How do you look at your competitors? As rivals? Or as valuable sources of insight into the customer landscape? Competitor analysis is a vital cog in informed decision making. By creating a systematic learning strategy, you can use the successes and failures, and the strengths and weaknesses of your competitors to engineer better decision making.
What is Competitor Analysis and Why is it Essential?
There are a number of vital factors driving success. Among them are an ability to leverage complementary assets, and the timing of entry into the market. But perhaps most importantly of all, according to the research firm, is scale relative to the competition. Competitor analysis shows you where you stand.
A comprehensive competitor analysis strategy can help your business to answer some of the most unanswerable questions in modern business. Why are your competitors performing better than you? What are they doing that makes them favourable in the eyes of your target demographic? What are they doing that lowers brand perception? How are they maintaining their position on the SERPs? And how are they succeeding?
Ultimately, competitor analysis gives you the information you need to make data-driven decisions and build better marketing, development and sales strategies to streamline your future.
A good competitor analysis strategy can:
- Make it easier to identify market gaps and serve under-represented niches
- Understand strengths and weaknesses of competitors to improve market share
- Utilise proven trends and previous track records to create sustainable change
- Identify the most beneficial focal areas for current and future investments
But why is competitor analysis essential? The truth is that each business will want something slightly different from their efforts. That said, there is one modern challenge that is shared across practically all industries and sectors today: retention.
Research by global management firm Gartner suggests that customer retention is a growing issue, especially in technology where more than one third of organisations cite retention as a major obstacle.
Customer retention is a very serious consideration. In many cases, customers don’t lose their long term needs. The fact that they require solutions to their problems doesn’t change, but what can change is who they choose to provide these solutions. And the reason for change could be anything, from price to experience, to brand reputation.
Competitor analysis gets to the very heart of the million dollar question: Why is your target audience choosing your competitors over you?
Why do we Need Competitive Analysis?
There are a number of reasons why competitor analysis is useful. One of the most compelling for many organisations is that it can counterbalance cognitive bias in strategic decision making. When businesses are considering launching a new product or service, or taking new opportunities for growth, they can sometimes take an isolated approach without factoring in outside forces or real life practicalities. And this introduces human bias.
“Strategic decisions are never simple to make, and they sometimes go wrong because of human shortcomings. Behavioural economics teaches us that a host of universal human biases, such as overoptimism about the likelihood of success, can affect strategic decisions.” ~ Olivier Sibony, Director at McKinsey’s Paris office
When making big decisions for your business, it’s not always best to rely on individual and independent judgement, especially from those closest to the business itself. Instead, it’s important to look at how potential decisions could play out in real life. Have your competitors taken a similar approach? Did it work? Could it have been done better? With competitor analysis, there’s no need to repeat the mistakes of others.
Competitor analysis involves considering your future plans in context; thinking about them in relation to similar plans or ideas that have already been actioned by those operating within your industry, or in complementary sectors. By constantly evaluating your business operations against a benchmark, you can build upon what’s been proven to work in order to gain a competitive advantage and solidify your position.
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Competitor Analysis vs Market Analysis
Competitor analysis and market research are often talked about interchangeably, but they are actually two distinct methods of improving your strategic decision making:
Market analysis is primarily focused on products and services. It’s about gaining a more thorough understanding of the needs and expectations of customers, and tracking how these evolve to ensure you’re always developing new solutions that are relevant to the current and future landscape. Market analysis can help you to identify new markets, scope out potential new products, and explore market opportunities.
Competitor analysis is focused on the behaviours of others within your industry. It’s a method used to better understand the strengths and weaknesses of your competitors and, perhaps more importantly, their perceived strengths and weaknesses. It enables businesses to make changes today to attract the customer of tomorrow, and ensures you’re prepared to proactively mitigate potential threats, such as new market entrants.
How to Perform Online Competitor Analysis
McKinsey states that to perform online competitor analysis is to ‘learn from the experience of other companies by collecting case studies of similar decisions to provide a class of reference cases for comparison’. And there’s a 3-step process for doing so:
- Identify Your Competitors
Your competitors don’t just include the big names. Be sure to consider emerging players to provide you with the insight you need to counter potential new threats to your market position and share. For a comprehensive overview of where you stand, it’s important to take into account both direct competitors and your indirect competitors.
- Direct competitors are those who operate within your immediate industry and who offer the same or similar products and services. You will usually both target the same demographics, and provide solutions to the same customer problem.
- Indirect competitors are those where there are notable differences between your offerings, your target market, or your sector. However, you operate within the same broad area, and may be able to leverage valuable information.
- Obtain Information
To get yourself into a position where you’re able to make data-driven decisions for the future of your business, you first need to collect this data. There are multiple sources, including publicly available documents such as annual reports, company profiles, press releases, and product brochures. But depending on what it is you’re hoping to achieve from your competitor analysis efforts, you may also wish to collect the following data:
- Content data which may be found within blog posts, case studies, newsletters, images and videos, webinars, podcasts, or paid ads. What gaps could you fill?
- SEO data which can provide insight into why your competitors are ranking higher than you in the SERPs. This can help to improve brand awareness and visibility.
- Social media listening data such as which networks are utilised, posting schedule, and follower counts. This can help to determine relevant engagement metrics to track.
- Evaluate Strategies
Once information has been obtained, businesses can take a SWOT approach to creating and evaluating strategies. SWOT – strengths, weaknesses, opportunities, and threats – helps you to transform the digital information you’ve gathered from your competitor analysis efforts into actionable insights that can help you to thrive.
Trends to Look for When Conducting Competitor Analysis
There are a number of different trends to look out for when conducting competitor analysis. The metrics you choose to measure will largely depend on what exactly you want to achieve through your efforts. However, some good trends to identify are:
- Brand awareness – Take a look at the portion of your target audience base that’s aware of you, and the percentage that discuss, visit, or buy from competitors.
- Pricing – Where products or services are the same or similar, checking out your competitors’ price lists can help you to price your offerings competitively.
- Profits – Press releases or financial reports and statements that highlight revenue can be beneficial. It can also be useful to track your competitors’ share prices.
- Products/Services – Examine the strengths and weaknesses of your competitor’s products and services, not just from your point of view but from a customer’s.
- IP – Have your competitors filed intellectual property? Protecting IP could be a strong sign of new product launches or efforts to break into international markets.
- Audience – Are your competitor’s customers the same as yours? Are you targeting the same demographics? Could you refocus your lead gen efforts?
- Customer experience – What do your target audience think about the level of customer experience offered by competitors? How could you improve on it?
- Marketing – Checking out the marketing efforts of your competitors can provide good insight into what campaigns are engaging audiences, and which aren’t.
- Risks & Threats – What issues have your competitors encountered in the past? Consider how you can anticipate and neutralise growth-associated risk.
- Opportunities – What sort of new opportunities have your competitors grabbed, and how are they working out? Use this to explore opportunities for your brand.
- Employee support – What sort of company culture do your competitors embrace? This could help you to retain employees and minimise hiring costs.
- Global reach – Are your competitors targeting audiences nationally or globally? Is there a potential market where your competitors have so far failed to infiltrate?
How to Improve Competitor Analysis with Social Listening
As we touched upon earlier, gathering data from social media can be an important part of a comprehensive competitor analysis strategy. Taking a look at competitor posts, audience engagements, and responses to issues and concerns is a good starting point. But it’s not just about how competitors act… it’s about how their customers do.
The benefits of competitor analysis can be enhanced through social listening; through understanding more about what customers actually think of your competitors. Social listening is a way to look at your competitors not from your point of view, but from the point of view of your audience. It can help you to answer questions such as ‘why do customers choose this brand?’ and ‘what would make them want to switch brands?’
Incorporating social listening techniques into competitor analysis can help you to more clearly see what your target audience thinks about the products, services, and overall experience offered by your competitors with sentiment analysis. It can also help you to tune into emerging trends before they become widely apparent, and perhaps discover new brands.
Tuning in to what’s being said can make it easier for you to calculate your share of voice; how much audiences are talking about your business and your brand in comparison to how much they’re talking about others. Of course, share of voice is a tricky subject, with both positive and negative discussions creating a seemingly strong SoV, but by taking into account reputational highs and lows, you get the whole picture.
Social listening can also be effective in reaching out to new demographics and new audiences. It provides insight into the expectations, demands, interests, and requirements of your competitor’s audience base, enabling you to make strategic decisions to appeal and attract these new pools and generate new MQLs and SQLs.
Competitor Analysis Tools to Investigate Your Competition
Perhaps the most obvious starting point is Google. At the most basic level, early stage competitor analysis can be kickstarted by searching for competitor names, or by searching for your own brand name and viewing which other companies are searched for alongside your own. But unfortunately, Google is limited in its ability to support a comprehensive competitor analysis strategy. And that’s because of data overload.
It’s important to consider just how much data is out there and available: digital trade publications, employee interviews and press appearances, advertising copy… And then there are press releases which discuss financial progress, job postings which can hint at new projects or initiatives, and social media which highlights audience perception.
What businesses need to do is bring all of this together. Of course, in terms of value, not all data sources were created equal. But all must be considered for the full picture. And that’s why tools that combine web scraping with social listening methods are best. Good competitor analysis tools help you to track behaviours, analyse actions, and ultimately learn from what your competitors are doing. They should generate information that can be applied directly to product development and campaigns. To ensure this is the case and the most applicable, relevant insight is extracted, a professional in data analysis and research will often be needed.
As competitor analysis has become such an essential tactic in business success, a huge number of tools have been made available, and choosing the right support can sometimes be tricky. What you should be looking for is a multi-use tool that allows you to collect and collate information from multiple sources, listen to your audience, identify trends, and transform insight into action. There are many excellent options out there, including Sprinklr which offers both listening and benchmarking, Talkwalker’s Quick Search, which offers real time competitor activity tracking, and Brandwatch which dives deeper into sentiment to measure share of voice and audience perception.
Rolling out a full competitor analysis strategy can be a nerve wracking experience, but when you’re using the right tool, keeping track of the competition can be simple – provided you have the know-how to extract the best insight from the data collected.
How to Outperform with Online Competitor Analysis
Although the actual act of competitor analysis can be simple when using the right tool, excelling at the act itself is not enough. It’s the equivalent of creating a new product, and then not actually taking the measures to launch it; it’s pointless. When you have the necessary information, it’s important to act on it, and use it to your advantage.
To outperform with online competitor analysis, it’s important to consider all of your potential options for the future in relation to a reference point. By using this reference point as a benchmark, you can learn from the decisions and moves that other companies have made, and tailor your approach to deliver the very best results.
Work to identify competitive blind spots and discuss how these blind spots can be addressed, and where they fit into your overall strategy. Ultimately, the aim of competitor analysis is not to find out what the competition is doing, it’s to put this information to good use, using it to streamline your path forwards towards success.
And the truth is that, while it may seem simple to gather data using tools, it’s not always as easy to understand how this data applies to your business, and how you can transform it from mere facts and figures into real actionable insights.
That’s why many businesses work alongside an experienced research team, not just facilitating change, but actually implementing it into day-to-day operations and core business processes. It’s massively helpful to get a fresh perspective from an outside professional service. As looked at earlier, viewing the landscape from an isolated viewpoint is not beneficial.
Know Where You Stand
Competitor analysis isn’t a onetime thing. With new businesses entering the market all the time, and customer needs evolving at a rapid rate, data should be collected, analysed, and actioned on a regular basis in order to maintain market position and share of voice, and gain a competitive advantage that will help you thrive in future.
If you want to grow your business through COMPETITOR ANALYSIS, talk to our team today!
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