So, you have decided to turn to affiliate marketing to promote your products and services. Perhaps you’ve even planned your budget and came up with some ideas on how to structure your affiliate program. If that is the case, your main goal is probably to get it up and running as soon as possible. Don’t rush it, though! Launching your program too quickly, without studying what your competition does in this realm, without clear rules and policies, and without a competent affiliate manager to steer it and the right direction, are some of the biggest mistakes you could make.
While an affiliate marketing program only benefits your business (since you would be paying affiliates based on the performance that they drive in), it is important to base it on a thorough analysis of your own business, of your competitors, and of the market you are in, taking into account its current state and anticipating opportunities, threats, and trends.
That is where competitive analysis comes in. It helps you find out exactly where you stand and what you can do to build and run a successful affiliate program and prevail over your competitors. It can also help you get to know your business better and improve it.
Let’s now find out what a competitor analysis involves and how you should perform it in order to determine where you stand and how to use affiliate marketing to accomplish your goals.
As Geno Prussakov explains in his Affiliate Management: An Hour a Day book, competitive analysis means assessing your business’ past, present, and future, identifying weaknesses to strengthen, opportunities to exploit, and ways to use your affiliate marketing program in order to stand out among your competitors.
The best way to accomplish that is through a SWOTT analysis.
SWOTT for Competitive Analysis
SWOTT stands for Strengths, Weaknesses, Opportunities, Threats, and Trends. Below, we will guide you through the analysis and show you how to use its findings. Before we get there, though, there are two frequent mistakes you should avoid:
- Turning your analysis into an academic-like exercise of collecting and classifying data
- Losing sight of empirical considerations
As you perform your analysis, remember that your goal is not to fill up your worksheets with numbers and observations but to find practical, effective solutions to build and run a successful affiliate program, one that will help you stand out among your competitors.
Therefore, as you identify strengths, weaknesses, opportunities, threats, and trends, before writing them down, ask yourself if and how you can use them to improve what you do and win in the battle against your competitors. Don’t waste your time on generalities and theory but always focus on practice!
If you do that and you follow the guidelines below, your SWOTT analysis will be a success and provide all the data and answers you need to create an affiliate marketing program that works.
5 Guidelines to Follow in Your SWOTT Competitive Analysis
In the aforementioned Affiliate Management: An Hour a Day, Geno provides five guidelines that any merchant or affiliate manager performing a competitive analysis should follow:
1. Identify and Get to Know Your Competitors
Don’t take the word “competitor” (only) literally here. Analyse everyone and anyone targeting your potential customers, offering products or services related to yours (they may expand to provide the same products and services, or you could decide to expand and compete with them) or planning to enter your market.
2. Collaborate with Other Departments within Your Organization
When you perform your analysis, it helps to run your observations and ideas by other departments within your company. They may provide new perspectives, furnish you with invaluable supplemental date, or help you come up with creative and innovative solutions.
3. Put Yourself in Your Buyers’ Shoes
If you really want to sell more, you need to learn to see your business from your customers’ perspectives. Ask for feedback, collect data from your different departments, monitor customer behavior, and use your findings to identify weaknesses to correct, strengths to emphasize and exploit, and opportunities to improve customer satisfaction.
4. Look for Causes, Don’t Settle for Characteristics
When performing your SWOTT analysis, do not stop at listing characteristics. The weaknesses, strengths, opportunities, and threats you identify have a deeper cause you need to discover and work on. For example, let’s say your website conversion rate is poor. It is a weakness you should work to improve, but, in order to succeed you need to uncover its cause.
Perhaps your website loads too slowly because of the limited resources made available by your hosting provider, case in which you need to either upgrade to a better hosting plan or change providers.
Perhaps the content on your website is poorly written, your prices are too high, or your customer service is faulty. Unless you identify the real reasons why your website visitors move on without buying from you, chances are you will never convince them to trust you with their money.
5. Separate External Issues from Internal Ones
External issues are the ones that exist independent of your company’s existence. Your affiliate marketing program could not exist outside of your company but affiliate marketing, in general, will continue to exist no matter if you or any other merchant decide to use it or not.
Use this difference to separate opportunities from marketing options, tactics, and strategies in your analysis. They may occasionally overlap but never neglect their independability.
Now that you know the basics, let’s move on to the actual competitive analysis or the “how-to” part of the process.
How to Perform Your Competitive Analysis
As mentioned above, we recommend using the SWOTT approach to competitive analysis.
While looking at its five components, keep in mind that your goal is to analyze your capabilities as a merchant in your market niche, among your competitors, and in the broader context of e-commerce.
The purpose of the analysis is to provide you with the necessary data to set up and steer your affiliate marketing program and your entire business in the right direction.
Let’s take the components of the analysis one by one and see how you can obtain the information you need.
At this stage, you should focus not only on identifying the features of your business, products, or services that you consider strengths, but also the things that could give you the upper hand over your competitors. When looking for strengths, look at:
- Main sources of revenue and profit
- Pricing, quality, customer support
- Brand awareness and reputation among customers
- Unique selling points
- Most effective marketing strategies
- Your online presence and online marketing efforts
- Staff resources with online marketing skills, knowledge, and experience, their field of expertise, and how you use that expertise
- Online marketing staff resources and expertise
- In-house knowledge, experience, tools or technologies possessed
- Company and staff ability to adapt and change
- Staff flexibility and willingness to learn
As you review these aspects related to your business, remember to remain objective and try to embrace several perspectives: not only yours as a business owner, but also that of your customers, future affiliates, and competitors.
Inventing strengths where they do not exist won’t do you any good, but neither will neglecting the ones you do have. You need to find out where you stand and work your way up from there.
Some business owners tend to disguise or justify weaknesses. Others see flaws everywhere. You should be objective and maintain a constructive approach. You need to discover the things you’ve been doing wrong and start doing them right, and you need to start doing things that could help your business but you’ve neglected.
A great starting point would be your very list of strengths. Any strengths you lack can be considered weaknesses. Similarly, any absent weaknesses may qualify as strengths. For example, if you have not invested in online marketing or your staff members have no knowledge in the field, these can be considered weaknesses.
You can turn them into opportunities by recruiting personnel with online marketing knowledge and skills and investing more in online marketing. If you’re already promoting your business online, perhaps you have neglected the social networks or other channels.
If at least some of your staff members are versed in online marketing and your campaigns pay excellent results, congratulations are in order. That could be your strength, your competitive advantage. Here are a few questions you should answer in your weaknesses identification efforts:
- What are your vulnerabilities?
- Does your business lack any capabilities?
- What do your customers’ most frequent complaints refer to?
- Which of the marketing channels you’re using provide the lowest return on investment?
- Are there any areas of your business in which you are unable to recover costs?
- What are your company’s biggest expenditures?
- How do you fare against your competitors as far as technology and especially online marketing are concerned?
By this point, you should already have a few weaknesses to work on, and you may discover more along the way. Hopefully, they will be few and easy to turn into strengths, but their number is less important than what you do about them.
As mentioned above, many weaknesses, both yours and your competitors’, can be turned into opportunities with the right approach, so start from the list you’ve put together at the previous step. To identify even more opportunities, think of:
- Customer needs you’re not attending
- Technologies you’re not utilizing
- Regulations that may have loosened
- Wider markets you can tap (go national or international)
- Marketing campaign geo-targeting
- New ethnic markets you could cater to
- Areas your competitors have not covered
- Favorable circumstances you could take advantage of
Keep in mind that opportunities are closely connected with trends. Every trend is a potential opportunity. If you monitor the market, your competitors’ actions, and especially your customers’ preferences, you will surely identify new opportunities.
Let’s say you run a fashion store. It’s December 2018 and the color of the year was just announced. It goes without saying that this color will influence the year’s fashion trends. If you hurry, you can take over your competitors and put together a collection based on the respective color.
Of course, your new collection won’t get you sales if you (or your affiliates) don’t spread the word about it, but you get the point: trends are opportunities, as long as you monitor and follow them, as long as you keep an open mind and you are ready to learn and adjust.
Besides opportunities, you should also keep an eye on threats. They could be external, like legislation changes, or internal, like incompetent, disloyal employees. No matter their type, it is important to anticipate threats and prepare to avoid or overcome them.
Think of threats as diseases. The sooner you diagnose them, the easier they are to treat. How can you recognize them? The following list of questions should help:
- Have you noticed any significant changes in customer preferences or a decrease in sales or traffic to your websites?
- What are the most important obstacles that your business is facing?
- Have new competitors emerged or have your older competitors changed their strategies significantly?
- Were any regulations or restrictions changed for the worse?
- Do any of the new trends amplify your weaknesses?
Answering all these questions should help you have a list of potential threats to consider and prepare for. Since one thing leads to another one, our threats analysis made us look into trends. Let’s see how you can identify them and keep up during the last stage of our analysis.
Markets change, and customer preferences change with them. If you want your business to thrive, you need to learn to keep up with trends, with technology, with your competitors. To find out where you stand and what more you can do, look at your business from the following perspectives:
- Emerging trends fitting your company’s strengths
- Current online marketing trends you could take on
- Openness to new technologies, materials, and innovations
Your competitive analysis should now be complete. You should have all the data you need to assess your company’s current situation and the viability of starting an affiliate program. As you get to it, remember the following guidelines:
- Build on your strengths
- Work on your weaknesses
- Exploit opportunities
- Mitigate threats
- Keep up with trends
The affiliate marketing program you’re about to launch should help you do all these and more. If you fail to see how it could do that, perhaps it’s not yet ready for launching, or perhaps you need a competent affiliate manager to help shape it, steer it in the right direction, and implement it.
After all, performing a detailed and thorough competitive analysis, although important, is less important than what you do with its results. In this case, you should use them to develop a competitive intelligence strategy.
From Competitive Analysis to Competitive Intelligence
Affiliate marketing is not just a marketing channel, but a partnership/collaboration between you, the merchant, and the affiliate marketers who promote your business. Your affiliate marketing program gives you the chance to solve any issues identified during your analysis without worrying about costs or their return on investment.
All you need to do is to make it look attractive and recruit and activate the right affiliates, the ones able to enhance your strengths, compensate your weaknesses, and help you exploit new opportunities, mitigate threats, and keep up with trends.
If you play your cards right, your affiliate marketing program can help you take over your competitors. Just don’t sleep on it! Keep in mind that your fight for market supremacy cannot stop at the first battle you win or lose. The above analysis and your efforts to use its results to your benefit need to become an ongoing exercise. You cannot afford to lose track of your competitors, of their activities and performances. On the contrary, you should keep a close eye on several aspects of their businesses.
- Technologies used
- Products and/or service features
- Marketing strategies
- Distribution channels
- Delivery methods
- Branding efforts
- Online marketing methods
- Affiliate program specifics and marketing strategies
Keeping track of so many aspects in several businesses can seem challenging and time-consuming, but it doesn’t have to be. Here are a few tips to guide you in the right direction.
Tips to Monitor Your Competition Easier
- Join affiliate programs. You will need to invest a little time into creating a blog or a website, but it will give you access to all their program specifics and other information you would not be able to obtain otherwise, like their affiliate newsletters and promotions. Besides letting you monitor their activities and shape a more attractive affiliate program than theirs, it should also enable you to see things from an affiliate’s perspective.
- Sign up as a customer and follow your competitors on social media. It will help you see their business and yours from a customer’s perspective and learn what they do so that you may do it better.
- Use automatic tools. There are many incredibly useful tools available, like Google Alerts, SocialMention, Topsy, Instapaper, SEMRush, BuzzMonitor, BlogPulse, Alexa, Hitwise, Quantcast, and more. They can help you set alerts, monitor your competitors’ use of keywords and paid search ads, and their website analytics.
Of course, as a business owner/manager, your time is limited and precious. You may not be able to invest so much in your affiliate marketing program. That is why it is so important to rely on an experienced and competent affiliate program manager.
If you have not found one yet, you should consider outsourcing your affiliate program’s management to professionals. They will perform the affiliate competitive analysis for you and use their observations to recommend the best solutions regarding:
- The platform or platforms to run your program on
- Program specifics (payment models, payout structures, cookie life, locking period, etc.)
- Affiliate program rules and policies
- Development of creatives
- Program presentation and marketing
- Affiliate recruitment, activation, compliance policing, and much more
A diligent affiliate manager will also continue to monitor your affiliate programs’ performance and your competitors’ affiliate marketing efforts, anticipating trends, watching out for threats, and identifying and pursuing new opportunities.
Should you need any help with any of the above-discussed, do contact us! We’re always here to help.