If you want to build your customer base and grow your business, you’ll likely need to outperform the competition. And, as anyone who’s played any kind of sport knows, the better you understand your rivals, the better chance you have of beating them. That’s where a competitive analysis can help.
What is a competitive analysis?
Essentially, a competitive analysis is the process of identifying major (and perhaps minor) competitors, collecting information about them, and then evaluating your own strategy in the context of this intelligence. It can be general, looking at all aspects of your competitors’ business, or it can be more specific; we often perform analyses for our clients that dig deep into competitors’ websites, social media presences, or content marketing activities. For Trekk, it’s a key part of any market research initiative. And whether you take a broad approach or a narrow one, you can use your findings to inform your company’s SWOT analysis — your evaluation of your own strengths, weaknesses, opportunities, and threats.
Why should a company spend time on a competitive analysis?
In short, it’s important to know who is out there and what they’re doing. Who is garnering the most market share? Who is growing and poised to take business away from you? It’s a tool that can be used to identify where you’re lagging. For instance, a recent competitive analysis we did for a client revealed that nearly all of their competitors offered e-commerce, while they still required people to call and place orders over the phone. Seeing the data laid out in a spreadsheet made the client’s necessary next step strikingly clear.
On the flip side, a competitive analysis can also tell you where you stand a chance to gain a competitive edge, show your creativity, or distinguish your own unique value proposition. An analysis for another client recently revealed that only one of their competitors was making any sort of inbound marketing or SEO efforts. This told us that investing in content marketing would be a wise move — the organic traffic was there to be earned.
How do you perform a competitive analysis?
The process will vary depending on your industry and goals, but in general you can follow these steps:
- Determine who your direct competitors are (aim for a list of 5-10). These are companies who are producing a product or providing a service that is very similar to yours. If you have the time and bandwidth, consider identifying indirect and tertiary competitors as well.
- For the products or services that specifically overlap yours, identify the value proposition that each competitor is using to position themselves in the market. Are they competing on price? Claiming to offer a higher quality? Do they lean on their reputation for outstanding customer service?
- Analyze the marketing strategies your competitors are using. Collect intel on their print and digital ads, and note as much as you can about their web presence. Pay close attention to the user experience on their website — do they offer educational content to help their audience with purchasing decisions? Do they have an easy way to capture online lead information?
In general, you’re looking to gather as much information as possible in order to identify your rival’s strengths, weaknesses, and differentiators. When you’re determining what data to include, start with the basics and expand from there. Before you begin gathering data, set up a spreadsheet with company names across the top and categories down the side. Be sure to include your own company’s data in the first column as a starting point for the comparison. Some information you may choose to include:
- company name and URL
- number of employees
- core capabilities/products/services
- e-commerce options
- general marketing strategy
- digital marketing activities
- social media platforms/number of followers
- print marketing activities
- event marketing activities
Remember, the more exhaustive your competitive analysis, the better you’ll be able to understand your competitors! Once you have the data in hand you’ll be able to determine what competitor weaknesses you can use to your advantage as well as any strengths you should watch out for. Ultimately, the analysis should provide a good foundation of knowledge upon which to build your strategy.
Where do you find data for a competitive analysis?
The web is your friend. Start with the company’s website and glean as much information as you can from their public-facing digital presence. Then use search engines and keywords to find data on your competitors. Dive into financial reports (which may be more difficult to find if your competitors are private companies), blog posts, press releases, and news articles. Try interviewing your own prospects and customers — they can provide key information on which companies they considered and why they ultimately did or didn’t decide to employ a competitor. Finally, social media and internet forums (think Twitter, Reddit, or Quora) can also help you identify direct and indirect competitors if you’re struggling to compile a list