Running a competitor analysis is a lot more than just looking at your competitor’s social media and seeing what they’re doing.
When you run a competitor analysis, you’re acquiring new information that, in the end, could help your business grow and prosper
You will also acquire new information about your customers, or a similar target audience to yours. Competitor analysis helps you see what exactly your competitors are doing, how they’re doing it, and so on. It gives you a true insight that you can then utilise and learn from.
A competitor analysis is built to help your business understand what other popular businesses in your sector are doing; giving you more of a valuable insight to what could work for you, and more specifically, what does work for audiences similar to yours.
Performing a regular competitor analysis allows you to identify any gaps in the market, develop new products/services to fill these gaps, identify trends in marketing efforts, and so on. Here are some steps to take before performing a competitor analysis…
Identifying true competition
You will need to first and foremost understand who your true competitors are. You can divide your competitors into two categories.
Direct: businesses that offer a product or service that could pass as a substitute for yours, operating in the same location, etc.
Indirect: one that provides products that are not the same but could still satisfy the same customer need or solve the same problem.
When comparing businesses, you should really focus only on direct competitors. This is because these competitors are the ones that are going to affect your performance much more directly as you have the same target audience, selling the same product/service. You, essentially, need to be one step ahead of them.
What are you comparing?
Of course, all competitor analysis’ are going to be different and compare different things. However, the three main categories that should be compared are: business (products/services), sales and marketing.
To begin with, you will need to analyse your competitor’s products/services, the quality of them, pricing, any discounts, and so on. Some questions to consider include…
Do they focus on volume sales or one-off sales?
What pricing structure are they using?
What are the characteristics and needs of their ideal customers?
How does the company differentiate itself from others?
A sales analysis may be one of the more tricky parts. You will want to try and find answers to questions like…
What does the sales process look like?
What channels do they sell through?
Are they expanding?
What are their customers reasons for not buying?
Revenues each year?
Do they regularly do discounts?
Some of the answers to these questions may be difficult to find out, and it may be a matter of searching online for annual reports or simply trawling through their website to try and find out as much as you can. You can also get answers to these questions by using your own customers; if they mentioned competitors or anywhere they previously used, ask them about it, question what made them move to you/choose you, and so on. This way, you’re learning more about your competitors whilst also learning about your strengths.
Look at your competitors website and answer some of the following questions…
Do they have a blog?
Do they create eBooks?
What visuals do they use?
Do they have an FAQ section?
Do they have any press releases?
Case studies or testimonials?
Then it’s about determining how many of each of these things they have, if they have them. Work out the frequency and amount. Then determining the quality of all of the content they have on their website. When reviewing the content, ask yourself…
How accurate is the content?
Are there any spelling or grammar errors?
How in-depth is their content?
What tone and voice do they use?
How readable is it?
Is their content free and available to everyone?
Who is writing their content?
What imagery do they use?
Once you’ve completed all this, it’s about looking at where and how they share the content they’re making. Whether they’re present on social media, if they send out any newsletters, if they’ve optimised their website for search engines, and so on. It’s important to look at their social media and engagement levels; to gauge how popular they are and how popular their content is. Look at how the competitor chooses to promote their content and how these promotions perform. Gather all information you can think of in terms of marketing, and you’re set to go.
SWOT (strengths, weaknesses, opportunities and threats):
For each competitor, it’s important to complete a SWOT analysis; more specifically, for all categories discussed above, if possible. A SWOT analysis means taking note of your competitor’s strengths, weaknesses, opportunities and threats. Some questions to answers when completing a SWOT analysis can include…
What is your competitor doing really well?
Where does your competitor have an advantage over others?
What is the weakest area for your competitor?
Where do you have an advantage over your competitor?
What could they do better?
Where do you feel threatened by your competitor?
Performing a Competitor Analysis
Start collecting data
You’re now ready to begin the actual process! It’s recommended to set up a spreadsheet with three different tabs with the three categories discussed above; business, sales and marketing. It’s then a matter of putting all the questions you’re wanting to answer down the first column, and then listing all the competitors names on the first row. This way, you’ll be able to see a clear, concise overview of all the competitors and answers. Try to make sure all the information you’re giving is easy to read and understand and gives you a truthful overview.
Once you’ve gathered all the data and the information you can/need, you can then move on to highlight rows or boxes of data that stand out. For example, things that show your competitors are doing really well. You need to think carefully about why certain things stand out, why it seems important to you, what it indicates, and so on.
Use it to Your Advantage
Create a plan
Once you’ve completed the spreadsheets to the best of your ability and analysed the results; it’s time to plan. You need to observe what your businesses weaknesses are compared to your competitor’s; what they’re doing and what you’re not doing, and so on. It’s a matter of looking at this and seeing what you can do to improve the position you’re currently in. Answer things such as…
What marketing, sales or service improvements do you need to make overall?
What changes do you need to make to any strategies you have?
What will help you gain an advantage over your competitors?
It’s very important to create a plan that’s going to guide you along the process of improving your business and being one step ahead of your competitors.
Monitor your results
As a business you need to be consistently monitoring results and understanding the performance of what you’re doing. You need to review everything you’ve done in terms of how you’ve improved, where you’re still lacking, and so on. It can also be good practice to review and monitor your competitors too, to see how they’ve progressed and grown. Monitoring your results closely will allow you to see what else needs to be done and what has worked really well.
Simply put, a competitor analysis enables you to understand your competitors on a much more advanced level and will put you in a suitable position to be comparing your business to your competitors.
You need to monitor exactly what they’re doing
Whether it be on their social media, on their blogs, in terms of their sales process, and so on. Everything they’re doing is an indication of something you should be doing or something that you could be doing better. Of course, doing a competitor analysis does not mean you can mirror everything a certain competitor is doing; it’s about looking at what they’re doing and how they’re performing and seeing if any of their ideas or concepts can help you progress as a business.
A competitor analysis is there to help you understand what your competitors are doing well and what they could do better. It enables you to improve your business and fill any gaps you find that need filling, whether the gap be in the shape of a service/product or a social media channel. Filling any previous gaps puts you in a more advantageous situation than your competitors who are failing to fill these gaps.