Commission-Only Affiliate Marketing (w/ Rob Palumbo & Borrowell)
Learn how Rob Palumbo helped a consumer personal finance startup scale out a commission-only affiliate program that delivered customers for under $10.
In late 2016, Rob Palumbo was Marketing Lead at Borrowell, a high-growth Canadian financial technology company offering personal finance products. Rob was tasked with helping Borrowell scale its Free Credit Score product to hundreds of thousands of users, while keeping customer acquisition costs (CAC) low.
After an initial tailwind as Canada's first truly free credit score product (including a steady stream of PR, word of mouth, and efficient Facebook and Google SEM growth), most of their channels started seeing diminishing returns and rising marginal customer acquisition costs (the cost of acquiring one additional customer through paid marketing efforts).
Enter Cost Per Lead (or commission-only) affiliate marketing as a potential fix in the mix. Cost per lead (CPL) affiliate marketing is a marketing channel in which affiliate partners (like 3rd-party blogs & influencers) receive an incentive of commission for each signup or sale they generate on behalf of a brand. If they don’t refer users who become customers, they don’t get paid.
A CPL affiliate program is helpful for a scaling business focused on predictable unit economics. In most programs, the marginal cost per lead is generally fixed independent of volume, which means there is a linear relationship between spend and users, and no marginal cost increases.
Borrowell's Affiliate Test Results
Drove an additional 10-20% of new user acquisition in a given month
Achieve their target CAC payback and 3:1 LTV:CAC ratio within their target 30 to 90 day payback window, allowing Rob to keep their CPL incentive at a flat single-digit dollar per user cost.
Dramatically improved Borrowell’s backlink profile by targeting niche financial blogs with good domain & subject authority
How Borrowell Tested Affiliates
First, Rob priced their CPL incentive at a flat cost that would allow him to achieve his hurdle rate thresholds for CAC payback and LTV:CAC ratios
To keep the test lean, he relied on traditional analytics software to start, using UTM tags and referral traffic sources. As the channel scaled, he invested in pixel tracking and the software solutions offered by partners
He spent a lot of time identifying the highest-traffic financial blogs in Canada, as well as in understanding where organic traffic was coming from historically
Rob and his team started by recruiting personal finance influencers with cold email, while later leveraging affiliate marketplaces like Fintel Connect and Adbloom to find publishers who would be interested in their offer
Publishers responded well to the offer since Borrowell’s free product offered clear value to their audience. A key, if obvious, lesson: it’s much easier to get an affiliate or influencer to promote a free product than a paid product.
The Borrowell offer would typically be couched in an article as a review or as a how-to guide for improving credit score and credit worthiness
After going live, Rob evaluated the volume and customer quality coming from the new channel. For customer quality, he calculated the 1, 6, and 12-month LTV per user. Soon, he found that certain publishers (e.g. personal finance sites) outperformed others (e.g. coupon sites) on customer quality.
How Borrowell Scaled Their Affiliate Channel
Building on the test's success, Rob and his team expanded their affiliate program by creating an Affiliate Program Expansion Playbook
They worked directly with their affiliate partners to ensure they targeted ideal customers with the right content
Over time, they discovered that more targeted personal finance influencers and niche affiliate networks were outperforming larger, more general affiliate networks
How You Can Drive Leads with a Commission-Only Affiliate Model
Provide affiliate partners with the right tools and content
The more you enable them to sell your offering well, the better they’ll perform in the short and long run
Invest in your partners
Your affiliate funnel is it’s own sales funnel. The better you treat and communicate with them, the better your chances of activating partners that really move the needle
Don’t be afraid to niche down
Some smaller blogs and influencers have much higher affinity, making them potentially better partners. Start there before expanding to larger players in the space if possible
Don’t stop seeking improvement
Continually seek ways to improve your program’s incentives and performance to maintain success.
Rob is CEO and co-founder at OutPoint, an automated media mix modeling company that helps high-growth brands scale product-channel fit. Connect with him on Linkedin or Twitter.