Competitor Analysis: How To Research Your Competition And Win
Competition is inevitable. It's always been a part of doing business, and always will. And if competition scares you, it may be time to search for a new career. However, if you embrace competition just like the most successful entrepreneurs and businesses do, I'm going to show you how you can actually use competition to your advantage with a proper competitive analysis.
What Is Competitive Analysis?
Standing out against your competitors is, indeed, one of the keys to a successful business venture. That is why competitive analysis has been very beneficial to most businesses today, whether small, mid, or large-scale.
However, it doesn’t necessarily mean that you’ll need to observe your rivals’ activities every second of the day. Nor does it mean that you have to copy every bit of their actions.
So what is this analysis then?
When doing a competitive analysis, you’re research your competition by researching their products, sales, and marketing strategies as well. Through your evaluation, you’ll be able to come up with a plan that can make you unique against your competitors.
Aside from assessing your competitors, this analysis can also provide you with some insights about your customers. If you want your business to be successful, you’ll have to cater to their needs consistently. To do that, you need to keep up with their tastes and preferences.
Here are some of the things that you’ll learn as you conduct your analysis.
- Your customers’ alternatives, like the types of products or services they use to satisfy their immediate needs
- Your competitors’ target audiences, specifically the type of customers they’re aiming for
- How you can formulate your competitive strategies by looking at how your competitors try to stand out to their target customers
- Your target customers’ preferences and what they expect from their favorite products and services
How Do You Conduct a Competitive Analysis and Research Your Competition?
Get a Competitive Analysis Report Template
To optimize your analysis, get yourself a report template first. This way, you’ll be able to analyze your data effortlessly. As you go through this lesson, you can input the different types of data you’ll find on your report so you can understand this technique better.
You can download a template from the internet, or you can create one on your own.
Here’s a sample of a competitive analysis template.
If you think this one looks too complicated for you, you can simply use a SWOT matrix for each of your competitors. The SWOT matrix will present each of your competitors’ strengths, weaknesses, opportunities, and threats.
Choose the Competitors You Want to Analyze
First of all, you need to choose and evaluate which competitors you should analyze.
Although there are tons of possible candidates available, you must select the right ones to ensure that your analysis is accurate and precise.
Now there are three types of competitors to choose from.
Direct competitors refer to companies that offer the same products and target the same audience as you.
An example of this category is Mcdonald’s versus Burger King or Starbucks versus Dunkin Donuts.
Indirect competitors, on the other hand, are companies that offer different products but target the same audience as you.
For example, McDonald’s and Domino’s offer different products—the former offers burgers while the latter provides pizzas. These two companies offer different types of food, but they target the same audiences.
Substitute competitors are also known as replacement competitors. These companies refer to those that your customers go to instead as an alternative to your products or services.
You can consider anything as your substitute competitors. For example, you’re offering the latest digital SLR camera in the market. However, your customers decided to get the newest iPhone rather than buy your cameras; others would opt to pay for a Shutterstock subscription instead.
After knowing the differences between each of these types, list down at least ten brands or companies that you want to analyze. For the best results, select at least one from each category.
Understand Your Customers
A business cannot run without its customers, which is why you must do your best to understand them. To run your business successfully, you need to know how they think, especially how they perceive your competitors.
One of the most effective ways to do know your customers is by conducting a survey or an interview. This way, you’ll be able to receive feedback straight from them. Plus, you get to ask them directly about the things you want to know.
For starters, it’s suitable to start with customer surveys first. The data that you will get from your study will provide you with narrowing down the factors you need to conduct your competitive analysis.
However, if you wish for more detailed feedback, then an interview suits you the most. This way, you’ll be able to ask your customers for additional comments and suggestions, as well as follow-up questions.
Conducting Your Surveys and Interviews To Research Your Competition
If you want to start performing your surveys, here are some of the questions that you can ask your customers.
- What products are they currently using?
- Do they have alternatives for these products? If yes, what are they?
- Do they use these products with other brands?
- What do they think about these products?
- How do they use these products?
- Were there instances when they switched brands? Why?
Of course, if you think these questions aren’t suitable for your needs, you can always tweak these, or you can add more.
If you want to optimize your analysis, you may conduct a Net Promoter Score (NPS) question. All you have to do is ask this question:
“On a scale of 0 to 10, how likely are you to recommend our product or service to a colleague or friend.”
So what will the NPS score tell you?
Customers who gave you a score of 0 to 6 are known as detractors, who weren’t satisfied with your products and services. Therefore, you need to reach out to them proactively to avoid brand damages.
Those with a score of 7 to 8 are the passives. These customers are, indeed, satisfied with your services, but they aren’t happy enough to share their experiences with others.
Customers with a score of 9 to 10 are the promoters who are likely to be loyal to your brand. These people can make your business grow and expand through the referrals they can make.
That being said, the higher your NPS scores are, the more satisfied your customers are.
Also, if you want to know more details, you can include a follow-up question for the score they gave you: “what is your reason for your score?” This way, you will extract not only quantitative data but also qualitative information.
Constant provision of these surveys can help you a lot in knowing your beloved customers. You can perform them annually to update your data frequently.
If you’re wondering how you can perform these surveys, the answer is simple—approach them via email. To encourage them further to answer your questions, give them incentives. You can provide your customers with discount coupons or vouchers so you can make them happier. If you want to conduct an interview, simply inform them that you wish for a follow-up call through communicating platforms, like Zoom or Skype.
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