If you want your business to stand out and succeed in our noisy, competitive world, you need an edge. That edge, or competitive advantage, comes from giving your customers something they can’t easily find elsewhere. Whether it’s better prices or a better process, the key to unlocking your competitive advantage is understanding what your competitors are up to. What kind of value are they providing that encourages customers to buy? Keeping pace with (and then pulling ahead of) other businesses in your industry starts with conducting a competitive analysis.
What is a Competitive Analysis?
Based on research and observation, a competitive analysis lets you evaluate your competitors’ strengths and weaknesses. By getting a better understanding of what these companies are doing right or wrong, you’ll be able to create a more effective plan to promote your product or service.
A competitive analysis can reveal both opportunities and threats to your business, and by acting on this information, you can turn what you know about the competition into a competitive advantage.
How to Get Started
To conduct a competitive analysis, you should start by putting together a competitor array. This is a simple method of ranking your competitors, to show you where everyone stands – your business included.
You’ll first need to know who your competitors are, so you can find out some basic facts about them. Take a look at your rivals’ websites, print materials, and social media pages, then follow these four easy steps:
- Establish who your local industry’s customers are, and what benefits those clients are looking for.
- Determine what strengths each competitor brings to the table, whether it’s price, product quality, convenience, or customer service.
- Use client expectations to assign a number grade to each strength, then rate every business on each of those assets.
- Add up the grades and rank your competitors.
Examine Your Competitors’ Marketing Plans
Examining your competitors’ ads and other promotional platforms can tell you a lot about their sales approach and target markets, and that’s important. When marketing resonates with a customer, they’re more likely to choose that company over another.
Exploring your competitors’ marketing plans can disclose:
- How they allocate their advertising budgets,
- Who they focus their marketing efforts on, and
- Which platforms they use to target various customer groups
Monitoring changes in your competitors’ advertising over time can also keep you in the know about pricing or service updates, branding overhauls, and new product distribution channels.
Here’s what you need to keep an eye on:
Websites
The same questions you should be asking about your own website apply when assessing a competitor’s. What’s your first impression of the site? Is it laid out attractively, and is it user-friendly? Does it load well from a mobile device? Note any customer reviews, testimonials, or interactive features. Don’t forget to check how current and popular their company blog is.
Social Media Channels
Which social media platforms are your competitors actively engaged on? It’s important to get a feel for how widely and by whom they’re followed in terms of posts and comments.
Print and Online Ads
Do your competitors make use of brochures, newspaper and magazine ads, or online directories? Take note of what features they emphasize, and how they encourage their customers to respond.
Promotional Events
Do your competitors offer free webinars or downloads, participate in community or charity happenings, or host regular sales events?
Advertising Partners
It can be helpful to know who your competitors are connected to in terms of affiliate sites or local businesses. You may even want to run a separate competitive analysis on these advertising partners.
SEO Practices
Finally, make a point of checking out your competitors’ SEO practices. What are they ranking for? Do they rank well for the search terms your customers might use?
Dig Deeper with Competitor Profiling
Digging a little deeper will reveal even more about what makes your competitors tick. One way to do this is through competitor profiling. Creating a profile of your business rivals can give you detailed information about their backgrounds, who works for them, and their financial situations.
By combining this data into one resource, your business will have a practical guide for devising, implementing, and fine-tuning an effective and ongoing competitive strategy. Remember, the more you know about your competitors, the more significant your competitive advantage will be.
Competitor profiling can:
- Expose weak points (unmotivated service personnel, for example) that you can take advantage of to attract more clients,
- Demonstrate strengths that should inspire improvements in your own company, and
- Help you anticipate competitor response to changes inside your industry
Information about rival companies can often be gleaned from the internet. Some will take a little more work to collect. Consider interviewing mutual customers, researching your competitors’ trade associations or annual reports, and attending trade shows or other promotional events where you can discreetly find out more about them.
Be on the Lookout for New Competitors
When it comes to analyzing the competition, it’s not only the rivals of today you have to worry about – it’s the ones who may come along tomorrow. New competitors show up in the marketplace all the time, especially when business is booming and relatively easy to break into.
One of the best reasons to conduct a competitive analysis is to avoid blind spots where future competitors are concerned. Making this analysis a regular part of your business strategy offers great preventative benefits like:
- Showing if and where untapped competitive advantages exist,
- Revealing unrealized growth potential, unmet needs, or customer dissatisfaction inside your industry,
- Helping you keep tabs on businesses in related markets, nearby locations, or with similar target markets, and
- Making it easier to track start-up activities of your competitors’ former associates
Just as important as performing a competitive analysis is acting on the results. Take what you learn from your competitors to make your business better – whether that means adjusting your prices, exploiting unused advertising routes, or exploring the promise of a new target market.
