Competitor Analysis – A Simplified Seven-Step Overview
Why perform competitor analysis? Because you can’t expect to maintain a competitive edge if you don’t.
Competitor analysis opens the door to actionable insights worth their weight in gold. Areas in which your competitors are excelling, weaknesses you can leverage for your benefit, potential markets to target with your products and services – the list goes in. Still, understanding the importance of competitor analysis and knowing how to go about it are two entirely different things. Often, the most effective competitor analysis is performed by an experienced third party. This is the only way to conduct 100% objective and unbiased competitor analysis. When comparing your business to similar operators within your niche, it’s hard not to be influenced by loyalty to your brand.
Even so, performing effective competitor analysis in-house is perfectly possible. As a very rough and highly simplified overview, these are the basic steps involved:
Step 1: Identify the Competition
First, you’ll need to make a list of your main competitors—i.e., those running similar businesses to yours and targeting the same audience. Enter the keywords customers use to find businesses like yours and see what comes up in the listings.
Step 2: Take a Look at What They Do
The next step is to examine how competing businesses within your niche do business. Examine their website, scan through their social media pages, watch the videos they’ve published on YouTube, and read their blog posts. While doing so, make notes regarding their USP and general points of appeal from the perspective of their/your customers.
Step 3: Test Their Sales Funnel
Please go through their website's entire product purchase process (without actually buying anything) and see how it works. Subscribe to their mailing list, email their customer support team, analyse the generosity of the offers, and so on. As you progress, you’ll gradually build a detailed picture of the entire customer journey.
Step 4: Study Their Pricing Structure
Compare your competitor’s product pricing to your own and consider it in the context of overall value for money. Factor in things like free delivery, free returns, extensive warranties, price match guarantees, loyalty programs, special offers, and so on. Consider why customers would choose your products over those of another seller based on value for money.
Step 5: Scrutinise Their Digital Marketing Strategy
Next, take a good look at how the competing businesses approach digital marketing. Examine all aspects of their digital strategy, from SEO performance to PPC advertising and social media. From ad positioning to tone of voice to preferred media types (images, videos, Instagram reels, Tweets, etc.), consider who they are targeting and how the recipient will respond.
Step 6: Reviews, Comments and Complaints
One of the easiest ways to identify the strengths and weaknesses of a competing business is to peruse their archives of feedback. Every positive and negative review provides invaluable information about how customers perceive them. Great for identifying opportunities to capitalise on while at the same time helping you learn more about your target audience.
Step 7: Adjust Your Approach
Last, it would be best to have a reasonably clear picture of how the competitor you’ve been investigating does business. You should, therefore, be in the perfect position to craft a plan of action accordingly, perhaps based on a SWOT analysis – a great way of summarising all strengths, weaknesses, opportunities and threats related to a competitor.