When I speak to potential new clients, a question I usually ask is what commission are you thinking about offering to your affiliates?.
These are the most common answers:
well, (COMPETITOR NAME) is offering this, so I’m planning to match that amount
My competitors don’t have affiliate programs – I’d like to offer (LOW COMMISSION AMOUNT)
My competitors offer really generous commission rates but I can’t afford to match their insane budgets. I have no idea what to offer.
On one hand, it’s great that these folks have a pulse on what their competitors are doing. Unfortunately, most program creators just take a quick look at commission and decide one of three things:
- That they can match their competitor’s commission structure – and offer the same one
- That they can’t match their competitor’s commission structure – and offer something lower
- That they can do better than their competitor’s commission structure – and offer something slightly higher
But commission is only one part of the program structure equation. Your business is completely unique to your competitors (otherwise why’d you get into business?) so your affiliate program should be unique too.
Think about it:
- If you’re offering the same thing or less, why would affiliates join your program if your competitors have a more recognizable brand name?
- If the higher commission structure you offered to one up your competitors means you can’t offer incentive bonuses to affiliates throughout the year, how will you motivate them to promote you? And what if your competitor got funding and tripled their commission rate?
I’m not saying you should ignore what competitors are doing, quite the opposite actually. I just want to encourage you to take a more calculated approach when comparing so that you can use the uncovered information to develop a completely unique program structure and style that will attract the best affiliates for you.
Enter the Competitive Analysis
To stand apart from competitors, the crucial exercise you must do before launch is a competitive analysis. By completing this fun investigative work, you will walk away knowing how to set your program apart from competitors.