Conversion Rate useful or another damning metric?

Some affiliate networks set store by conversion rates using it as a method of ranking merchants, because of this sadly it is not unknown for merchants and / or affiliate managers to terminate affiliations with affiliates who are lower than the average.

Let us look at what conversion rate is:

Basically, in affiliate marketing circles, conversion rate is the percentage of affiliate traffic which ultimately cumulates in a sale.

So if for every 100 visitors through affiliate links 5 sales are recorded the conversion rate is 5%.

Consider this

Affiliate ‘A’ has a highly optimised landing page which pre-sells the merchants product so that the merchant site only to complete the sale. He sends 400 highly targeted visitors a day and 10% convert to sales.

Affiliate ‘B’ on the other hand is not so hot on the pre-sell but is an absolute whiz at generating traffic this affiliate sends the merchant 1000 prospects a day but it is left to the merchant site to do the pre-sell as well as the close, consequently only 4% convert.

Both Affiliates are generating 40 sales a day, but ‘B’ has a lower conversion rate, does that make him a worse affiliate? I would say no.

Look at non affiliate traffic

Before a merchant can seriously decide whether or not an affiliate is providing poor quality traffic they should filter out all affiliate generated traffic and then calculate the conversion rate of their own traffic, I suspect it will be nearer the 4% than the highly targeted pre-qualified 10%.

A merchant who concentrates on improving sales closing and user experience on his own site will in the long term be much better off than one who massages figures by terminating lower performing affiliates.

Conclusion

The metrics provided by Affiliate Networks should be used as a guideline to performance and not the be all and end all.

A merchant should monitor the performance of different channels of site traffic separately before forming an opinion about individual affiliates, and even then termination is a draconian measure, help and advice is a much better way to forge relationships and grow your business.

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