Competitive analysis is one of the most important tasks a business owner can undertake.
There’s a reason every successful company spends a lot of time (and sometimes money) in the process, and why most new companies start their journey by assessing their competitors. But it is something that you have to do no matter where you are in your business life cycle.
And that’s because competitive analysis is like a multi-tool for your company. Not only does it allow you to understand the competitors you are up against, it also shows you how your company can do more. Looking outside will help you understand what to do inside. Examining your competitors’ successes and failures can help you plan the long road.
And that’s exactly what entrepreneurs want: understand how to get ahead in their industry. How to stand out and become the biggest fish in the pond.
Therefore, your company should invest time and money in competitive research. Because it could very well be the differentiator that makes your sales and success soar.
Why it is important to assess the competition (continue)
If you’re just starting your business, you know you want to do whatever you can to get your competitive analysis right. If you’ve had quite a bit of success already, you probably did a pretty good job the first time around.
But whether you’re just starting out or have been serving people for years, it never hurts to know what your competition is up to. And your competitive analysis can probably always be better.
Do you think Starbucks has come to the fore in the coffee industry and completely forgot about its competitors? Do you think McDonald’s is not keeping up with what Burger King and Wendy’s are doing? These companies are at the forefront of their industry for one reason: They are always looking for things they can do better.
And that’s impossible without investing in the resources to find out what to expect.
What makes a good competitive analysis?
Many people think that the question when assessing the effectiveness of competitive research is “Do I understand my competitors better?” The question they really need to ask is, “I do best understand my competitors? “
Because if you put the time and effort into it, you may as well do the best job possible.
Stephanie Nivinskus, CEO of SizzleForce Marketing, shared her competitive analysis strategy during a DigitalMarketer Certified Partner Training Day. Stephanie has helped many clients conduct innovative competitive research that will help them stand out from their competitors.
Any level of competitive analysis will be useful. But when the most successful companies conduct competitive research, they go all-in. They examine their competition from every possible angle and try to put themselves in their competitors’ shoes.
So if there was one general rule for good and effective competitive analysis it would be: Be creative. If you think outside the box, you can not only check your competition effectively. You will also be able to find the solutions that will set you apart from others.
However, if you want a little more specificity, here are some best practices that can help you take your competitive analysis from good to good.
1. Do it over the course of a few days
Competitive analysis isn’t that difficult – all you need is the ability to research and identify differences between you and your competition.
But it’s time consuming and this part shouldn’t be discounted. In fact, it is probably the most common mistake entrepreneurs make when analyzing competition.
Really effective competitive analysis cannot be done in the course of a day. There is no way you (or your team) can do the research necessary to paint a complete picture of your competition in less than 24 hours. To build this understanding, you need to take the time to get the process right.
Because after you have carried out the research, you still have to analyze and organize the results found. Then you need to compare that information and compare it to what you are doing.
It’s a multi-step process that really shouldn’t be rushed. So when the time comes to join forces with your team and explore the landscape of your industry, you should be ready to spend the time required to do so. If you devote a full week to the process, you will likely be far more satisfied with the results than if you tried to speed it up.
2. Identify differentiators, not expectations
This is a common problem, especially with smaller and newer businesses. When trying to identify the differences between them and their larger competitors, they say that one thing that sets them apart is that “we really care” or “we are more personal”.
And while these things may be true, new and potential customers won’t care.
Distinguishing features are recognizable or tangible. They are things that make you unique, as well as things that your customer can see almost immediately. Great service and personality are an expectation that doesn’t set you apart from your competition.
Once you are known, people will begin to like and appreciate the personality traits of your company.
Just ask Chick-Fil-A – staff courtesy is a staple of business.
This does not mean that there cannot be any distinguishing features that may not be immediately apparent, but could still be effective if marketed correctly. If you’re a coffee shop, you may have a variety of organic options or your coffee may be “responsibly sourced”. These are potential differences that could actually set you apart from your competitors. It is only up to you to make this known.
That being said, your distinguishing features should be fairly obvious. It depends either on the product or services you offer, as well as your price.
The expectations that you have of yourself and your company are high and can often be the things that make your customers become loyal. But they won’t be able to know this without going through the door, so you can’t rely on them to make you stand out.
3. Think beyond the price points
The key to effective competitive analysis is to think about every single opportunity you can use to gain a competitive advantage. What that really means is the key to effective competitive analysis, asking yourself correct Ask.
And yes, these questions often go well beyond the price.
Price may be the most important thing for most consumers, but there are plenty of other things that can help you stand out and get people to choose you.
That could be things like diversity. If your business is female or minority owned, it should be very publicized (and knowing this can help find programs or grants that you may qualify for).
It could also find an advantage in marketing strategy. By researching your competitors’ content marketing efforts, you can potentially find unique strategies that can set you apart. Or maybe it develops a good reward system that rewards loyal customers for shopping with you. These are things that set you apart from your competitors, especially if they’re taller than you.
There are many other things that you need to find out. What niche do you fill? Is your customer avatar different from that of your competitors? What is your company’s history and how can you use it? These are all valid questions that can help you stand out, and which people only think of often when they put the time and effort into them.
Every aspect of your business is important. Don’t fail to promote them if you think doing so will give you an advantage.
If you remember these practices while conducting competitive research, you will get an analysis that will really help you position your business.
Once you figure out how these differentiators work for you, you will attract more customers than ever before.