What is Sentiment Analysis and How Does it Work
Sentiment analysis is fast becoming a strategic necessity in the competitive business landscape, but not for the reasons that many people think. The technique is commonly used to track, monitor, and act upon audience perception about a specific brand, but it’s often overlooked in terms of its ability to really help businesses gain the competitive edge. Sentiment analysis is the secret weapon in competitive intelligence.
Understanding Sentiment Analysis
Sentiment analysis is about drawing meaning from online conversations and digital discussions. It borrows aspects of social listening by tracking mentions of your brand and assigning meaning to the words, but it also goes further to actually analyse these instances to determine the overall feeling that your audience has about you, whether that’s positive, negative, or neutral. Sentiment can be drawn from digital discussions across multiple channels, including social media, blog comments, and online reviews.
Ultimately, sentiment analysis provides unique insight into the opinions and perceptions of your target audience, and helps you to retain an in-depth understanding of your individual reputation. But what if sentiment analysis could help you to manage it, too?
Sentiment Analysis in Competitive Benchmarking
Sentiment analysis is used to monitor feelings about your brand. But what’s actually driving this sentiment? By understanding why your customers are perceiving you in this way, you can take the necessary action to gain an advantage over your competitors.
After all, is it vitally important to spend your analysis efforts figuring out what your customers think you’re doing well? It’s important, sure, but you should already have a pretty good idea of where your business is excelling. What is perhaps more important is to understand what your target audience thinks the competition is doing well, and what they’re not. By focusing on this area, you’ll have the tools you need to measure up where sentiment about your own brand falls in relation to sentiment about others.
Can’t you just measure where you stand in relation to your competitors by analysing share of voice? Share of voice, or SoV, can be a highly beneficial key performance indicator. It shows you what percentage of your audience is talking about you, and what percentage is talking about your competitors. But in terms of actually understanding where you fall on the industry leader board from a sentiment perspective, it’s limited. It’s important to remember that both positive and negative sentiment impact SoV. So adding sentiment analysis to your strategy is essential.
Why Incorporate Sentiment Analysis into Competitive Intelligence?
Quite simply, customers have more power than ever before. The power balance has shifted from businesses to consumers, and what audiences think really does matter.
“The shift in the balance of power between consumers and brands has disrupted the traditional path to purchase. Instead of a funnel shaped selection process, consumer journeys are now subject to interruptions, diversions, and delays. Moreover, when considering a purchase, consumers prefer to ‘pull’ information, rather than have businesses ‘push’ it at them.” ~ Deloitte Consumer Review
It’s reported that 82% of people read online reviews, and 76% of them trust them as much as they trust recommendations from family and friends. Your audience cares about what customers think of you. They care about the opinions of their peers, and they care about how customers view your overall brand. Isn’t it time you did, too?
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How it Works
Sentiment analysis works by providing insight into what works, and what doesn’t. It doesn’t only focus on your own strategies, but your competitors’ strategies, too. Ultimately, it works by delving deeper into factors that are outside of your control.
For example, imagine a competitor announces that they are starting to offer free delivery on all orders. What naturally happens is that audience perception of that brand rises. But will perception of your brand remain stable? Perhaps. Or perhaps audiences will use this competitor as a reference point when considering brands operating within the industry. This could cause perception of your brand, and other similar brands, to drop. The drop has been caused by the actions of others, not by you. It’s outside of your control, but with sentiment analysis, you can take the right action.
But the ‘right action’ may not always be copying the behaviours of your competitors. Following in a competitor’s footsteps is not always enough. For example, perception of the brand offering free delivery may rise in response to cost savings. But is it actually what customers want? Perhaps they’d rather continue to pay for delivery, but have faster shipping options available. And this is what sentiment analysis is all about. It works by helping you to understand perception and giving you all the information you need to make an informed, data-driven decision about the actions you choose to take.
It’s clear how sentiment analysis can fit into a competitive intelligence strategy. But many businesses are stalling in combining their competitor analysis approach with sentiment analysis methods. The reason? Sentiment analysis is not a onetime thing. To derive full value from the technique, it’s important to track sentiment over time.
You don’t just want a snapshot of sentiment at a specific moment; you want to be able to see how sentiment changes not only as a result of new campaigns and product launches, but also in response to the actions of your competitors. Sentiment analysis for competitive intelligence does require effort, but by partnering with data collection and analysis experts, it’s easy to create a path from where you are to where you want to be.
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