Driving Sustainable Efficiency for a Mature Affiliate Program

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Challenge

Cost Optimization in a Competitive Market

In the highly competitive ride-sharing industry, one of the world’s top ride-hailing platforms faced continuous pressure to optimize costs while sustaining growth. Their mature affiliate program, managed by another agency for nearly a decade, required a fresh approach to drive efficiency without sacrificing scale or customer acquisition.

Balancing Cost Reduction with Performance

The program was paying millions in commissions globally, creating significant cost pressure. The company needed to test the elasticity of their partner commission structure to identify potential savings while ensuring strong performance. The challenge was complex: reduce costs without compromising the program's effectiveness or damaging valuable partner relationships.

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The Strategy

In 2023, the company started working with Hamster Garage to help manage their affiliate program. They implemented a strategic, multi-faceted approach to optimize costs while maintaining growth:

Reducing commissions across the board:

The team reduced commissions for cashback and coupon partners, which typically drive less incremental value. This decision came after benchmarking the company’s rates against leading competitors who were paying less, creating an opportunity to align with market standards.

Analyzing performance elasticity:

After reducing commission rates, the team closely monitored each partner's performance to understand the relationship between commission rates and output. This data-driven approach allowed them to identify which partners were sensitive to rate changes and which maintained steady performance despite reduced commissions.

Targeted commission increases:

For partners whose performance significantly declined following the commission reduction, Hamster Garage strategically increased rates to restore output to pre-reduction levels. This selective approach ensured optimal performance while still achieving overall cost savings.

Value-based earning opportunities:

Partners who maintained performance despite commission reductions were offered opportunities to earn higher rates in exchange for additional value, such as premium placements and increased visibility. This ensured the company only paid incremental costs for added value.

Partner diversification:

To mitigate potential negative impacts from commission reductions, the team actively recruited new partners to add to the program mix, providing a safety net if existing partners showed significant performance declines.

Results

The results of the company’s partnership with Hamster Garage demonstrated that strategic optimization could achieve both cost savings and growth simultaneously:

• Massive cost reduction: The strategy delivered $2,001,000 in immediate savings that year, with annualized savings projected at $4,800,000.
• Improved performance: Despite the commission reductions, the program saw a 6.9% increase in first-time rides, the company’s primary KPI.
• Overall growth: The affiliate program grew by 7% while simultaneously reducing costs.
• Long-term trust: After witnessing Hamster Garage's ability to drive such significant savings while growing the program, the company has continued to renew their partnership.

Growth Summary

Hamster Garage's strategic approach to the company's affiliate program management transformed what could have been a simple cost-cutting exercise into an opportunity for both savings and growth. By taking a data-driven, partner-specific approach rather than applying blanket reductions, they maintained the strength of the program while significantly reducing costs.

The nearly $5 million in annualized savings represented a substantial return on investment for the company, while the simultaneous 7% growth in the program and 6.9% increase in first-time rides demonstrated that efficiency and performance could go hand-in-hand with the right strategic approach.