Quantitative Decision Making
In my career, I have had the fortune to work with a very diverse set of businesses, from Fortune 100 companies to mom & pop shops, on their marketing efforts. One commonality I have noticed between successful business of all sizes that allows those business to react nimbly and consistently make strong decisions is that many successful businesses intelligently track and apply data when making decisions.
In the field of marketing, while qualitative elements as extremely important in making a marketer’s message resonate with a target audience, every qualitative decision from the dimension of a banner or the copy of a tag line can be backed up and optimized by quantitative analysis as can a campaign as a whole. Below, I have included two examples of how a Merchant and an Affiliate could use a quantitative approach to calculating their profit in ShareASale.
--------------
Classified Register business With US
prabhakaronline.com
MERCHANT SCENARIO:
Ursula sells her own brand of clothing and accessories. Her average order size is $100 per order. Her profit margin on an Affiliate driven order is 37.5%. Ursula wants to know, after she pays a $550 setup fee, how many sales in ShareASale would she need to obtain a profit on her Affiliate marketing campaign. Ursula uses the below formula to calculate how many Affiliate sales will be the breakeven point for her campaign:
Number of Sales = Setup Cost / (Avegage Order Size x Profit Margin)
or:
Number of Sales = 550.00 / (100.00 x 0.375)
Number of Sales = 550.00 / 37.5
Number of Sales = 14.66
Ursula now knows that, upon her 15th sale, her Affiliate program will become profitable and thus she decides to proceed with the campaign.
AFFILIATE SCENARIO:
Jeremy writes a sports blog and works with a Merchant that sells baseball memorabilia and a second Merchant that sells golf memorabilia. Jeremy knows a lot about baseball, and it only takes him 2 hour to write a blog post on baseball. Jeremy has to do more research for his golf articles, and it takes him 4 hours to write a blog post on golf. Golf memorabilia has a much higher commission rate than baseball memorabilia. On an average baseball post, Jeremy earns $300 in commissions. On an average golf post, Jeremy commands $500 in commissions. Jeremy wants to know which type of post earns a greater return on his investment of time. Jeremy can create can create a simple ratio to compare his investment of time:
Commissions per Post / Hours to create Post
Baseball:
$300 / 2 hours
$150 per hour
Golf:
$500 / 4 hours
$125 per hour
Even though Jeremy earns more total commission on Golf posts, he earns more per hour writing. With this information, Jeremy decides to shift more of his writing time to baseball in order to increase his return on investment.
These are just two examples of how a Merchant and how an Affiliate can use quantitative analysis to make positive changes within an affiliate marketing context. Within the ShareASale platform, ShareASale has created a variety or reporting tools to address data gathering needs – from visits to banners and sales – that can be used in quantitative analysis. Give our reports a review, asking yourself how you can use each report to better your business.
BY CHRIS RUECKERT - Chris is a 6 year affiliate marketing Merchants in launching their affiliate programs
