Business success can be delayed without a proper competitive analysis, which is the understanding of the strengths and weaknesses of the competitors
We live in an era where even the weirdest business ideas face intense competition. Unless you’re selling technology from Area 51 with an exclusive patent, prepare to battle it out in the marketing arena.
With the World Wide Web turning into a war zone for businesses, getting target users to a website, at least for a few seconds, will draw the line between a winner and loser. With a surge in the intensity of the competition, this trend is forecasted to continue in the future.
Ensuring that your target market stays glued to your business and not your competitors, requires a 24×7 watchful eye. If you are a marketing professional or a business owner, scrutinizing the marketing efforts of your competitors must be part of your daily task.
Emulating and adapting strategies that work for your competitor will ensure growth, opportunities, and leads for your business. However, the process of scrutinizing the products, sales, and marketing strategies of your competitors requires an in-depth knowledge of how to do a competitive analysis.
This blog is tailored for you if you are looking for kick-ass competitive analysis strategies to improve upon your competitors. The tips that you are going to learn from this blog will ensure that your marketing efforts stay relevant to the target audience.
What is Competitive Analysis?
Competitive Analysis is a strategy deployed by businesses to determine how top competitors use different marketing tactics to generate more leads, sales, and traction to products or services. Competition analysis helps in understanding the strengths and weaknesses of the competitors to build a concrete marketing strategy for businesses.
Importance of Analyzing Your Competitor in Marketing Terms
The advancements in marketing are hard to catch hold off unless you have a dedicated team that tests new strategies and measures success rate. In most cases, this becomes impossible, and your competitors may cut across you with strategies that you have not yet tried out. This is where competitive analysis comes to your rescue.
An in-depth competitor analysis will ensure that you stay on top of your marketing activities and reap the full benefit. This includes factors such as identifying the strengths, weaknesses, and opportunities of the competitors and making decisive changes to the current marketing strategy.
A proper competitive analysis will enable you to market and sell products and services effectively. It can additionally pave the way for your business to establish a success route that none of the other competitors have tried.
Before seeing how competition analysis helps in achieving business success for you, let’s dive deeper into the basics of competitive analysis that can be the stepping stone to your success.
How to Identify and Evaluate Your Competitors?
In today’s changing times, where the internet is both the provider and destroyer, any other website where your target audience spent time is a business threat. However, it is impossible to analyze such a large sample, and the information that you get may not help to improve the marketing strategy of your company.
What you need is the list of competitors who are into the same niche and selling similar products or services that directly compete with yours. For example, the competitor of a kids’ subscription website cannot be a subscription site that caters to babies.
In the above scenario, even though the businesses are indirect competitors, their target audience differs, and so will the marketing strategies deployed. What you, as a business owner or market, should look for is direct competitors.
Who is a direct competitor?
A direct competitor is a business that provides the same type of products or services as yours and to the same target audience that you cater to.
That said, ignoring the indirect competitors is not recommended as they are in the same business and, during the later stage, can delve into your territory. For example, a baby subscription box website may extend their services to kids. In such cases, they become your direct competitor.
Make it a habit to do competitor analysis regularly to ensure that there is no new competition lurking within your radar.
Keep a Tab on Products and Services Offered by Your Competitors
Some businesses nail the marketing in the head. Still, in a few months, the strategy fails, and the company slowly disintegrates. The most common reason for businesses perishing is the lack of innovation with the products.
The products and services that you offer is the driving factor that decides the success of any marketing strategy. Innovation and experiments are continually happening within any industry, be it a product or service.
Adapting to the changes is an essential factor that will determine the future of businesses. The failure to emulate and modify strategies are the prime reasons that push companies out of business.
A proper competitive analysis will ensure that you don’t miss out on the strategies incorporated by your competitors to succeed. The approach could be anything from tweaking the pricing to adding discounts or incorporating a new feature to the product\service.
The most common question you should ask:
One of the most important factors that businesses must consider while doing a competitive analysis is the cost. Different companies have different packages for products and services. However, the moment users find they get similar services at a lower price, they may turn incognito.
The best way to ensure that the cost does not dissuade the users is by making it competitive enough based on the industry standards. In addition to this, if you think that you’re providing premium services that are unmatched in the industry, ensure the users understand this beyond doubts.
Also, if you are offering premium services or products, you must ensure that the competitor that you select also offers premium services. Forgetting to filter the competitors may lead to wrong marketing strategies that are hard to drive ROI.
Additionally, you must also look into the pricing of the competitors’ online and offline (brick and mortar) stores. Some businesses have both presences, and the pricing differs for the same product.
The market share of a business is also crucial before you zero-down it as a competitor. A company that just entered the business may not be your recommended competitor as they are yet to penetrate into the market. It would help if you looked for companies that have a sizable number of sales/clients, whichever is applicable for you.
By ensuring that they have a relatively large market share, you can align your strategies in achieving a share of it. This is, after all, the outcome that you need for doing the competitive analysis.
Understand the Characteristics of the Target Audience
Meeting the expectations of the target audience will ensure that your business retains the clients and customers. The easiest way to understand the characteristics of the target audience is through a competitive analysis.
There is a possibility that your product or service might interest a large section of the crowd. However, not all are your target audience. Your targets are the ones that are using the services of your direct competitors and your prospective future customers.
Keeping a tab on the social network and community profiles of the competitors will provide you clues about the type of audience they interact with. Besides, target concerns and the weaknesses of the competitors can be easily identified by analyzing social interactions.
Identify the USP of the Competitors
As we discussed before, if you are out there doing business, competitors follow suit. In that case, what is it that makes one company successful and the other a failure? The answer to this is a Unique Selling Proposition (USP).
USP can be defined as a distinguishing factor – a product, service, or even customer service for that reason, that makes the target audience choose your competitor above yours.
Once you identify the USP of your competitor, that paves the way to identify your weaknesses. Additionally, you can reverse-engineer the strategy to fit your business so that you put a stiff competition.
In-depth Analysis of the Competitor’s Marketing Tactics and Results
Businesses use different marketing tactics to earn customers. The process used by companies to tap into the customers may differ. However, understanding their sales process will enable your business to prepare a tailored marketing strategy that drives results.
If you are a small or medium-sized business, your focus will be naturally to compete with companies within your segment. However, if you are a multimillion-dollar business, the sales strategy and the result that is generated can be retrieved from the annual reports that are published by your competitors.
If you fall under the first category, getting the information about the marketing strategy will require more effort. To understand the marketing strategy of the competitor, you have to first dig deep into their sales process.
Understanding the Sales Process
Understanding a customer’s journey through the different marketing efforts of your competitor is critical to emulate. A process can be defined as the journey made by your target audience through a set of predefined steps that qualify a prospect into a customer.
A typical sales process consists of seven stages: Finding the Prospect, Preparing the Prospect, Approaching the Prospect, Presenting to the Prospect, Countering the Objections of the Prospect, Turing Prospect into Customer, and Retainer Strategies.
By understanding the sales process of the competitors, you can avoid making the same mistakes that they did and spend the time churning up more productive strategies.
Having a sales funnel is an important aspect that determines the sales process. A sales funnel ensures that your target audience passes through a journey that qualifies them to buy your product or service. A marketing funnel/sales funnel/revenue funnel can be again divided into seven phases.
Awareness Phase- In this stage, the prospects come to know about a solution to their problem.
Interest Phase- The prospects are now looking for products or services that can provide the best solution.
Evaluation Phase- This is when they find multiple offerings providing the same solution and assess the merits and demerits of each.
Decision Phase- Your prospect has zeroed-down on your service, and now they do price negotiations.
Purchase Phase- The prospect becomes a customer.
Reevaluation Phase- This is when the customers will once again revisit the evaluation stage wherein they decide to renew the contract or not.
Repurchase Phase- In this stage, the customer repurchases the same product or service.
Mining out Marketing Channels
Gone are the days when companies relied on cold calls to reach out to prospective customers. Now with big data and other sophisticated tools generating customer insights, businesses focus more on using marketing channels that best suit their industry and the target audience.
Search engines, social media, webinars, and referrals have become the new marketing channels that drive businesses. You need to identify the channels that are frequently used by competitors for lead generation and find ways to penetrate.
If your competitors are using just one channel, you have an opportunity to use the other channels provided; your target audience is active on those. A majority of the online service providers are now shifting to free webinars to engage with their prospects and is turning out to be a successful marketing channel.
When it comes to brick and mortar stores, there is a growing affinity to host events or participate in events that are frequented by the target audience. If you find your competitors deploying these marketing techniques, ensure that you don’t miss out on these.
Check the Success of their Marketing Strategy
Measuring the success of the competitor is vital to optimize your marketing campaigns. If your competitor has ruled out channels that failed to drive the desired output, you can avoid doing the same.
Understanding your competitors’ Key Performance Indicators (KPI) and whether or not the marketing campaigns achieved will provide you insights on the success rate of the campaign. An overall picture of the success rate of your competitors’ marketing strategy will give you critical metrics about what works and what doesn’t.
This in-depth knowledge will help in spending your dollars judiciously and effectively to achieve marketing success.
SWOT stands for Strength, Weakness, Opportunity, and Threat. The reason why you do a SWOT analysis is to identify the strengths, weaknesses, opportunities, and threats of your company and the competitors.
SWOT is now considered the most crucial competitor analysis framework worldwide. It helps businesses make decisions based on the internal and external factors that can influence the projected growth.
While the Strength and Weakness of a company is an internal factor, Opportunity and Threats are determined by external factors such as the scope of the project or competitors’ market share.
An in-depth SWOT analysis will help you identify the strengths and opportunities of your business to overcome the weakness.
How to Do a Quick Competitor Analysis in 30 Minutes
Step 1: Identify the Top 5 Competitors
Follow the strategy that I shared at the beginning of the article to identify the top 5 direct competitors to your product and services that you offer. If you are confused with finding the best competitor, use SEMRush or Ahrefs tool to find them. If you are not ready to spend on the subscription for these tools or not interested in starting a trial, use Google search.
Type in the keywords that you want to rank for on Search Engines and see the businesses that are ranking on top five positions. These businesses usually qualify the traits that you are looking for in a direct competitor.
Step 2: Understand the Content Marketing Strategy of the Competitor
Check the kind of content that the competitors have published on their websites. If you find blogs, white papers, e-books, etc., the competitors are inclined towards inbound marketing channels than outbound channels like PPC or social media promotions.
An in-depth analysis of the content marketing strategy of the competitors will also reveal the quality of the content and even the topics that have helped them in gaining more traction and leads.
Also, keep a tab on how frequently they come up with the content resource. If you want to beat the competitors, it’s imperative to produce more content regularly with superior quality.
Step 3: Understand The Competitor’s SEO Strategy
There is a high chance that your content marketing strategy is superior to your competitor. However, when it comes to traction, you fall behind the competitor. This could be the result of the competitor optimizing their pages better.
Try to understand the SEO strategies deployed by the competitor by using Ahrefs or SEMRush. Check for these factors:
- Analyze the number of keywords ranking on Google and their positions
- Keep a tab on the number of referring domains that are linking back to the website.
- Check how they have structured the content
- See whether they have a better internal linking structure
- Check for the images and other multimedia content
- Check for the speed of the website
- Check how properly they have optimized the meta title and description of the website.
Step 4: Check for the Competitors Social Media Strategy
Social Media traction is now a critical deciding factor for success. Companies maintain and frequently update their content on social media to keep the target audience engaged. And of course, social media has now become an easy route to get faster redressal of concerns.
Check if your competitors are active on social media channels and see what the strategies they follow to increase their follower base are. Also, check out the social media integration within your competitors’ site and keep a note of the number of likes and shares that they are receiving.
In addition to this, you can also keep a tab on the kind of posts that they push out through each social media channel. You have to understand that the people active on different social media channels have a different persona, and the content that goes out should match with the interest of the target audience.
Companies that fail to create social media content that interests the target audience receive less reach via social media channels. Therefore, to ensure you approach the right targets with the right set of posts, take a look at what is working for your competitors.
There are also chances that your competitor is using influencer profiles to promote their business. Check if they have micro or macro-influencers who are expanding their business through social media handles.
Step 5: Identify Areas for Improvement
By performing the steps mentioned above, you now know how your competitors are performing and the strategies that they use to keep up the pace of business growth. Now it’s your turn to emulate this by identifying the areas that require improvements.
Each business has a unique style for marketing. Even though this cannot be replicated fully, you have to come up with a reliable formula that can create a marketing style for your business. You can create your own marketing strategy when you try to improve upon what is already tried and tested by your competitors.