Creating a competitor analysis is a great way to figure out which companies are after the same customers as you, and what your business could be doing to outperform them.
Not only will studying the competition’s goods and strategies help you identify ways you might sell more effectively, you could discover market gaps or industry trends you can leverage to develop new products or services.
Here’s how to create a competitor analysis in 4 steps.
1. Identify the competition
There are a number of ways you can learn who your main competitors are and what products or services they offer.
You could, for example:
- Do a simple online search for products or companies similar to yours
- Consult business directories, industry organizations, or your Chamber of Commerce
- Look for upcoming trade shows, exhibitions, and conferences
You might also speak with customers, prospects, or your sales team about comparable businesses they’ve encountered.
Once you’ve identified who your top opponents are, you should reach out—in person, by phone, over email, or through their website—and conduct a thorough (but anonymous) audit of everything they sell.
2. Break down their pricing strategy
Part of the goal for researching your competition is to gather as much information as you can about:
- Their prices and any discounts they offer
- Shipping or delivery options they provide, and how much they charge
- Customer incentives or loyalty programs they sponsor
Once you discover how a rival has laid out their pricing and perks, you can use that information to improve your own strategy.
This could include charging more for a superior product (which can make it more attractive to the right audience), or cutting costs and charging less for a similar product to attract a price-conscious portion of the same market.
3. Study their sales and marketing approach
It’s important to understand how the competition is reaching their audience so you can compare their sales and marketing approach with your own.
In addition to tracking them down on various social media sites (and studying their content strategy when you do), you should determine if your competitors:
- Take advantage of multiple sales channels (do they sell in person, by phone, through their website, on social media, or via direct mail, for example?)
- Work out of multiple locations (perhaps in an effort to cover more territory)
- Leverage third-party resellers or channel partnership programs (to better service different markets, for example)
It will add fuel to your strategy if you also sift through your rival’s reviews and uncover what buyers like or don’t like about their products, sales process, or customer support platform.
4. Analyze their success
Nailing down exactly what’s behind your competitor’s success can be tricky. But the more effort you make to uncover what drives them, the more effective any plan to outperform them will be.
If they’re a public company, you should be able to find details about their growth and achievements (like sales volume, revenue, and how many people they employ, for example) online. If they’re a private business, you may need to get a little creative.
You could, for example:
- Use your company data to identify and reach out to customers (or new leads) who’ve deal with your opponent in the past
- Get familiar with their business actions and reputation by seeking out news stories and press releases online
- Dig into their company vision, mission, and values—and look for any connections between these and their customer base (do they appeal to an environmentally-minded audience, for example?)
It’s inevitable that your competitor analysis will reveal a great deal about what the businesses you’re competing with are doing right.
But by also looking out for what they could be doing better, you can avoid their mistakes, capitalize on what they’ve missed, and boost your own success as a result.