X-ray absorption spectroscopy of thin films is central to a broad range of scientific fields, and is typically detected using indirect techniques. X-ray excited optical luminescence (XEOL) from the sample's substrate is one such detection method, in which the luminescence signal acts as an effective transmission measurement through the film. This detection method has several advantages that make it versatile compared with others, in particular for insulating samples or when a probing depth larger than 10 nm is required. In this work a systematic performance analysis of this method is presented with the aim of providing guidelines for its advantages and pitfalls, enabling a wider use of this method by the thin film community. The efficiency of XEOL is compared and quantified from a range of commonly used substrates. These measurements demonstrate the equivalence between XEOL and X-ray transmission measurements for thin films. Moreover, the applicability of XEOL to magnetic studies is shown by employing XMCD sum rules with XEOL-generated data. Lastly, it is demonstrated that above a certain thickness XEOL shows a saturation-like effect, which can be modelled and corrected for.