Looking for a low-risk commission model for your affiliate program that brings in a steady stream of leads on auto-pilot? Pay-per-lead affiliate programs may be just what you’re looking for.
With pay-per-lead affiliate programs, you’re paying for “leads” as opposed to sales which means a bigger volume of potential prospects.
Are there any risks, you ask? Sure they are! But, the benefits far outweigh them, which is why you need to learn the ins and outs of this model before you decide to implement it.
Here’s everything you need to know about pay-per-lead affiliate programs, how they work, plus examples to bring you up to speed!
What is a pay-per-lead affiliate program?
In a pay-per-lead (PPL) affiliate program, you reward affiliates (content creators) with commissions for every qualified lead they generate. This program is sometimes called a PPL program or CPA (cost per action) program..
The onus is on the affiliates to simply provide the leads and not to generate any actual sales, but they may also be rewarded for the sales they generate.
Affiliates will place links to your lead magnet, sales funnels or landing page within their content. Whenever someone clicks the link and becomes a qualified lead, the affiliate gets paid their commission.
Affiliates appreciate being paid per lead when a business has a longer sales process, as they’d have to wait a while for payouts when these businesses only pay per sale.
What counts as a qualified lead?
Qualified leads are leads that have taken an action that indicates they are a good fit for your business and have high interest in buying.
The lead-qualifying actions you decide to reward affiliates for are up to you, but may include:
- Free trial sign-ups — customers are driven by the affiliate to sign up for a free no-obligation/no-credit card trial.
- Demo/Consultation sign-ups — customers are driven by the affiliate to sign up for a demo or a consultation to learn more about the product or sign up.
- Lead form fills — Another version of a signup form, where the customer shares their name, email address or contact number to learn more about the product and service.
- Software downloads/app installation — Affiliates drive marketing efforts towards getting customers to download or install the application.
- User account creation — Affiliates promote user account creation on your platform, and get rewards regardless of if those accounts turn into paying users.
- Quote requests — Affiliates market your quotation forms to customers so they can book a quotation for the specific products or services they’re looking for.
- CRM qualifications (leads that get a high enough score in your lead scoring system) — A slightly more complex yet highly-effective method, where you rate leads based on how they’re engaging with your business via your CRM of choice.
The common factor in all the above actions is that the customer shows a genuine interest in your product or service. From then on, the ball is your court in terms of how you nurture the lead toward an actual sale or recurring subscription.
Another way to do a pay-per-lead affiliate program is to use a multi-tier model where the affiliate gets rewarded both for leads and sales. We’ll cover this more in detail next.
Multi-step affiliate programs: Pay for leads and sales
If you pay only for leads, you can’t always be certain whether those leads are going to convert to sales. In other words, you might not be investing in leads that eventually generate money for your business.
Creating a multi-step affiliate program is one way to address this – for the benefit of both your business and your affiliates. In this program, you provide smaller commissions for leads and then larger affiliate commission rates for sales.
Affiliates are more easily motivated to bring in leads, given there isn’t as much of an effort to be made on their side. But, for affiliates who are more profit-driven, sales commissions can be an attractive proposition. In any case, you can cast a wider net for more affiliates, as your commissions are available to a larger network of affiliate marketers.
Also, given that sales pay more, affiliates are more likely to focus on driving high-quality leads with the expectation that these leads will convert to sales over time.
Will a pay-per-lead program work for you?
Pay per lead affiliate marketing programs are a win-win for both businesses and affiliates, but they’re not suitable for all types of businesses. The best fit for this type of program are sales-led B2B businesses and other businesses with a longer sales cycle — where it often takes a while before qualified leads purchase.
In terms of commissions, ensure you’re able to pay for each and every lead – and sales where possible (as an additional layer for generating profits). Offering sales commissions incentivizes affiliates to bring in quality leads, ones more likely to convert.
You must also be ready and able to pay cash for qualified leads even if they don’t convert to sales. After all, cash is the reward affiliates expect. Although commissions can be lower for leads, you’ll be paying out commissions more frequently than if you’d only award for sales. You should have high customer retention rates to cover these commission costs.
Not ready for a pay-per-lead program?
Let’s say you’d rather pay for sales instead of leads, because your business model supports quick sales. In this case, you can always launch a traditional (pay-per-sale) affiliate program.
If you aren’t ready to pay cash commissions for leads and sales, consider a multi-step referral program. In this type of program, you encourage customers (not content creators) to promote you and become your brand ambassadors. Although you’ll still hand out rewards for both qualified leads and sales, you have the freedom to award other types of incentives – not just cash – for leads and sales. For instance, you might give out credits, gift cards, or free upgrades.
How to set up a pay per lead affiliate program
Now that we’re done with making sense of what pay per lead affiliate programs are, let’s take a closer look at the right way to set one up for best results.
Stay away from existing affiliate networks
It may sound counterintuitive, but you really want to stay away from existing affiliate networks. They have a large pool of affiliates ready to promote your business, but networks have considerable disadvantages:
You won’t have full visibility on all lead and sales data, as the network owns it and can withhold metrics at will. The network also controls affiliate relationships, so it’s tough to build meaningful connections. Plus, you’re restricted to the affiliates that are already part of the network. If you want to recruit existing customers, they’d need to register on the network – meaning you’d have to sacrifice control of them to the network.
Since the network supports a vast array of businesses and affiliates, it can impact the quality of relationships. Network affiliates usually divide their time between lots of brands – and that’s what the network wants as the network makes more money. So, it’s tough for you to keep affiliates engaged. You may find that your affiliates are equally vested in other businesses – a drawback that you won’t experience as much with your own dedicated affiliate team.
You can end up paying a lot to the networks for using the platform and having the benefit of accessing their affiliates. Expect extra charges and hidden fees, including “finder’s fees” on every sale affiliates make… leaving you with less money that you could give affiliates for leads and sales, and less money to put back into your business. It’s better to use this money for promoting your own business or rewarding your best affiliate performers.
Choose the right affiliate software
If not affiliate networks, what next? Rely on affiliate software instead.
With affiliate software, you can run your own affiliate program without needing to sacrifice control – and a large share of your marketing spending – to affiliate networks. It can be overwhelming choosing the right type of affiliate software for your business, so keep these tips in mind while you’re researching options:
Look for software that helps you manage affiliate marketing for both leads and sales. Choose carefully as some software only pays for sales, some options that handle pay per lead are very expensive, and other affiliate software operates too much like a network (meaning you don’t have control over valuable lead and sale data).
Evaluate your budget against the utility of the software and its features. Also, explore payment options in the form of monthly, quarterly or annual options. Annual options are invariably cheaper overall.
If you’re in the market for new affiliate software, consider Referral Rock!
Referral Rock is the best option for a pay per lead affiliate program because it lets you:
- Seamlessly integrate with your CRM to track referral status updates, and automatically reward affiliates for leads and sales
- Integrate with over 50 other tools to mesh with your existing processes
- Run both pay-per-lead affiliate programs and multi-step referral programs – customize your reward type and structure based on your needs
- Set up your program and launch in a snap, thanks to prebuilt templates, best practices, and expert guidance from an onboarding specialist.
- Keep affiliates engaged by giving them full visibility on their progress via a dedicated portal, and by sending monthly emails with updates.
- Track affiliates’ sales through detailed metrics, so you always know your ROI
- Manage affiliates on your terms, and automate key processes, without being held back by a marketplace
Set strategic commissions
Once you’ve set up your software, you want to look at creating a strategic and competitive commission framework. Here are the aspects to keep in mind:
Research what other companies in the same industry are paying affiliates for leads and sales. Also, run surveys to understand what affiliates would consider an attractive payout. Balance against your budget.
Pay per lead commissions are typically a flat fee. But for sales, you could offer a flat fee or a percentage value.
Choose an optimal cookie duration. Cookie duration refers to the length of time your business will track user activity from the time they land on your page to the time they make a purchase. Consider these aspects:
- How long after someone clicks does the cookie stay active? In other words, in what window must a lead get qualified in order for the affiliate to earn commission on that qualified lead?
- Generally, should be at least 30 days to reflect a longer discernment process
- When a lead gets qualified, does the cookie reset?
- Or will you have a longer cookie length for the lead and sale to happen within?
- Or, if a lead gets qualified within the cookie window, is the affiliate permanently eligible to earn a commission if the lead buys?
Keep commissions sustainable
Before you determine a commission structure, it’s critical to understand if your model is sustainable over the long term. Bear in mind the following points to arrive at an optimal commission payout amount.
Commission amounts (the total offered for both leads and sales) should always be well below your CAC or customer acquisition costs, given your final goal is profit. Consider the overall revenue per customer, average customer value, and annual retention rate as part of your calculations.
- How much does it usually cost to bring in a new customer?
- What percentage of customers do you retain in a given year?
- How much revenue can you rely on each customer to bring in?
Generally, commissions per lead are low (in the region of $1-$5 on average), so you’re able to pay higher amounts per sale. But expect a higher volume of payouts for leads vs. sales.
Devote most of the money you’re able to pay on commissions to rewarding sales, to reflect the revenue you generate in return. But keep the lead commission motivating enough.
Set up conversion tracking
At this stage, you want to set up conversion tracking — a system for tracking who sent the referrals, how many of them converted, and where the referred lead is in the sales process. This is easily set up using affiliate software. You can set it up to change tracking statuses based on the stage where the customer is at in the sales cycle.
Ultimately, you want to measure and track results, identify roadblocks, and optimize which channels and affiliates are working the best for you.
Set up reward rules
In this part of the process, you want to set up workflows that adapt to your rules for rewards (how, when, and how much?). Identify when affiliates get rewards and how they will be awarded these incentives. Affiliate software typically provides options like Wise, Paypal and custom cash payouts for cash commissions.
Set up rules for how much affiliates will earn at various stages (at the time of a free sign-up, at the same time as the sale, once at the time of purchase or monthly for recurring subscriptions, bonuses for hitting a certain amount during a fixed period, and so on).
Optimize your landing pages
Another very important aspect to consider is optimizing your landing page. Your affiliate will be directing traffic to your landing page, hence you want to ensure they’re set up to convert visitors to your preferred objective – leads or sales.
Your affiliate’s responsibility ends once the potential lead or sale lands on your page. From then on it’s up to you to capitalize on the opportunity and convert the visitor to a sign up, a form fill, a free account creation or a purchase.
- Your landing page should speak the language of your target audience — their pain points and how ultimately, taking action will help them gain “X“ benefits. Clearly elucidate the benefits, so customers find your proposition irresistible.
- Ensure the call-to-action or CTA is clear and visible, so your audience can’t miss it. The CTA is the action you want your visitors to take.
- While you want to provide information in a compelling way so customers simply can’t refuse your offer, you also don’t want to clutter your page with irrelevant content.
- Consider A/B testing different landing pages to see which page performs the best. Test small changes – colors, layouts, typography, placement of CTAs. Optimize the pages for the best conversion rates.
Find the right affiliates
Next, find the best-fit affiliates for your program. In the absence of motivated and driven affiliates, you may not get the projected results.
You’ll want affiliates with a similar audience to your own, who have built trust among that audience. Ideally, they should be niche or industry experts who are familiar with your product or service, and who can genuinely speak to the benefits of your product or service. They should ideally already be your customers. Or if not, they should try your product before they promote you, and match the audience who usually uses the product.
Ensure they’re producing consistently high-quality content. The voice and tone of their brand should align with your brand values. Ideally, they should not have had a history of controversial or polarizing content or behaviors.
Consider designing an affiliate application, where you ask questions that can help you identify quality affiliates. Don’t be afraid to ask for evidence of previous results. Alternatively, hand-pick creators you’ve found online who align with your requirements.
Create an affiliate agreement
Next, create a formalized affiliate agreement which both parties should agree to before starting (use e-signatures for online agreements).
The affiliate agreement should contain all the rules, terms and conditions of affiliate engagement, as well as how the commission structure works, how and when payouts will be made, and finally, the cookie duration.
Specifically in terms of leads, elaborate what you would identify as a “lead” for the purpose of commission payout. Is it a free account or free trial sign-up? Is it a demo or quote request? Is it an app installation?
The affiliate agreement should also discuss what to do and what not to do when it comes to company branding and promotion, usage of promotional assets, keyword bidding, and so on.
The clearer, the better, for all parties concerned.
Track your success
The very last step is tracking how well your affiliate program is doing. Without having some form of tracking mechanism, you don’t know whether your money is bringing in the kind of returns that are actually helping you grow your business. Here are some of the core metrics you want to track to measure your affiliate performance:
- Track qualified leads brought in through the program, new customers, conversion rates for leads and sales, revenue brought in, and average order value.
- Check your lead count and conversion rate against your sale count and conversion rate to see if affiliate-driven leads are actually converting to sales.
Having insights like this also helps you identify where things are going wrong in your affiliate program — helping you implement strategies to address the shortfall by either tweaking your program or changing your affiliate lineup.
Pay per lead affiliate program examples
In this section, we’ll take a closer look at some pay-per-lead affiliate program examples from real-life businesses. You can use these as reference points for when you build your own pay-per-lead affiliate program.
1. Grammarly
Grammarly follows the multi-step affiliate program structure where they pay for both lead generation ($0.20 per free account sign-up) and sales ($20 per premium plan purchase).
One of the biggest USPs that Grammarly has a product is its easily decipherable product lineup – there’s a free service and a paid one. In that sense, the product is an easy sell for affiliates.
Grammarly also provides other attractive features for affiliates, such as high conversion rates (20-30%), an activation bonus, a 90-day cookie duration window, and performance incentives (cash bonuses, increased payouts, exclusive discounts).
2. SEMRush
The SemRush affiliate program delivers $0.01 per new sign-up, $10 per new lead, and $200 for every new subscription sale. Additionally, they also provide a last-click attribution model, so you get credit for your referrals for up to 120 days of cookie life.
SEMRush is one of the more attractive affiliate marketing programs on this list with a lot of incentives, as affiliates move up the ladder in terms of how much bottomline revenue they bring to the business.
The program has been made available to a diverse audience, so small businesses, freelancers, online marketers, and agencies can also apply.
3. Pluralsight
The Pluralsight’s affiliate program’s biggest USP is the simplicity of its commission structure:
- $5 for free trial sign-ups
- 50% of the purchase price of the first month of a monthly Pluralsight Skills subscription
- 15% of the purchase price of an annual Pluralsight Skills subscription
Easy commission structures make it easy for affiliates to remember what’s on offer. Each affiliate applicant is vetted manually with the emphasis on good-fit partnerships. Affiliates need to share trackable ads and links via their content assets, such as podcasts, email marketing, social media, and SEO driven blogs to create traction with their marketing efforts.
4. Domestika
Domestika is the largest online community for creatives providing over 2000 expert-led courses on its platform. The brand is one of the highest-paying for generating leads, offering $2.00 for each referred user who doesn’t actually end up making a purchase.
In terms of sales, if the referred user makes a first-time purchase within the 30-day period, the affiliate gets a 40% commission from the total sale and 20% commission for recurring purchases. The payments are transferred once a month through PayPal.
Set up a pay-per-lead affiliate program
Pay-per-lead can be a profitable affiliate marketing model to drive new leads on autopilots. But in order to make the best of your program, incorporate a multistep model whereby you reward sales as well to keep affiliates motivated while driving real bottom line profits. Follow the tips and strategies provided in this article while setting up your own affiliate program for the best results.
