A rough rule of thumb is it’s a good deal for both sides if you pay an affiliate what it would cost you to acquire that lead on your own.
An approximately way to think about that:
- 35%-40% of first year ACV (Annual Contract Value) if they bring you a closed, signed lead. It would cost you that much to acquire and close that lead yourself.
- 15%-20% of first year ACV if they bring you a true Opportunity. I.e., if they do the marketing part, but not the sales part.
- 10% or so for a Lead. Much more than this, without deep qualification of the Lead, gets expensive.
And generally speaking, note you probably need to pay your sales teams on even “closed” leads send to you (i.e., the first category), so the real cost will be higher to you.
And of course, this model assumes a long customer lifetime. These numbers are too high in a higher-churn environment. But you can just adjust them there to a shorter customer value (instead of ACV), and keep the percentages about the same.
In the end, affiliates are a marketing channel. Pay them what you’d pay your own marketing team and you probably come out ahead. Tweak from there. – Read more