For small business owners to stay ahead of the competition, they need to know what to expect. Your best bet for surviving the game is to keep checking the other team’s playbooks. However, unlike sports, this is not a scam in the business world. This is a tried and tested approach where everyone should be involved. This is known as competitive analysis. The following tips will help you strengthen your process and learn all you can from your competition.
Why Is Competitive Analysis Needed?
To identify trends and adapt your business to counter their strategies, you want to deeply understand what is motivating your competition. A thorough competitive analysis requires a bit more than a simple internet search to learn more about your competitors. It takes a well-planned and meticulously structured approach to understand how business is conducted on the other side of the fence.
Discover Who Your Key Competitors Are
Using your favorite search engine, type in the products and services you provide to get things started. After finding businesses that may meet the criteria, look into each business further by investigating additional information sources such as:
- News articles
- Social media
- Customer Reviews
- Any online threads or subgroups connected to your business category
- Sponsored ads
List and Categorize Your Competition
- The primary competition includes most of your competitors who share your exact business model and clientele profiles.
- The secondary competition includes businesses selling a higher- or lower-end version of the product or service you provide. Consider the difference between a big-box electronics store and a smaller neighborhood TV store to paint the picture.
- Tertiary competition is a business that has an indirect or tangential connection to yours. If you sold cars, they would sell tires.
Document and organize your findings for easy access by jotting down the basics such as name, location, product offerings, and more. It’s a particularly good practice to include the strengths and weaknesses of each competitor and pay close attention to those with strategies and practices you feel inspired by.
Learn from Your Competitors’ Websites and User Experience
After the findings of your competition have been organized, it’s time to look into how their digital space is presented. Start by looking over these items:
- Product listings
- Personality (this can come to life through the words used, the colors chosen, calls to action, positioning, and design)
- Mission statement
- Did they include a blog? What content can be found there?
- Is their website optimized to work for any screen size?
- How reliable are they at responding to emails?
- How do they address customers within their emails?
- How frequently do they run promotions?
- Do they sell products/services online?
The list above is not exhaustive. There are more things you can examine based on what makes sense for your business and what is important to your customers.
Identify Their Digital Strengths
Your competitors are using more tools on their websites than you can easily see. Most gain customer attention through SEO (search engine optimization) and careful deployment of the words customers type into search engines to find businesses like yours. If you want to identify keyword usage to overtake them, you need a tool. SEMRush.com and Ahrefs.com are just two websites that can help you identify keyword usage on competitor websites.
Price comparisons are an important component of competitive analysis. As you look over the competitor’s pricing and compare it to yours, be mindful of the fact that you don’t necessarily have to lower your prices to compete. In some cases, you may see that their prices are higher than yours, and that can be an indication of what consumers are willing to pay if they believe the value is there.
SWOT the Competition
Now that you’ve collected all of these elements, the final step is to run a SWOT analysis to break down everything you’ve learned. SWOT (an acronym typically used for Strengths, Weaknesses, Opportunities, and Threats) is an excellent way to categorize where your competitors are when you compare them to you. With this in mind, you’ll also want to run SWOT on your business. You can find SWOT analysis templates easily across the internet.
Competitive analysis will help you gain a foothold in comparison to your competition and may even give you an edge. But keep in mind, your competitors are likely performing analyses on you too. It’s best to perform your analysis several times a year (quarterly, for example) to stay as up-to-date as possible. A healthy rivalry can help build drive for all parties involved and even boost your business.