Competitive analysis is one of the most important tasks a business owner can undertake.
There’s a reason why every successful company invests lots of time (and sometimes even money) into the process, and why most new businesses start their journey by sizing up their competitors. But it’s something you need to be doing no matter where you are in your business life cycle.
And that’s because competitive analysis is like a multi-tool for your business. It not only allows you to understand the competitors that you’re up against, but it also shows you all the ways your business could be doing more. By taking a look to the outside, you can better understand what you need to be doing on the inside. Examining your competitors’ success and failures lets you plan for the long road ahead.
And that’s truly what businessowners want: to understand how you can find an edge in your industry. How you can set yourself apart and become the biggest fish in the pond.
That’s why your business should be investing time and money into competitive analysis. Because it could very well be the difference maker that ends up skyrocketing your sales and success.
Why It’s Important to (Continue) to Gauge the Competition
If you’re just starting your business, then you know you’ll want to do everything to get your competitive analysis right. If you’ve already had a fair amount of success, then chances are you did a pretty good job at it the first time around.
But no matter if you’re just starting out or have been serving people for years, it never hurts to know what your competition is up to. And, chances are, your competitive analysis can always be better.
Do you think Starbucks got to the top of the coffee industry and completely forgot about their competitors? Do you think McDonald’s doesn’t keep up with what Burger King and Wendy’s are doing? Those businesses are at the top of their industries for a reason: they always look for the things that can make them better.
And it’s impossible to do that without investing in the resources to figure out what you’re up against.
What Makes for Good Competitive Analysis
A lot of people think that the question to gauge competitive analysis effectiveness is, “do I better understand my competitors?” The question they really need to be asking is, “Do I best understand my competitors?”
Because, if you’re going to put the time and effort, you might as well do the best job that you can.
Stephanie Nivinskus, the CEO of SizzleForce Marketing, shared her competitive analysis strategy during a DigitalMarketer Certified Partner Training Day. Stephanie has helped many clients do cutting-edge competitive analysis that’s allowed them to get an edge on their competitors.
Any of level of competitive analysis will be useful. But when the most successful companies do competitive analysis, 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, effective competitive analysis, it would be this: be creative. Those who think outside the box won’t just be able to examine their competition effectively; they’ll also be able to come up with the solutions that will set them apart.
But, if you want a little more specificity, here’s a few best practices that can help you take your competitive analysis form good to great.
1. Do it over the course of a few days
Competitive analysis isn’t that difficult—all it takes is the ability to do research and identify differences between yourself and your competition.
But it is time consuming, and that part shouldn’t be discounted. In fact, it’s probably the most common mistake businessowners make when it comes to competitive analysis.
Truly effective competitive analysis can’t be done in the course of a day. There’s no way you (or your team) will be able to do the research necessary to paint a complete picture of your competition in less than 24 hours. To build that understanding, you need to take the time to do the process right.
Because, after you do the research, you’re still going to have to analyze and organize the results that you found. Then you have to compare and contrast that information to what you do.
It’s a multistep process, and one that really shouldn’t be rushed. So, when it is time to knuckle down with your team and examine the landscape of your industry, be prepared to spend the time it takes. If you devote an entire week to the process, you’ll likely be way happier with the results than if you try to rush it.
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 one thing that sets them apart is that “we really care” or “we’re more personable.”
And even though those things may be true, new and potential customers aren’t going to care.
Differentiators are noticeable or tangible. They’re things that make you unique, as well as things that your customer can tell almost immediately. Great service and personability is an expectation, not something that differentiates you from your competition.
Once you are well-known, then people will start to like and appreciate the personality-based traits of your business.
Just ask Chick-Fil-A—their employee politeness is a staple of the business.
Now that doesn’t mean there can’t be some differentiators that may not be immediately noticeable but could still be effective if marketed correctly. If you’re a coffee shop, maybe you offer a variety of organic options or your coffee is “responsibly sourced.” Those are potential differences that could actually set you apart from your competitors, it’s just on you to make that known.
Other than that, your differentiators should be relatively obvious. It will either be based in the product or services you offer, as well as your price.
Those expectations that you set for yourself and your business are great, and they can oftentimes be the things that end up getting your customers to be loyal. But they won’t be able to know that without walking in the door, so you can’t rely on them to set you apart.
3. Think beyond the price points
The key to effective competitive analysis is to think of every single way that you can get an edge on your competition. So what that really means is the key to effective competitive analysis is to ask yourself the right questions.
And yes, those questions often go far beyond the price.
The price may be most important thing to most consumers, but there are plenty of other things that can help you stand out and have people choose you.
That could be things like diversity. If your business is woman or minority-owned, that’s something that you should make very well known (and knowing this means you can find programs or grants that you may qualify for).
It could also be finding an edge in marketing strategy. Maybe by examining your competitors’ content marketing efforts, you’ll be able to figure out unique strategies that can set you apart. Or maybe it’s developing a good reward system that rewards loyal customers for shopping with you. Those are things that differentiate you from competitors, especially if they are bigger than you.
There are plenty of other things you’ll need to figure out. What niche do you fill? Does your customer avatar differ from that of your competitors? What’s the story of your business, and how can you use it? These are all valid questions that can help you find ways to stand out, and ones that people won’t often think of unless they put the time and effort in.
Every aspect of your business is important. Don’t neglect to advertise them if you think it will give you an advantage.
If you remember these practices when doing competitive analysis, you’re going to come away with an analysis that will really help you know how to position your business.
Then, once you figure out how to make those differentiators work for you, you’ll win over more customers than ever before.