A competitive commission rate can make or break a B2B SaaS affiliate program. Commissions are a driving force in attracting top-tier affiliate talent and keeping them loyal to your program. But creating a compelling compensation is more than just finding the magic number. An effective B2B affiliate commission model takes a holistic approach to compensation that strikes a balance between attracting and retaining affiliates while keeping profit margins healthy.

In this article I’ll break down the different types of B2B affiliate commission models, outline a step-by-step guide to determine how much you can afford to pay affiliates, and share the key factors for designing a commission rate that will have affiliates picking your program over competitors.

Whether you’re determined to do the legwork yourself or work with a team of experts like Partner Commerce, affiliate commissions are the key to tapping into an explosive industry that’s continuing stable growth year-over-year.

When in the B2B sales cycle should you pay out affiliate commissions?

The first step in understanding modern B2B affiliate commissions is dropping the outdated notion that commissions are only for closed deals.

A good thumb is if the sales cycle is 30 days or less, you can generally get away with paying the affiliate on a sale only. But given that B2B sales cycles are long and complex, taking an average of one to five months to close a deal, you’ll want to add some mid funnel actions to keep the affiliate interested.

Affiliate commissions have evolved to better reflect this multi-touchpoint customer journey by rewarding partners at different points in a sales cycle:

  • Cost-per-sale (CPS): Affiliates earn a commission for every sale made through their affiliate link. CPS is the most common and widely used commission model because it ensures profitability.
  • Cost-per-lead (CPL): Affiliates earn a commission for each qualified lead they generate. The definition of CPL can vary depending on the organization, referring account sign-ups, free trials, marketing qualified leads (MQL), sales qualifies leads (SQL), app installs, form submissions, and event registration, among others. CPL commissions are particularly useful for B2B SaaS companies with internal sales teams whose main challenge is filling their lead pipeline.
  • Cost-per-click (CPC): Affiliates earn a commission for every ad click. Often overlooked, these micro conversions are a helpful tool for brand awareness and slowly nurturing leads towards conversion.

Rather than picking one over the other, affiliate commissions can be stacked to optimize the entire sales funnel.You’ll want to pick an action that is frequent enough to keep the partner interested but far down the funnel enough to ensure quality. By rewarding affiliates at multiple stages of the customer journey, you can create a flywheel effect where affiliates are incentivized to drive engagement, nurture leads, and convert those leads to customers.

What are the most common B2B affiliate commission rate models?

How and when affiliates are paid out can vary depending on which commission rate model is being used and can be a deciding factor for affiliates considering joining a program. The most common commission structures each offer their own advantages:

    • Flat rate: Offers a fixed amount per sale. Simple to create and manage, it’s best suited for motivating new affiliates. For example, a company may pay affiliates a flat fee of $200 for every sale they close. You can also choose to pay a flat rate commission on other actions, like qualified leads, or clicks. For example, an affiliate may receive $50 on an MQL, and then a further $150 on the closed sale.
    • Tiered rate: Commission rates vary depending on sales volume. This model rewards top performers and committed partners. For example, affiliates may earn 10% commission on their first 50 sales, and 15% for every sale afterwards.
  • Revenue sharing: Affiliates receive a fixed percentage of ongoing revenue generated from an individual customer. This is best suited for industries that rely on numerous user transactions. For example, an affiliate will receive a 15% commission on each in-app purchase a customer makes.
  • Recurring: Commissions are paid out on an ongoing basis for subscription-based products or services. Affiliates receive a fixed amount typically every month or quarter, similar to a traditional salary. This model is most common in subscription-based software services. For example, an affiliate earns $5 for every month their referred customer is subscribed to an e-commerce platform.

Another important aspect of commission rate models is bonuses and partner challenges. These reward activities, whether time-based or sales-based, are one of the best ways to add gamification elements into an affiliate program and boost partner engagement.

How to set up a B2B affiliate commission rate

As the old adage goes, you have to spend money to make money. But figuring out how much you can afford to spend on affiliate commissions without eating into your profits will require some due diligence.

1. Know your lifetime value (LTV)

Lifetime value (LTV) is an estimation of the total revenue a customer will generate throughout their entire relationship with a business. LTV can be calculated a few ways, depending on how many transactions customers tend to make. For example, if your customers make recurring subscription payments, you can calculate LTV by multiplying the average purchase value by the number of transaction. Then multiply that by the customer retention period.
LTV is a helpful benchmark for understanding if a commission rate will be sustainable. The higher the LTV, the more generous a commission rate can be as there is a longer return on investment.

2. Understand your customer acquisition cost (CAC)

Customer acquisition cost (CAC) is the average cost of acquiring a new customer. By understanding how much it costs to acquire a new customer through traditional channels, you can create another benchmark to use when determining affiliate commission rates.

As a growth channel, it’s crucial that affiliate commission rates not only align with your target CAC but also incentivize partners to drive sustainable, profitable customer acquisition.

3. Create a workback commission rate

Affiliate marketing should be a cost-effective channel. Define your business objectives and work backwards from your LTV and CAC to determine the commission range you can afford to offer.

When starting a new program, start on the lower end of the commission range. This gives you the flexibility and freedom to offer bonuses or increase the commission later on. If you start on the high end and are forced to decrease the commission offer, you risk losing affiliates and souring those relationships.

Key factors for determining B2B commission rates

How novel is your solution? When it comes to promoting one product over another, B2B affiliates aren’t short on options. Mimicking industry standards for affiliate commission rates in itself is not enough to drive recruitment and loyalty. Instead, look at these key factors when designing a competitive compensation:

  • Competitive research: Research industry standards and join programs of direct competitors to learn what rate they are offering and what the commission structure looks like. While the SaaS industry at large seed affiliate commissions ranging from 20% to 70%, a 20% first year commission rate is considered competitive for B2B.
  • Affiliate effort: Tie compensation directly to affiliate effort. For example, your top-performing affiliates might warrant higher commissions to keep them engaged. A tiered commission structure can be useful to reward different levels of effort.
  • Affiliate type: Commission models should reflect the strengths of different affiliate types. Influencers and content creators are often better suited for top-of-funnel awareness, so a PPC commission model might be the move.

Measuring effectiveness and knowing when to leverage agency expertise

To say that a successful B2B affiliate program has a lot of moving parts would be an understatement. After launch, it requires constant management and a meticulous monitoring of key metrics to ensure a steady influx of new affiliates while keeping other affiliates in the program active and engaged. Conversion rates, ROI, and engagement can be indicators to determine which parts of an affiliate program need to be reassessed and tweaked.

Building and managing a successful affiliate program is no small feat. That’s where agencies like Partner Commerce come in. As the leading agency specializing solely in B2B SaaS brands, Partner Commerce can provide an inside look into specific industry trends, competitor programs, and the current competitive commission rates. For organizations looking to optimize and scale affiliate programs fast, agency expertise and connections can be the key to kickstart a competitive program.

With clients like Notion, TikTok for Business and Google Cloud, Partner Commerce offers comprehensive, end-to-end program management for enterprise businesses. We have access to data and insights that can help you benchmark your commission rates against competitors. Communication, payouts, and performance tracking are our everyday. Avoid costly beginner mistakes, free up internal resources, and ensure your program’s success under the guidance of seasoned professionals.