating your resources efficiently and retaining your customers for as long as possible will be the two main drivers of growth. Three key KPIs come into play here: the average Lifetime Value (LTV) of your customers, your average Cost of Customer Acquisition (CAC), and your LTV to CAC ratio.
What is Customer Lifetime Value (LTV) and what is it for?
LTV is a KPI that measures how much money a customer has made for your company while doing business with you. This metric is calculated from the other three metrics that are easily found in any company that has been in business for at least a few years.
You calculate LTV by dividing average net monthly revenue per customer (which you get by multiplying average monthly revenue per customer by the gross margin percentage) by the monthly churn rate:
LTV= (Gross Margin % x Average Monthly Revenue from each customer)/Monthly Loss rate
As the name suggests, LTV directly measures how valuable each customer is to your business in the long run.
What is Customer Acquisition Cost or CAC and what is it for?
CAC is basically what you have to spend to acquire each new customer. This means the average cost of sales and marketing per customer, calculated as your total spend on sales and marketing divided by the total number of new customers, or:
CAC = Monthly sales and marketing expense for new customers / Total number of new monthly customers
This metric is inversely proportional to how effective your marketing is. The higher the number, the more expensive it is to acquire each customer, so your marketing efforts are less effective.
When setting up the commission structure for your affiliate program, you can determine how much each new customer will cost you because you set it up from the beginning. Whether it makes sense to install higher than your current CAC depends on the metric below.
What is the ratio of LTV to CAC and what does it do?
Finally, the LTV:CAC ratio is a very important indicator that measures the efficiency of your marketing efforts. It determines how much value you will get for the money you spend on sales and marketing. This is because this ratio tells you how much net worth you get for every dollar you spend acquiring a new customer.
The LTV:CAC ratio tells you if there is room for improvement and whether you should devote most of your company’s resources to marketing strategies such as an affiliate marketing program.
What is a good LTV:CAC ratio to start an affiliate program?
Usually you want the LTV:CAC ratio to be as high as possible, right? Not necessarily. It depends on the stage in your company’s lifecycle. A high LTV:CAC ratio is great for increasing profitability in an already established company, but if you’re looking for growth, a very high ratio means you’re spending too. too little in marketing and leaving opportunities for growth on the table.
A healthy ratio for a growing crypto company would be around 3:1. If your numbers are lower, you will want to look for ways to reduce costs or increase customer retention. This is not an ideal scenario for starting an affiliate program as you will likely have to offer lower commissions which will not be attractive to publishers.
However, if your LTV:CAC ratio is 5:1 or higher, there is an opportunity for you to start an affiliate program with attractive rewards that will make affiliate marketers fight for a chance to join.
Now that you know when it’s time to set up your affiliate program and have identified the resources you want to allocate to the program, here are 3 keys to making your crypto affiliate program a success.
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Key #1 – Target the right partners
Remember that through an affiliate program, you plan to reach your target audience through content posted by an affiliate marketer. Therefore, you will truly reach your affiliate’s target audience. That’s why it’s so important to start the process by ensuring your affiliate’s target audience aligns with your target audience.
In the case of crypto, statistics show that crypto investors are getting younger every day. In the US, the percentage of investors aged 18 to 34 who are likely to purchase bitcoin in the next five years increased from 32% to 55% between 2017 and 2020.
In terms of geographic location, Nigeria shows the largest proportion of people currently using or owning crypto, thanks to the difficulty and high costs of traditional cross-border transactions. The African country is followed by Vietnam, Philippines, Turkey and Peru.
What all this tells you is that if you want to start an effective crypto affiliate program, you should target publishers and creators whose readers are mostly from that age group and/or from those countries.
Key #2 – Offer upfront payment
Once you find your potential partners, you need to attract them with a good offer. An important insight is that most publishers are not interested in charging a certain percentage of fees over the customer’s lifetime. This is a somewhat common offering made by crypto exchanges. They just want to be paid in advance. The problem with the first option is that while it has the potential to generate a large amount of revenue for the affiliate if the customer service uses it a lot, it can also be the other way around.
If you offer to pay for future performance rather than paying upfront, affiliates will not have a clear idea of how valuable your affiliate program will truly be to them. On the other hand, by offering to pay them upfront, you are giving broadcasters more precise information that will help them compare programs more accurately and ultimately make better decisions.
Finally, a third important insight that will allow you to gain the loyalty of publishers and influencers is to regularly sponsor their content. This not only ensures that your affiliate audience gets the marketing text or content you want (as sponsorship gives you a bit more control over the content posted), it also opens up a second source of income for your affiliate, which will definitely be for them. to appreciate.
If you’re not sure what type of content to sponsor, look for content that’s already running. For example, many affiliates in the industry have written successfully about the specific process for purchasing altcoins like Safemoon and Dogecoin, while others focus more on the technology behind the coins. As always, aim to collaborate with sites whose audiences broadly match yours to ensure you get the best bang for your buck.
The keys to running a successful crypto affiliate program start with checking the performance of your current marketing efforts and determining if you are in a position to invest in the program. Once you have determined this and defined how much you can spend on the affiliate program, success comes down to finding the right affiliates and offering them a good deal on the right terms.
Paying upfront rather than paying after each action is more attractive to publishers, even if it means losing the chance to win big on a few high-value leads. This alone can be a deal maker for the right affiliate. Also, by regularly sponsoring content, you not only help increase the effectiveness of your affiliate’s marketing efforts, but you also gain more loyalty from your affiliate network.