There is only one way to beat your competition: dive deep into the current competitive landscape and learn everything you can for your customers, industry, and rivals.
Today I am going to detail a simple, easy-to-use process to help you complete competitor analysis. Once you’re ready, you will be able to develop your differentiators and create a powerful, industry-dominating strategy giving your business an exponential advantage that will put you at least seven times ahead of competitors.
How to Conduct Your Competitive Analysis
Performing a competitive analysis isn’t rocket science. It’s a process of identifying your major competitors and researching their products, sales, and marketing strategies.
Good competitive research could put your business in a unique position to reach customers who are being underserved. That’s exactly what help a 24-year-old graduate to build a $100 million company competing with top brands
Your competitive analysis should answer these core questions:
- Who are the other companies in your marketplace?
- What products do they offer?
- What is each competitor’s market share and profit share?
- What are their strengths and weaknesses?
- How do your own products compare?
- How can you differentiate your products ?
1. Identify who your competitors are.
Whether you want to admit it or not, your competitors are out there and they’re just as determined to succeed as you are.
Step 1: Find Your Competitors
Let’s figure out who you’re really competing with. The most apparent place to start your research is Google Search and Amazon. You can also check websites like Crunchbase or Product Hunt. You may find competitors that you might not have noticed before.
Step 2: Categorize Your Competitors
All of a sudden, you will realize that your marketplace is overcrowded. With so many rivals, you’ll want to categorize them into various groups, from primary competitors to those you still need to keep on your radar — like secondary and tertiary competitors.
Here is an easy way to categorize sellers in your industry:
- Direct Competition: direct competitors are the companies who offer similar products, and/or target the same audience in the same area.
- Indirect competitors are those who offer a high- or low-end version of your product, or a substitute for your product or sell something similar to a completely different audience. Knowing who they are, provides clues to potential direct competition or new opportunities for your business.
- Tertiary Competition: This category includes businesses that are tangentially related to yours, and really comes in handy when you’re looking to expand your product catalog. These could be related products that are trending, as well as businesses that may be beneficial to partner with. For instance, if you sell jewelry, a tertiary competitor may sell gems and stones.
When comparing your brand, you should only focus on your direct competitors. This is something many brands get wrong.
For example, Starbucks and Dunkin’ Donuts are direct competitors, while the prepared foods section of the local supermarket could be an indirect competitor to them both — especially if their coffee is good.
But, this doesn’t mean you should throw your indirect competitors out the window completely.
Keep these brands on your radar. They could shift positions at any time moving into the direct competitor zone. Or you might decide to partner with them.
2. Determine what products your competitors offer
At the heart of any ecommerce business is the products. If you understand your competitors and their products, you can differentiate your own product strategy.
You’ll want to analyze your competitor’s complete product line and the quality of the products they’re offering.
Take a look at their website and marketing messaging and ask the following:
- What are customers really buying from them? Are they going for a price? Experience? Or a cause?
- How are they differentiating their product from their competition? What features and benefits do they highlight the most in their marketing copy?
- In their opinion, what makes their products unique?
- What is their market share?
- Are they using different pricing strategies for online purchases versus brick and mortar?
- How do they distribute their products?
To gather as much information as possible, put yourself in their customers shoes:
- Purchase a product: Check out the whole purchasing experience, the product itself, note the time it takes to ship, and how their packaging looks.
- Put an item in the cart and abandon the checkout process: Monitor whether or not they send an abandoned cart email series and note what language and structure they use for their emails.
- Follow them on social media: Get a feel of their communication: how they speak to and serve their customers.
- Research what are the benefits they use to sell their products. What are the emotional triggers they use to encourage people to shop.
3. Pricing Research
Pricing a product is probably the toughest thing there is to do.
Your pricing strategy is going to be one of the most important aspects of your online business — and potentially a competitive advantage.
Take a look at how your competitors have priced their products and learn what your target market expects to pay — and is willing to pay.
Keep in mind that pricing could be tricky. It’s not just the product. Most of the time going for the lowest price isn’t an option. Figure out what it is you’re actually selling to your customers.
Your target market may be willing to pay more for peace of mind, expedited shipping or just overall website experience.
Let’s take for example Schultz, the founder of Starbucks. He charges prices several times higher than his competitors. What Starbucks customers actually buy is the experience.
Amazon has become the go-to for ordering just about anything online because of their expedited shipping through Prime.
Offering a longer guarantee on your products can be a selling point that will make your customers choose to buy from you rather than your lower-priced competitors.
You must maintain profit margins in order to run your business. You cannot make compromises. Usually 40% Gross Margin is a must. Learn how to do your business math.
4. Research your competitors’ sales tactics and results.
Running a sales analysis of your competitors can be a bit tricky. You’ll want to track down the answers to questions such as:
- What does the sales process look like?
- What channels are they selling through?
- Do they have multiple locations and how does this give them an advantage?
- Are they expanding? Scaling down?
- What are their customers reasons for not buying? For ending their relationship with the company?
- What are their revenues each year? What about total sales volume?
- Do they regularly discount their products?
Getting to know their sales process might give you an idea of what industry bottlenecks there might exist and then try to overcome them. A better sales process can give you a competitive advantage. You can also use this information to learn how to overcome your customer’s hesitations and barriers to buy from you.
5. Examine your competitor’s website & customer experience.
Analyzing your competitor’s website is the fastest way to assess their strengths and weaknesses, as well as their marketing efforts. Take notes and make sure to copy down the specific URL for future reference:
Take a close look at the following:
- What is the user experience like on their website?
- Is it easy to navigate? Is it easy to find different categories?
- How attractive is their product photography? How do they display their products and help communicate details?
- How detailed are their product descriptions? What information do they include? What information is missing?
- Where are their calls to action throughout the online shopping experience? Are they obvious or do they get lost due to a poor color scheme or positioning?
- Are they trying to build an email list with a newsletter sign-up prompt? How prominent is it?
- Where are their social media icons positioned?
- Do they have a blog? How often do they blog? Is the quality of their content good? What topics do they blog about most frequently?
- Is their site optimized for mobile?
- What methods for contact do they offer? Do they have limited hours for phone support?
- How long does it take them to respond to email, live chat, and contact form submissions?
- Do they have an abandoned cart saver feature? If so, how frequently do they send the emails, and what messaging is included?
- What information is included in their marketing banners?
- How frequently are they running promotions? What benefits do those promotions provide to their customers and potential shoppers?
You can use this information to understand where you should be focusing your attention and resources; how you can improve your website and if there are opportunities for you to outperform your competitors.
6. Check the online reviews of your competitors.
Take the time to read all their reviews: from product reviews on their website to business reviews on social media to comments left on their blog.
You will get the feel of what their customers think of them as a company, how good is their customer service, what is the quality of their products, do they deliver their products efficiently?
Any of this could be an opportunity for you to identify areas where you can improve your own product or service and differentiate your business.
7. Review their social media profiles
Take a look at all of the social media channels you can think of — including Pinterest, Facebook, Instagram, Youtube, Snapchat, and Twitter — and find the answers of the the following questions:
- What is their overall social media presence?
- What social platforms are they actively using to talk about their products?
- What are they posting? Do they manage to engage their target audience?
- How do they speak with them?
- How often do they interact with their following?
- How frequently do they post?
- Which social media channels are they missing? Is there opportunity for you there?
- What percentage of the posts are about their business?
- What percentage is solely meant to increase engagement or gain followers?
If your competitors don’t have a decent following, it could indicate that the market is weak, your target market doesn’t use social media, or simply that there is room for your business to take the lead in engaging with customers.
If a competitor is doing really well, it might mean that you’ll need to step up your game and look for a new way of engaging your market — or possibly choose a different mix of customers all together.
8. Perform a SWOT Analysis to learn your competitors’ strengths, weaknesses, opportunities, and threats
SWOT stands for strengths, weaknesses, opportunities, and threats. Perform a SWOT analysis to identify what competitors are doing right, and what customers are complaining about. Use a competitor’s weaknesses to understand how you can fill gaps to make their customers your customers.
Some questions to get you started include:
- What is your competitor doing really well? (Products, content marketing, social media, etc.)
- Where does your competitor have the advantage over your brand?
- What is the weakest area for your competitor?
- Where does your brand have the advantage over your competitor?
- What could they do better?
- In what areas would you consider this competitor as a threat?
- Are there opportunities in the market that your competitor has identified?
Now that you’ve taken note of some of the biggest differences between you and your competitors, it’s time to think about how you can use this information to improve your own business results.
You’ll want to run a competitor analysis every three or six months to stay aware of every market shift and move of your competitors and respond to them accordingly.
Tools for competitive research
Today’s digital world makes it so much easier for everyone to find whatever they look for. The following list includes some of the main methods for finding company information:
- Google: Search with pertinent keywords.
- LinkedIn: This site offers information on company size, locations, hiring, and key personnel.
- Yahoo Finance: Check this for financial background on organizations.
- AngelList: This resource lists startups, investors, and job openings at startups.
- Crunchbase: This outlines new products and companies and their investments.
- Alexa, SimilarWeb, and Other Online Tools: Use web search tools to find traffic on keywords, backlinks, and more.
- Hoover’s provides detailed descriptions of companies for a fee
- Dun & Bradstreet sells reports on companies with information about history, directors, customers, employees and recent developments.
- SEC Filings: Peruse SEC corporate filings for key information about a company’s financial endeavors and financial health.
- Purchased Data: Buy database collections of consumer and corporate data.
- Website, YouTube, and Facebook Comments: Discover what users and customers really think about your products and services as well as those of your competitors.
- SEMrush: This is one of the best competitive research tools on the market. It contains over 30 tools that can track things like SEO, PPC, keyword research, competitive research, and more. SEMrush will help you discover new competitors, find their best-used keywords, and analyze their ad copy. They have flexible pricing plans depending on your business needs.
- BuzzSumo: BuzzSumo lets you see how your content is matching up to your competitors’ content. You can see which content is shared more frequently on social media compared to others, and you can even schedule alerts on your competitors’ content which will make it easier to continue tracking them.
- Think With Google: You can get insights, ideas, and inspiration to take your marketing further. You will also find interesting insights on how people browse and buy
- eBay Research – effective way to research what your competitors are doing, how they’re doing it, and how you can improve your own listings on eBay
- SpyFu – incredibly useful tool to spy on your competitors. You can see every keyword they’ve bought on Adwords, every organic rank, and every ad variation in the last 14 years.
Competitive research can seem daunting at first but it’s an essential part of running a successful business.
Remember, regularly performing a competitive analysis doesn’t mean you need to watch your competitors like a hawk or let them keep you up at night, but you should keep tabs on how their businesses are changing and watch for new challengers in your space.
Next, you should go and craft your winning strategy for dominating your industry.
If you decide to go outside and hire a professional consultant instead of collecting the information in-house, you can write to email@example.com and our expert will help. We have done hundreds of these analyses and we know how to do it in a systematic way.