3 Major Questions Answered On How To Do A Competitive Analysis
While judging your company based on how it’s currently performing compared to how it performed in past years can give you a good idea of whether your business is growing, it won’t give you an overall view of your company’s place within the industry. Determine how your company stacks up by looking at your competitors and analyzing their marketing and sales efforts. Doing a “competitive analysis” may help you identify strategies and tactics that can benefit your marketing and sales efforts. You may also discover your competitors’ efforts that failed, which you can then avoid.
Performing a competitive analysis is easier said than done. Before you begin analyzing your competition’s marketing and sales efforts, it’s essential to answer three questions, which will help to inform your competitive analysis and ensure that you get the most out of it.
1. How Do I Identify My True Competition?
Just because a company operates within the same industry as you doesn’t make them a competitor. Generally speaking, competitors fit into three categories: primary competitors, secondary competitors, and tertiary competitors. However, when it comes to competitive analysis, there are only two categories that you should use to identify your competitors: direct competitors and indirect competitors. When performing a competitive analysis, you only need to concern yourself with direct competitors.
Any business offering products or services similar to yours and operates within your geographic area is a direct competitor. For example, if a Walgreens were located right across the road from a CVS, then they would be direct competitors since they both offer the same service (filling and refilling prescriptions) in the same location. Direct competition may also stray into the arena of SEO and search terms. While a company might not be a direct competitor on the service level, it may be a direct competitor for the keywords and phrases your business would like to rank.
An indirect competitor is a business that offers a product or service that is different than yours but solves the same customer need or challenge. For example, Domino’s and McDonald’s are restaurant chains that offer different products (pizza vs. burgers), but both satisfy the same need (fast food).
2. What Exactly Should I Compare?
Once you’ve identified your competitors and the elements which they are competing against you, determine what exactly it is you want to compare. You may want to compare several different things, but you can break down your analysis into three main areas: the competitor’s products (or services), their sales efforts, and their marketing efforts.
Your products (or services) are the main facet of your business, which is why comparing your products with your direct competitors’ is an excellent place to begin.
What You Should Consider
Consider identifying these specific things when researching your competitor’s products and/or services:
- The cost – The cost of a competitor’s service may be close to yours, or it may be more expensive or more affordable. Remember, the unique value proposition may affect the price. For example, some companies may focus on providing luxury, while others may focus on more affordable solutions that are still similar. The cost is always important to note.
- Their sales volume – While you’ll want to look at the revenue a competitor is taking in eventually, you should also take a look at their sales volume. For example, you should find out the number of one-on-one purchases of their product during a specific time as opposed to how much they made from those purchases.
- Their market share – A competitor’s market share is determined by dividing their total sales by the total sales of similar products within the industry over a fiscal period. Market share gives you an idea of how well they’re doing compared to other companies in your industry.
- Their customers’ needs – Identifying what your competition’s customer needs are can help you better understand your own customer needs, as well as discovering potential customer segments that you might be missing. Identifying the needs of your competition’s customers will require you to do some research. Analyze their followers on social media and read the comments that people are posting about the competitor in general. Reading online reviews can give you insight into customer needs as well.
- Their pricing strategy – A competitor’s pricing strategy could be helping (or hurting) their sales volume. Identify what their pricing strategy is to determine how beneficial they have been to move their product (for example, is their online pricing strategy different from their brick and mortar pricing strategy?).
- Their unique value proposition – A good company will make their unique value proposition visible. Take note of what makes their product/service unparalleled within the marketplace. For example, maybe the product is a common everyday item, but they’re offering a high-end, luxury version of it.
- Their distribution methods – The methods of distribution can affect how convenient it is for customers to purchase from them and boost the number of products that they sell. Find out how they handle shipping and customer expectations.
Performing a sales analysis on your competition will give you an idea of how successful they are, but it can be somewhat challenging if you don’t know what to look for. Simply comparing their revenue to your revenue won’t give you enough to go on (just because their annual revenue is more than yours does not mean they are performing better). Neither can comparing revenue give you much insight into how you can improve your sales.
Factors To Make It Easier
One of the reasons that performing a competitive sales analysis can be tricky is that the information can be a challenge to obtain. If you’re performing a competitive analysis on a publicly held company, then you should be able to find an annual sales report online. For privately-owned businesses, you might have to do more work. You may be able to identify some of your current customers who were once customers or leads to your competitor that can provide you with some valuable information. Look over some of these items that can help scope out your competition when performing a competitor sales analysis:
- Their sales process – Analyze what their sales process is (the steps they take to help nurture leads through the sales funnel).
- Their sales channels – Identify the various channels that the competitor is using to sell their product (for example, if their website has an e-commerce page, or if they’re selling their products using third-party online marketplaces such as Amazon).
- Their growth – Identify whether the competitor’s business has been expanding or whether it’s scaling down.
- Their partner reselling programs – Resellers are channel partners that act as intermediaries between companies and their end customers. Reseller partners can help increase sales by bringing in a larger audience and by making it more convenient for some customers to buy a company’s product. Identify whether your competitor has a partner reselling program in place.
- Their annual revenue – In addition to sales volume, look at how much money they are making yearly. Are their revenues increasing? Decreasing? Remaining steady?
- Their promotional discounts – How often are they providing discounts on their products/services? In some cases, discounts can help boost sales and bring in a larger customer base, while in other cases, it may be a desperate bid to sell a product that’s doing poorly.
- The involvement of sales personnel – Is their product relatively easy to purchase without assistance, or do they involve their salespeople more significantly to close sales?
Once you’ve performed a sales analysis, you’ll want to look into the marketing efforts of your competition. Their marketing can have a significant impact on their sales.
Your Checklist For An Easy Comparison
If you want to perform a basic marketing comparison, just look through a competitor’s website for the following marketing tactics and identify how they compare to yours:
- Blog – Do they have a blog? How often do they publish new content? Does their blog have social share buttons on it? If so, how many likes or shares are they getting? Is there a comment section, and are readers posting comments?
- Whitepapers or eBooks – Do they have any whitepapers or eBooks available for free on their site? How prominently do they promote their whitepapers and/or eBooks? Are various whitepapers and eBooks available? Are they relevant to the page that they on?
- Videos or Webinars – Videos and webinars are both popular ways to deliver content to users. They’re easy to digest and they provide insight into the company’s personality. Take note of any videos or webinars offered on their site, how often they post new video content or hold webinars, and how engaged their users are with them.
- Podcasts – Not many businesses have implemented podcasts as part of their content strategy. Those that have are likely pouring resources into their content marketing campaign. If they offer podcasts, take note of what topics they’re covering, whether they have special guests on, how many people are listening to them, and how often they are producing them.
- Visual Content – Good visual content indicates a solid content strategy. People tend to be more attracted to visual content than text, which is why many businesses will post videos, images, GIFs, infographics, charts, and more to break up the monotony of any text that they have on their site.
- FAQ Section – An FAQ section can be beneficial for customers. Do they have an FAQ section and how easy is it to find? How in-depth are the questions and answers provided in the FAQ section?
- Featured Articles – Featured articles are articles displayed on their homepage. Do they have a featured article? When was it published? If it’s relatively new, they likely publish fresh content regularly. If it’s old, their content may be outdated.
- Press Releases – Do you see any press releases on their site? Press releases help increase brand awareness and build yourself up as an authority within the industry.
- Media Kit – Media kits include information about a business, product, or event that can be easily used by journalists who are writing about the company. A business that provides a media kit on their website is making it easier for their brand to get exposure.
- Case Studies – Case studies are in-depth examinations of how a customer used and benefited from a product/service. The presence of case studies allows potential customers to get a better understanding of how effective a company’s products or services are.
- Published Guides & Data Sheets – Competitors that publish guides and data sheets on their site have the data needed to back up the effectiveness of their products/services, which can be very helpful in convincing customers to trust their brand and to make a purchase.
- Online & Offline Campaigns – Be sure to look at both online campaigns (such as campaigns they’re running on social media) as well as offline campaigns (such as TV commercials and billboard ads). How extensive are their campaigns? How long are they running? Are their online and offline campaigns connected?
3. What Should I Look For In Their Marketing?
Doing a brief comparison of your marketing efforts and those of a competitor, as noted above, will be helpful to you. However, if you want to perform a more in-depth competitor analysis of a competing company’s marketing strategy, look into the following elements.
The previous list contained all of the types of content you should look for. Content is what draws new leads and what helps to establish your brand as an authority (thereby building trust). However, simply publishing a variety of content on your site isn’t an indication of a good content strategy. In addition to looking for different types of content, you’ll need to analyze the content itself as well.
What To Consider When Analyzing
These are some of the elements to look for when analyzing the content of a competitor:
- Accuracy – As a direct competitor, you should be familiar with the subject matter they cover. Read (or view) their content. How accurate are they? Do they draw incorrect conclusions? Do they present false facts? Accuracy is a good indicator of their authority.
- Spelling & Grammar – Take note of spelling and grammar mistakes. If there’s a lot of them, it means that their content strategy is sloppy (there’s a good chance that they aren’t using an editor for their written content).
- Topics – What kinds of topics are they covering? Are the topics relevant to their brand? How in-depth do they go? Do their articles simply scratch the surface of the topic, or do they go into detail?
- Tone – What tone do they use in their content? Is it appropriate for their brand? Is it consistent throughout their content? An appropriate tone that remains consistent is a sign of a strong brand identity.
- Readability – How readable is their content? Do they break up their written content into sections? Do they make use of bulleted lists and numbered lists when possible? Do they use multiple headers? Do they use carefully chosen images to break up the text? The less readable it is, the less effective it probably is.
- Access – Can anyone read their content, or are readers required to opt-in to get access?
- Author(s) – Who writes their content? Do they have a single author? Is there an in-house team of content writers? Do they source writers from all over?
- Byline or Bios – Check content for bylines or bios. These help readers identify who wrote what article/blog post, which makes it easier to track posts. Having these can help increase brand authority as well.
Their SEO Structure
If your competitor has content that is of similarly high quality as your own, but it seems to be more effective, there’s a possibility it’s because of their SEO structure. A good SEO structure enables higher page rankings and brings in more web traffic. Inspect the SEO structure of your competition by identifying what keywords they are ranking for (which can also provide you with new keywords that you can use as well) and how they are using those keywords. A good SEO structure will employ relevant, high-quality keywords in the URL architecture, page titles, H1 tags, body content, internal links, and image alt text.
In addition to identifying the quality of their content, determine if their content strategy is effective. Start by looking at how engaged people are with their content. You can do this by identifying how many shares, likes, and comments their content has. Go beyond the numbers and look at whether the comments are negative, positive, or a combination of both. You should also track readers on social media to see if they are commenting on specific topics more than others and whether they are responding better to updates about certain content on social media.
Inbound Links & Referring URLs
There are plenty of tools available that allow you to identify the inbound links and referring URLs of a given website. These are important to SEO because they indicate to Google that a page is of high quality (depending on the link source), boosting the page ranking. Inbound links are also important because it indicates a strong brand authority. Authoritative websites don’t add a link to another website unless it has high-quality content. All these links bring in more visitors.
By identifying the inbound links and referring URLs of a competitor, you can get a good idea of their brand authority, especially if those links are coming from popular websites. It may also introduce you to new websites that were unfamiliar to you and, in turn, present an opportunity to earn inbound links for your site.
Paid Advertising Presence (Google Ads, Bing, Facebook, etc)
Paid advertising is a cost-effective way to target a specific audience. Also referred to as PPC (pay per click) ads, you can run them on search engines, such as Bing and Google, as well as some social media platforms, such as Facebook. Look for any PPC campaigns your competitor is running and analyze their campaigns to see what they are promoting and who they are targeting. This search can give you an idea for new channels to run PPC ads on, who to target, and what kind of content is effective for PPC advertising.
Social Media Presence
A strong social media presence can significantly increase brand awareness and help drive traffic to your site. Here are a few ways to gauge the effectiveness of a competitor’s social media strategy:
- Which Social Channels Do They Use? – Find out what social platforms your competitor is using. Most businesses have at least two or three social media pages, including Facebook and Twitter; however, there are hundreds of different channels out there, some of which may be more niche than others, but that could be relevant in your industry.
- Do They Promote Their Social Presence? – Do they have social share buttons on their content to make it easy for readers to share with their accounts? Do they have links to their social media pages on their website? Do they have calls-to-action encouraging people to follow them on social media?
- How Strong Is Their Social Presence? – Having a social media page doesn’t necessarily mean that they have a “presence.” Take note of how many followers they have on each channel, how often they post to each channel, and how engaged followers are with their content (do people comment on posts frequently?). Do their followers appear to be organic and not purchased (a good sign of this is an account with 40,000 followers but little to no engagement)?
- What kind of content do they post on social platforms? – Are they posting original content? Are they sharing content from other sources? Are they trying to drive people to landing pages to generate new leads? Are they posting questions to promote engagement? The type of content they post indicates what their social media marketing goals are.
- Do they interact with their followers? – Does the competitor address questions and concerns posted to their social page? Do they respond to comments made on the content they post? Do they contribute to discussions?
Using The Big TWO’S (Threats & Weakness, Opportunities & Strengths)
As you analyze the products/services, sales, and marketing of your competitor, keep track of their big TWO’S. The big TWO’S allows you to assess your competitor as a whole using all of the information that you’ve gathered.
Basic List To Get Started
Some basic questions you’ll want to answer to create a big TWO’S assessment of your competition include:
- What are your competitor’s strengths? – For example, if they have hundreds of thousands of followers on several different social media platforms that are regularly engaging with them, then social media marketing may be their strength.
- What are your competitor’s advantages over you? – Their strengths may not be a significant advantage over you if you have similar strengths. Take note of an area that they’re doing well in that you are not. For example, maybe they have a much wider variety of content than you have, resulting in more engagement.
- What are your competitor’s weaknesses? – Look at the areas in which your competitor is weak. For example, maybe they aren’t earning a lot of inbound links and referring URLs. By focusing on this area yourself, you may be able to create a bigger advantage over them.
- Where do you have an advantage over your competitor? – Their weakness may not be your strength. Identify areas in which you are particularly strong, but are much weaker. Be sure to identify why you are stronger and focus on making this a distinguishing point between you and them. For example, maybe they have lots of content, but it’s not in-depth at all, and yours is. You could begin focusing on creating even more long-form, in-depth content to build on this advantage.
- What areas can your competitor improve in? – There are some areas in which your competitor could use improvement, but that aren’t necessarily a weakness. You can use this information to build an advantage over them as well by making sure that these areas become a strength for you.
- In what areas is your competitor a threat to you? – Identify areas in which they may be a threat. For example, they may be currently expanding and have a very effective pricing strategy that has boosted their sales volume as well as their revenue. Find a way to address these areas to become more competitive.
- What opportunities have they identified? – They may have identified opportunities that are unfamiliar to you. For example, as a result of your competitive analysis, you may have identified a type of content that tends to engage people more. Or maybe they have a presence on a social channel that has allowed them to reach a larger audience than you may have thought possible.
Creating A Baseline For Comparison
One of the first things that you need to do before you begin analyzing your competition is to create a baseline for comparison. All of the information and insight you gain from a competitive analysis won’t do much good if you have nothing to compare it to. You can use the same steps listed here to evaluate your own company’s product, sales, and marketing efforts. Then you’ll have a baseline that you can use to compare to your competitors.
Make Sure to Take Action From Your Findings
Performing a competitive analysis can give you a good idea of where your own company stands within your industry and how successful you are when compared to your competition. However, you need to take full advantage of your analysis by actually taking action. A comprehensive competitive analysis should allow you to pinpoint areas within your own business that require improvement and guide you to becoming even more competitive within your industry.