Conversion in affiliate marketing: All you need to know

Conversion might be a confusing concept in affiliate marketing. This post will clarify what is it, how many types are there, and how to improve the conversion rate – the most important metrics of your affiliate program.

What is conversion in affiliate marketing?  

In affiliate marketing, a conversion happens when a customer visiting an advertiser’s website or clicking on an affiliate link takes a desired action. This desired action can be anything the advertiser aims at, but most commonly is:

• Making a purchase: This is the classic conversion scenario. Affiliates promote a product through an affiliate link, and if someone clicks that link and completes a purchase on the advertiser’s website, that’s a conversion. 

Here are some other examples that could count as a conversion depending on the affiliate program:

• Signing up for a service 
• Downloading an app
• Register for a webinar
• Signing up for a newsletter
• Completing a form

The key thing is that the conversion is a specific action that the advertiser wants you to drive traffic towards. The advertiser will track these conversions and pay you a commission for each one you generate. 

Commission for single conversion    

While there are fixed rewards and commissions for every order, some advertiser want to reward affiliate perks to motivate them in their first sale.   

• Predesigned commission per conversion: Affiliates earn a fixed amount (including flat cash and percent of order value) of commission per conversion. For example, affiliates may get $10 of commission for each conversion, regardless of the order value. 

• Bonus for successful conversion: Some affiliate programs offer bonuses when their affiliates reach a certain performance milestone.  For instance, an affiliate could be rewarded with an additional $10 after achieving three conversions.  

• First conversion commission: First conversion commission, or initial conversion commission, generally refers to the additional reward earned when a specific action is completed for the first time. Many advertisers use this tactic to motivate and celebrate affiliate first success. 

When a conversion are disqualified?

• Fraudulent activity: The conversion is generated through click fraud or fake accounts.
• Incomplete data: The required information is incomplete or incorrect.
• Violation of terms: The method used to generate the conversion violates the platform’s terms of service, such as using prohibited advertising techniques. A program with strict prohibition may not issue commissions for affiliates who are non-compliant with affiliate link disclosure responsibility.
• Quality issues: The lead or sale does not meet predefined quality criteria, such as geographic location, budget, or business size.

How to Calculate Conversion Rate in Affiliate Marketing? 

The conversion rate represents the percentage of initial sales generated by an affiliate link per the number of “hops” they have. A “hop” refers to a visitor clicking on an affiliate link and being redirected to the product or offer page.

Therefore, the conversion rate in affiliate marketing is also called hop conversion rate  

The hop conversion rate in affiliate marketing is a crucial metric that helps both sellers and affiliates understand how effective an affiliate’s traffic is in converting.  

Conversion Rate is calculated by the following formula: 

Conversion Rate = (Conversions ÷ Hops) × 100

• Conversions: The number of successful sales generated through the affiliate link.
• Hops: The total number of times visitors clicked on the affiliate link.

However, there are 03 types of Conversion Rates in affiliate marketing that are derived from the same formula above. The conversion rate can be calculated based on the link, affiliate, or program.

Conversion rate of an affiliate link 

This metric measures the conversion rate for a single affiliate link. It’s calculated by dividing the number of conversions generated by a specific link by the total number of clicks on that link. This rate is useful for assessing the performance of particular promotional methods or pieces of content.

• Formula: Conversion Rate per Link = (Conversions from Link / Clicks on Link) * 100
• Example: If a link gets 1000 clicks and generates 50 conversions, the conversion rate would be 5%.

As one affiliate can use various links to promote a store, each link might perform differently. 

Therefore, it is important to an eye on the link that yields the most traffic & conversions. 

Conversion rate of an affiliate

This metric measures the conversion rate for each affiliate. It’s calculated by dividing the number of conversions attributed to a specific affiliate by the total traffic from all of their links. 

• Formula: Conversion Rate per Affiliate = (Conversions from Affiliate / Total Traffic from Affiliate) * 100
• Example: If an affiliate generates 2000 traffic driven from all of their links and 100 conversions, their conversion rate would be 5%.

Conversion rate of an affiliate program 

This metric measures the overall conversion rate for an entire affiliate marketing campaign. It takes into account all the affiliates and promotional activities involved.

• Formula: Conversion Rate per Campaign = (Total Conversions in Campaign / Total Clicks in Campaign) * 100
• Example: If a campaign generates 10,000 clicks and results in 500 conversions, the campaign’s conversion rate would be 5%.

It not only shows how effective the affiliates’s works are but also points out potential problems of your program. For example, a low conversion rate may indicate a poorly designed store landing page. 

What is the Difference between the Hop Conversion Rate & Commission Rate In Affiliate Marketing? 

“Hop Conversion Rate” is used particularly for affiliate marketing. It uses a specific measure (clicks) to show the effectiveness of affiliate-generated traffic in driving conversions. 

Meanwhile, conversion rate is used in every aspect of marketing. It refers to the broader types of conversions (e.g., sales, sign-ups, etc.) and involves various metrics like the visitor’s volume, clicks, or interactions on a website. It is a general measure of how effectively a marketing or sales process turns visitors into customers.

When people talk about Conversion Rate in affiliate marketing, they usually refer to Hop Conversion Rate. However, the use cases of the term “Conversion rate” may change depending on the context. It is notable for a concise understanding. 

How much is considered a good affiliate marketing conversion rate? 

Conversion rates in affiliate marketing vary depending on the type of promotion and the essence of the product. Certain types of products tend to have higher conversion rates than others, but there’s no universal “golden” rate. However, industry averages can give you a general idea.

• Average Conversion Rate: Typically ranges from 0.5% to 1%. Remember, this is just a baseline.
• High Conversion Rate: A rate of 3% or higher is considered excellent.

The rate may change based on industry niches. Competitive sectors like finance often have lower conversion rates, while less competitive fields, like hobbies, may have higher rates. Digital products, such as eBooks, generally have better conversion rates than physical products.

Additionally, when your affiliate program focuses on certain types of affiliates, the rate may change. For example, if your brand partners with influencers, even with nano-influencers, you can expect higher conversion rates. Influencer marketing often achieves conversion rates between 1% and 5%.

From my experience, conversion rates in affiliate marketing go in the same pattern across product types. Whether you achieve a higher or lower than benchmark largely depends on your affiliate marketing approach. 

How to increase the conversion rate?  

Choose Relevant Affiliates 

The number of followers an affiliate has doesn’t correlate with the conversion rates. Instead, the relevance of the affiliate’s audience to your product is crucial. An affiliate who is active in a small industry may have significantly higher conversion rates than affiliates who are not. 

Provide Creative Assets

Create a storage system for sharing marketing materials with affiliates. This ensures that affiliates use consistent, high-quality content that aligns with your brand. 

Some affiliates might not want (or are not able) to create their own content, and having pre-designed assets prevents them from spamming random places on the internet. 

Plus, redesigned creative ensures the quality of information and the consistency of brand identity. If the affiliate’s content is relevant and accurately describes the product or service, it can lead to higher conversion rates. Misleading or poorly targeted content can decrease conversions.

Invest in advertiser’s landing page 

A low program conversion rate may indicate a problem in the last stage: the landing page. Misleading or irrelevant content can lead to lower conversion rates. 

Meanwhile, when affiliate content aligns with what customers find on your landing page, conversions increase. 

See more: 10 Stunning Affiliate Program Page Examples

Invest in a loyalty program

Many view affiliates as a way to increase sales, but often overlook their impact on customer engagement and retention.  Affiliates can play a vital role in keeping customers connected to your brand. 

Many affiliates often have strong relationships with their communities. By supporting them with a loyalty program, you foster a consistent impression of the brand, which can translate into higher conversion rates and long-term customer loyalty.

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