Partner marketing is an effective way to boost brand awareness, expand online presence, attract new customers, and increase sales. Partnerships are a marketing channel that affects companies’ bottom lines dramatically – over half of businesses say partnerships drive more than 20% of their revenue.

Although partner marketing can work magic, some partner programmes still miss the mark and deliver poor results compared with the investments brands make into them. To figure out the profitability of partner marketing, marketers need to work out a partner programme return on investment (ROI).

Generally, we know that we calculate ROI by the following formula:

(Benefit – Cost of Investment) / Cost of Investment x 100% = ROI

So, if you’ve spent $30.000 on specific marketing activity and gained $60.000, your return on investments would be

($60.000 – $30.000) / $30.000 x 100% = 100%

Sounds pretty simple, doesn’t it?

Things get more complicated when it comes to partner marketing and a particular partner programme. There are three points that make measuring ROI in this channel a conundrum.

  1. Marketers don’t see the whole picture. Usual marketing tools, such as CRMs, do not allow companies to gain all the information they need about conversion rates and other marketing results. 
  2. The customer journey is complicated. Clicking your link on a partner’s website and making a purchase off the bat it’s rarely the case. On average, potential customers take more steps before buying something. 
  1. There are too many factors at play. Focusing solely on the profits you gain from partner marketing is a wrong tactic. This type of marketing requires a more holistic approach. 

As you can see, partner marketing is a sophisticated marketing tactic with many moving parts. So, leaning solely on the cost-to-benefit ratio to measure its ROI is no longer the option.

How to work out the return on investments for partner marketing?

Companies stuck between the devil and the deep blue sea when measuring their partner marketing ROI. On the one hand, they need to evaluate their performance to make the right data-driven decisions. On the other hand, they can’t reduce partner marketing results to sales metrics only. To calculate your marketing partner efforts’ profitability, you may adhere to the combination of the following tactics.

Measure your partner programme effectiveness

Though the effectiveness of a partner programme you’re running isn’t equal to effectiveness of all your partner marketing activities, it tells a lot. Measuring the partner marketing programme ROI alone is relatively easy — all you need is to set goals and frame key performance indicators.

The KPIs for partner programme effectiveness might be:

  • The specific number of leads a partner programme brings;
  • The revenue a partner programme generates;
  • The average deal size by each partner;
  • The engagement rates across the channels a partner programme employs, etc. 

Measuring KPIs and optimising your partner marketing campaigns takes a lot of time and effort. With dozens of traffic sources and partners involved, it’s impossible to process the data manually. Thus, your partner marketing needs automation. Consider trying marketing tools, which allow not only to track the campaign performance but also facilitate reaching the key performance indicators. The latter often includes CR optimisation, Smartlinks, caps management, BI integrations, fraud prevention, etc.

Implementing a partner marketing software can enable you to set the desirable campaign results, block conversions that don’t fit into a needed paradigm and disconnect low-performing partners. So, you can focus only on the most promising audience and achieve your partner marketing outcomes.

Employ the marketing attribution

Potential customers make winding ways to the purchase. Often, a lead interacts with a brand through dozens of touch points and various partners. Some of these partners make the first touch, and others nurture leads. Both acquisition and lead nurturing efforts may deserve credit depending on the goals of a partner marketing campaign. 

Companies need a multi-touch attribution model to track the customer journey and reward partners according to their contribution. However, businesses often lack the knowledge of more sophisticated attribution models and track only the first or the last click.

Attribution models built to a business’ needs and peculiarities help measure partner marketing ROI accurately. To create such an attribution, merchants need end-to-end analytics with an automated data import. On top of that, the software should let you store information in one place, so it’s easy to access it and build an attribution model. 

With the attribution model advertisers can understand which partners, marketing channels and ads perform best and estimate the amount of credit each ad interaction gets for the conversions.  Hence, it helps marketers to optimise across conversion journeys. All together, it results in a possibility to predict CR boost and estimate ROI more accurately. 

Evaluate partner engagement and satisfaction

Partner engagement and satisfaction are hard to measure precisely. Nevertheless, you shouldn’t downplay the effect they have on partner marketing success and return on investments. 

The more your partners are engaged, the better results you’ll get from your marketing activities. To evaluate partner engagement and satisfaction across various types, geography, and programmes, you may stick to the following criteria:

  • The frequency of visiting your partner portal;
  • Interaction with your marketing assets;
  • Involvement in your marketing campaigns and other activities;
  • Participation in training, etc.

To measure these things more or less precisely, you can employ partner marketing automation software, survey tools, and direct communication with partners. As a result, you’ll get the idea if you need to make any changes to your partner marketing to increase conversion rates.

Measuring partner marketing ROI far and wide isn’t a piece of cake. Apart from monitoring the referral programme’s effectiveness, it requires you to build a custom marketing attribution model and evaluate partners’ engagement and satisfaction.

Working out ROI may take extra effort and expenditures, e.g., spendings on partner management software. However, knowing how exactly partner marketing affects your bottom line and being able to make data-driven decisions worth every penny.

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