2 Most Important Elements of Your Influencer Program

Have you ever wondered how brands like Gymshark or Lululemon become household names through influencer marketing while other brands struggle making their influencer program work? In this article we will explain the number 1 reason brands fail with influencer marketing and how to avoid this. 

As you are running a business it all comes down to ROI. Especially with a physical product business managing your cash flow effectively and being able to acquire customers profitability is essential to keep your business going and re-invest into growth. 

The biggest mistake a lot of brands make is to calculate the ROI based on how much the influencers sell in their first post without taking into account that the majority of the ROI comes from building long lasting relationships with performing influencers.

Your influencer program should essentially consist of two central parts:

• Part1: Influencer testing: work with new influencers every month to identify the winners
• Part2: Seasonality campaigns: which you organise with your performing influencers

Part 2. is the driver of the majority of your revenue and ROI while part 1 is the engine which keeps increasing your revenue in part 2.

Brands often think they have to achieve a 4-5X ROI in part 1. The first posts you receive from the influencers you work with. What they overlook is that the majority of their ROI will come from the long lasting relationships you build up in part 2. We call the process in part 1. “Influencer testing” as you are looking to identify your winners. 

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Influencer Marketing follows a strong power low distribution.

We often refer to the 80/20 principle / Pareto principle which explains that 80% of your revenue comes from 20% of your influencers. In reality it is often more profound and what we see is that around 5% of the influencers you work with generate over 80% of your revenue. 

In part 1. Of your influencer program where you are “testing influencers” you are essentially looking to identify the top 5% which generates 80% of your revenue. This is why your returns can be a lot lower in part 1 as long as you are identifying performing influencers with which you can build up long lasting relationships: Part 2. Of your influencer program.

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The chart below visualizes this

• The red line visualises the ROAS of part 1.
• The yellow line visualises the ROAS of part 2.

Influencer ROAS based on campaign type

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Forecasting revenue to plan your inventory and cash flow looks as following:

Part 1:

Lets say you work with 50 influencers / month and the average sale / influencer is 1.5. Inventory wise this means you need 125 units every month:

50 (for influencer gifting) + 50*1.5 (for customers) = 125 units.

Part 2:

You will have to additionally take the number of posts per influencer into account to forecast. E.g. let's say you have 200 performing influencers which sell on average 12 products / post and you will get each influencer to post 4 times during your campaign. Your forecast would be:

200 Influencers X 12 Conversions X 4 Posts = 9,600 units sold

If we assume an average order value of $130 the forecasted revenue achieved in:

Part 2 = $1.2M (9,600 X $130)

Part 1 = $16.3K (125 X $130)

This shows how important Part 2. of your influencer program is and its contribution to your overall growth and revenue.

Main takeaway: your brand ambassadors / long term relationships with performing influencers drive the majority of your revenue and ROI.

For more info like this visit Influencer Hero Academy

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