Affiliate marketing refers to any and all activities that are geared towards promoting products and services in exchange for a commission when a successful sale or lead is completed. Functionally, affiliate marketing serves to ensure that business owners can expand their sales and marketing functions at a fixed cost that is based on an agreed action taking place from a potential customer.
Once you’ve decided to build out your affiliate program, there’s a lot that goes into the process of fine-tuning your product if you hope to thrive in that environment. For many business owners, affiliate marketing can be boiled down to finding an attractive commission price and listing products on review websites. Although high commission payments and brand reviews are an integral part of the affiliate marketing framework, there’s a lot more you must consider if you want to succeed.
One of the least understood but most important parts of building your affiliate marketing program is communicating your products the right way to vendors, customers, and affiliates. To succeed in your communications, it’s important to have an objective understanding of its position relative to other products and services in its category. This is where SWOT analysis comes in handy.
What is SWOT Analysis?
A SWOT analysis is a strategic preparation plan that allows a business owner to objectively enumerate its business position relative to others in its product or service category. For the business owner, this means that a SWOT analysis provides a comprehensive way to list your strengths, weaknesses, potential opportunities, and threats in a concise and meaningful way.
According to Bonnie Taylor, chief marketing strategist at CCS Innovations, “It is impossible to accurately map out a small business’s future without first evaluating it from all angles, which includes an exhaustive look at all internal and external resources and threats.”
Why is it important? Well, for one, coming up with a comprehensive analysis helps you reflect on your market position and the path forward. It also provides a basis for important decisions on how much you should pay as commission, cookie durations, and the viability of affiliate partnerships that are under consideration.
For the affiliate marketer, it gives them a basis to provide objective, well-thought reviews that have the force of conviction and the potential to create conversions. In other words, a SWOT analysis is a bridge between your affiliate marketing program and your business outcomes.
Strengths of Business – Find your why
As a business owner, it can be difficult to ascertain your business strengths. Understanding strengths can be tough if you’re constantly busy in the trenches of sales, marketing, and fulfillment every day as you have little or no time to consider the competitive environment.
One way to ascertain why your business is perceived to be better is by parsing out why your worst customers still come back every time. In attempting to understand business strengths, it can be tempting to rely upon accounts of those who will happily give you a five-star rating on Trustpilot. However, with this class of customers, you’re likely to hear what you already know.
Asking customers who constantly complain about your business but come back regularly will give you insight into the “why” for your business outcomes. Once you have an unbiased notion of why your business is strong, it is easier to integrate it into your marketing materials, landing page(s), and pitch documents.
According to Bill Gates, your most unhappy customers are your greatest source of learning. This idea rings true even with affiliate marketers. Once you have a definitive sense of your products and (or) services and their opportunity cost, you’ll be able to come up with copy materials that read like; “1000 songs in your pocket”. Communications like this, more than any meeting, strategy, or proposal will define your relationships with affiliate marketers and your customers for years to come.
Weaknesses – Find your Achilles and tell everyone about it!
To test for your business weakness, you must have a product/service that has been sufficiently distributed and tested by a significant number of users which means you have a lot of user feedback from which you can make data-driven assumptions. Unlike your strengths, finding weaknesses in your business is easier and a lot more accessible. If you’re looking to understand what your business does not do well, you can check review websites, Amazon (if your product is listed there), and (or) unhappy customers can provide you with a lot of information if you just ask them.
Although finding the information is easy, communicating it properly is a lot more complicated. For one, your business most likely has a wide range of weaknesses (as most businesses do), and finding the right one to communicate with is near impossible. Also, there is a risk that looking for and pointing out what your weaknesses are can affect customer perception of your product over time. While this may happen, knowing your shortcomings will help you reduce the risk of failure as you can plan to mitigate their effects in the future.
Although a valid strategy with weaknesses is to obscure and reduce, you can experience outsized benefits if you find the right way to communicate them to your affiliates and customers. The key to proper communication is to evaluate your root weaknesses by looking for them in your key strengths. For most companies, root problems emanate from the things they do well and multiply over time. When it started, Google did not run any ads and although they couldn’t take in any revenue, they had a much better user experience than Yahoo!.
Opportunities – Create a compelling what-if
Finding potential opportunities for affiliate marketers is a combination of the outcome of your strengths and weakness evaluation. As soon as affiliate marketers know what your business is about, your ability to create and communicate a compelling future will determine how they perceive your opportunity package. One of the opportunities that a good product might present is quick sales. If you can show affiliates that your offer already has some traction with their audience, they’ll be more likely to consider working with you.
Affiliates, bloggers, and social media influencers will be evaluating the ethical basis of your business operations. Some of the objective metrics that a high-quality affiliate may consider include a prevailing sentiment on social media channels, the eco-friendliness of your business, where your products are manufactured, and how your reputation can impact their brand for better or worse. If you hope to run a profitable affiliate marketing program, you need to clean house and ensure that everything about your business can stand the test of vigorous scrutiny.
Once you do, the next step is to design your commissions and cookie durations for success. To design your cookie duration, figure out how many visual touchpoints the average target needs to buy your product. For instance, high ticket items such as vehicles or furniture (in some cases) may require a lot more consideration than toothpaste and toiletries. Once you have a sense of the average time to purchase, you can set your cookie duration to match that range.
On the other hand, the commission paid to an affiliate should be a balance between the cost of the product, fulfillment and the acquisition cost (affiliate commission) while taking a slim margin. If you sell a product that has a high re-order value like fruit juice, you can set a lower commission as customers are likely to buy multiple times a month once they do the first time if you offer a referring commission model otherwise you can offer a higher commission upfront for a one time purchase.
Threats – What are you NOT?
While the first three can serve you in your communication with affiliates and customers, understanding the threats to your business will serve your business operations more. The first step to managing threats is to enumerate the different categories that exist in relation to your business. Some of the threats you should consider when setting up your affiliate program include business and channel threats.
Business threats may include the size of the competition, their technical proficiency, speed to market or the strength of their brand. A proper understanding of the business threats will give you enough awareness to narrow your focus on the customers that matter. If you own a small business or start-up, it’s likely that there are incumbents, and knowing how your value differs can help you survive.
On the other hand, channel threats have a lot more to do with the distribution of your offer. In making the consideration, you should learn what channels are most appropriate for your message, which ones deliver the most organic reach as well as those that may taint your brand in the minds of your customers if you decide to use them.
As a business owner who intends to benefit from a profitable affiliate marketing program, understanding the landscape of threats to your continued existence will color your decision-making palette for the better. Once you know where the dangers are, you’re more likely to find the right affiliates, negotiate the right commissions and project the right message to your customers.
Affiliate marketing can help you reach new customers, expand your brand and build efficiency into your sales and marketing processes. However, without the right basis for communication, you will most likely underperform and fail.
As an affiliate marketer, one of the most important requirements is that you understand your brand in relation to its position in the market. A great way to gain this level of understanding is to use a SWOT analysis. By honestly and meaningfully communicating your strengths, weakness, and opportunities, you can attract the right affiliates and sell your offers with a lot less stress.