Affiliate Marketing for B2B SaaS - How does it work?

In this article, I will explore Affiliate Marketing specifically for B2B SaaS companies. As the founder of Reditus, I see many misconceptions, wrong expectations, and people needing to understand how it works when other SaaS founders come to us.

This article will help you understand the basics, define if it is a good channel for you, and help you get started. Just a heads up, affiliate marketing is not a magic bullet or a ‘lean back’ channel. So, if you don’t want to put in the work to grow the channel, you can already stop reading ??

What will we cover

• Why indirect marketing?
• Different types of Indirect Marketing
• When should you start with affiliate marketing for your B2B SaaS?

Why Indirect Marketing?

When you look into affiliate marketing for your SaaS, you are going to work with an "indirect marketing channel." With an indirect marketing channel, you are asking someone else to promote you. This could be users, friends/networks, bloggers, influencers, publishers, agencies, consultants, associations, technical partners, or any other person/business.

The most important thing; they should have access to your ICP.

If you don’t know your ICP (Ideal Customer Profile) yet, indirect marketing will probably not fit you. You need to understand who you are targeting to identify who could help you reach them.

If done right, it can look something like below. Let's compare indirect marketing with tree (because our logo is one ??)

Trunk = Your Software

Branches = People recommending you

Leaves = Referrals (people signing up via someone else)

As with a tree, the bigger / more mature it is, the more branches and leaves it will have. The lesson here is that the better the foundation of your SaaS, the more likely someone will recommend you.

Another example: Would you be willing to recommend a restaurant that just opened up and where you have never eaten yet? Probably not, as they won’t have many reviews or social proof yet, and you don’t know their food or service quality.

This also applies to software; you will find a lot more people who will be willing to recommend you if you have brand awareness, case studies, a big user base, and they have already tried out your tool.

Different types of Indirect Marketing

When you look at the different kinds of people referring you, you can split them up into four buckets. See below for referrals, affiliates, partners, and technical partners. The buckets are shown below with more information.

I will explain them in more detail below. It is good to know that in practice, there will always be overlap between them.

Referral program

A typical referral program is the Dropbox example. If I invite you to Dropbox, we both receive 10GB of storage for free. For me to invite you, I grabbed a link within the app, and I don’t earn any money when you start using them.

To summarise the example;

• Two way benefits: we both receive 10GB for free
• It is not money-orientated; we only received in-app rewards
• I didn’t have to leave the app to grab my referral link
• It is not focused on setting up a technical integration with another player
• It is a medium effort to set, as you will need to trigger the in-app benefits

Affiliate Program

Let's also do an example for an affiliate program, as we are on LinkedIn; let's take AuthoredUp . If you want to become an affiliate of AuthoredUp, you sign up for their program via their landing page on Reditus. In Reditus, you will receive your affiliate link, and you can track how many people click it, sign up via it, and whether any of them move to pay. Once you refer paid clients, you will receive a commission, which accumulates into a payout.

To summarise

• A way one benefit is that you receive a 25% commission
• Fully money orientated; Revenue sharing model
• You receive your affiliate link in an external tool
• Easy to setup, as you only need to install tracking

Partners

You can come up with many different cases/examples in these cases, as this will be specific to your type of SaaS. With this, an Agency has ±50 clients; they don’t care about a kickback/rev-share model as they want their clients to be successful. Which means they often offer a discount to their clients.

As they recommend you to their clients, the sales cycle & CS might change as the agency will handle this. Finding partners like this will be much harder, and you will need a good product for them to start recommending you.

To Summarise:

• One or two-way benefits (discount + rev share)
• They are not always money-orientated
• They will already have potential clients lined up (their clients)
• Sales / Customer Success could change
• You will need to have a good/proven product

Technical Partner

A technical partner is a custom agreement between you and another company and can take many different forms. To give an example, we help SaaS companies set up an affiliate program and be discovered by people in our network. If we want to also help them with recruitment, we could build a partnership with Respona, which has a tool for recruiting affiliates based on backlinks (hint, Farzad).

Embedding another tool in your SaaS could increase the value your users receive while also increasing your revenue. We could charge a discounted price but receive a kickback fee for all subscriptions purchased via Reditus, making it a win-win for both parties.

To Summarise

• It will be different for any company
• Creating a win-win between the two companies
• It will require lots of technical work

Summary indirect marketing channels

When would you like to start with Affiliate Marketing?

When we think about the tree again(see above), make sure the foundation is in place. The more paid users you have, the better, as it would also mean you have case studies, figured out your conversion rates, and have materials and resources available.

Don’t use affiliate marketing as your Go To Market Channel > Sell yourself first.

(Insert video from Season 1)

To make it a bit more concrete, ideally, you will have the following:

• $10k+ MRR
• You ran paid ads yourself
• Figured out conversion rates
• Growth / Marketing person
• Case studies / social proof

Resources

When you are going to ask someone else to promote you, you want to ask yourself a couple of questions;

• Where do I want this person to promote us?
• What would they need from us to be able to do this?
• How can we help them to make money (quicker)?

The last one will be important to ask: How can you help them make money?

It might feel counterintuitive as that is ‘their job’, but compare it to a sales/marketing person; they also need onboarding. The better you onboard/help your affiliates, the easier it will be for them to start making money (and become motivated to do more).

Are you ready to get started?

• How to find affiliates for SaaS growth.
• How to manage affiliates.
• Start with an affiliate program for free with Reditus.

?? Want to receive more content on growing a B2B SaaS? Follow me ( Joran Hofman ), the Grow Your B2B SaaS Podcast , or check out Reditus .