In todayโs crowded consumer markets, you might have more competitors in your industry than ever before. That sounds like bad news, but thereโs good news too: itโs easier than ever to find detailed information on those competitors.ย And thatโsย reallyย good news becauseย doing competitor analysis is essential to the success and growth of your business. Thatโs trueย in every industry and every market.ย ย
Why You Need to do Competitor Analysisย
Evaluating your competitors is important because it allows you toย map your position in the marketplace.ย Once you know where you stand, you can create an effectiveย marketing strategyย that capitalizes on your position andย lets you reach new audiences and customers.ย ย
When youย analyzeย what your competitors are doing well, you can find gaps you need to cover in your own business. And on the flip side, by identifying gaps your competitors have,ย you can find opportunities to grow in aย space where theyโve failed to take the advantage.ย ย
How to do a Competitor Analysisย
Whatโs the best way to analyze your competitors?ย Weโll start with a few basic steps.ย ย
Figure Out Who Are Your Competitorsย
You canโt evaluate your competitionย until you know who they are.ย This allows you to compare yourย data accurately โ what works for one brand may not work for you.ย ย
Begin by sorting your competitors into two categories: direct competitors and indirect competitors.ย Direct competitors are businesses thatย are fairly similar to you โ they offer a similar product or service,ย and they operate in the sameย geographic area that you do. Indirect competitorsย offer a product or service that isnโt the same as the ones you offer but could fill a similar needย for your customers.ย ย
Itโs not too complicated. But many business owners get that distinction wrong. And itโs a critical difference because you need to focus only on your direct competitors.ย ย
Why?ย Letโs look at an example:ย Doordashย food delivery service vs.ย Instacart. Both companies will deliver food to your door, and you can order via an app. They might seem similar on paper. But the products they offer are not the same: one offers a full menu of pre-cooked food so the customer can enjoyย immediately, while the other deliversย groceries meant for cooking into meals yourself. Theyโreย actually indirect competitors.ย ย ย
You shouldnโt ignore your indirect competitors completely โ they could pivot their offerings suddenly and become a direct competitor.ย DoorDash could begin offering a grocery delivery service, and then they would become a direct competitor toย Instacart. But for now, thatโs not the case.ย Keep indirect competitors on your radar and regularly do a competitor analysis, because the market can change quickly. But they wonโt be your main focus in the analysis.ย ย
Find Out Whatย Your Competitorsย Offerย ย
Now that you have a list of competitors,ย itโs time to take note of what products or services they offer.ย You will want to note their whole product line. And donโt forget about the qualityย they offer as well.ย ย
Some keyย items youโll want to evaluate for each competitor are:ย ย
- Whatโs their market share?ย ย
- Are their offerings high or lowย cost?ย ย
- Do they mostly do volume sales or one-time purchases?ย ย
- What strategies do they use toย differentiate themselves from the competition?ย ย
- What does their ideal customer want or need?ย ย
- How do they distributeย their services or products?ย ย
- Whatโs their target market?ย
Donโt forget to note any discounts or pricing deals your competitors offer, either.ย This product and service analysis gets to the heart of your competitorsโ businesses.ย ย
Find Out How Your Competitors Sellย
Once youโve dug into your competitorsโ websites toย discover their product offerings, you can begin toย examine how they sell their products and how successful they are.ย The amount of information available on the internet makes competitive intelligence a lot easier to dig up.ย You can find a lot of this information just byย digging around their websites, downloading annual reports, and reading anything theyโve written online.ย ย
What can you find out about their sales process?ย What channels do they use to sell, andย how involved is a salesperson in the sales process?ย Do your competitors have multiple locations and is this an advantage?ย If you can find out data on their sales volume and revenue every year, thatโs great data for comparison.ย ย
Never underestimate the power of a personal connection.ย If you have prospects who ultimately chose one of your competitors over you, you can reach out and ask them for open-ended feedback about their choice.ย Getting feedback from multiple prospects is even more helpful because it allows you to see trends in the feedback.ย Ideally, you should have access to all this information in a CRM system.ย ย
Look at Their Marketing Tactics
Now itโs time to take a peek into their marketing tactics.ย ย
What does the social media strategyย of your competitors offer? Go through their social networks (not just Facebook, but LinkedIn, Instagram, and Twitter can yield rewards) toย see how they connect with customers. Do they have a high engagement rate โ lots of likes and comments on their social channels?ย Do they seem to have a social strategy, or do they only post sporadically?ย ย
Next, review their content marking strategies.ย Do they offer lots of content for customers and prospects on their website? Are they leaning more towards written content like blog posts, eBooks, case studies, or white papers? Have they used any newer content like videos, podcasts, or webinars?ย Are they effectively sharing that content on their social networks?ย ย
And donโt forget to check out the quality of their content โ itโs not just about quantity. Do they have a lot of errors or grammar mistakes? Is their tone appropriate for your market, and is the content easy to read?ย Is everything surface level or more advanced dives into detailed knowledge?ย ย
Compare and Contrastย
Competitor analysis isnโt just about comparing direct competitors to your business โ you should also compare them to each other. This is easiest to do if you take the time to create a thorough profile for each business with all the information we gathered aboutย them above.ย Create a side-by-side comparison of all the relevant information youโve just gathered.ย ย
The most effective way to compare and contrast your business and your competitorsโ businessesย is by doing a SWOT analysis:ย strengths, weaknesses, opportunities, and threats.ย ย
- Strengths:ย What is your company doing well? Where are you succeeding?ย What do you provide to customers that your competition doesnโt?ย ย
- Weaknesses:ย Where does a competitorโs business outperform your company?ย ย
- Opportunities: Do you see changesย in competing companies or emerging trends thatย could prove beneficial to your company in the long term?ย ย
- Threats: Do you seeย changes in competing companies or emerging trends that couldย disrupt your business?ย ย
Find Your Unique Positionย
During a competitor analysis, youโll find plenty of ways your business is similar to your competitors. But what should also emerge is whereย there is a unique market position for your company.ย ย
You now know what your competitors provide. Itโs time to start thinking about what makes you stand out from the crowd.ย Use your SWOT analysis toย find what you do well that competitors donโt, orย even where they donโt have an offering that you could provide.ย ย
Maybe itโs a wider range of products or a completely unique product. Perhaps itโs aย totally customizable service or a service thatโs much faster than anything else on the market.ย Maybe itโs your lower prices that help you stand out. Perhaps itโs your strong company values that differentiate you. Whatever it is, now you know how youย can market yourself to your customers and stand out from the crowd.ย ย
What Comes Nextย
With the valuable data youโve gathered during your competitor analysis, you should have a much clearer view into how you can market and sell your products or services to your customers. Even if your market seems crowded with direct competitors, thereโs almost always a way you can find to differentiate yourself from them andย make an impression on your prospects.ย ย
Donโt forget to set up a regular schedule for doingย competitor analysis again โ at least quarterly is a good start. Stay aware and ahead of your competition and your business will thrive.ย ย
Get Help to Stand Outย ย
Business owners like you have a lot on your plate โ and marketing tasks like competitor analyses can fall to the side, even if you recognize how important they are.ย Thatโs when you should enlist the help of a team of digital marketing experts like C1M. Weโll help you figure out how you can stand out from the crowd, based on real data. And weโll come up with a plan together for how you canย get measurable results that put you ahead of the competition every time.
Schedule your consultation today and get ready to get real growth for your business.ย ย