Using Competitive Analysis to Cash in on More BusinessLearn what your edge is — or how to create one.
In a crowded marketplace, it’s essential to have an edge over the competition. To do that, you need to understand it.
Competitive analysis goes beyond visiting other businesses in your industry. You’ll want to evaluate the competition using specific criteria so you can better understand your relative strengths and weaknesses and what sets, or could set, your business apart.
Look to the leaders
“It’s important to know what your competitors are doing because it really sets the industry bar,” said Maralyn Beck, founder and CEO of BRAVE Social, a digital media consulting firm.
“For instance, I always tell clients there is a good, better and best scenario, and the best is the thought leader.”
Figure out who your good, better and best competitors are. Then you can delve into what makes them stand out in the areas that matter most to you, whether it’s market share or product or something else.
Once you survey the competitive arena it will be easier to determine which businesses are both threats and inspirations, and why.
Do detective work online and off
Beck said you’ll want to answer a host of basic questions about your competitors.
“The first thing you are going to do when you start a business is ask, ‘What is the space I’m in? Who else is in it? What are they doing? Who else is in my price point? Who are their customers? Where are they located? What is their advertising? Where are they spending money?”
The more specific the questions, the more helpful the answers. Create a spreadsheet with categories on one axis and companies on the other, then fill it in as you glean information.
The most important question to answer is “Why?” Said Beck, “’Why?’ is the treasure map to success; the answers will directly correlate to your business strategy.”
To get the answers you need, your investigation should happen both in real life and online.
“Go to the retail space of the best of the best. Look, touch, feel. Notice how you are greeted, what you smell and see. Who are the employees? What did you like and dislike about them?” said Beck.
Investigate the company’s digital presence, too. “How often are they posting? Are they clean looking? Is there video? Are they just sharing content or creating content? How many people comment? Share?” Look at whether they have a newsletter or blog, and if they do, how often they send it or post to it. Notice, too, what digital promotions or incentives they offer.
Especially if you’re running your own pay-per-click campaign, take your analysis of a competitor’s website further by looking at what keywords the business is buying. Use free or paid versions of tools such as SpyFU and SEMRush to do this “spying.”
Once you’ve done the analysis
It’s smart to incorporate your competitive analysis into your business plan. It can even be shared with investors to show how your business stands apart.
The point of doing competitive analysis, of course, is to use it to improve your business. Here’s how.
Follow the leader. “There is some truth in business that if all your friends are jumping off a cliff, you should, too,” said Beck. “If all your competitors are on social media, then you should be on it, too, unless you have an incredibly compelling reason not to be.”
While you don’t have to copy every facet of the industry leaders’ business, it’s important to stay current with stakeholder expectations, customer and otherwise. For example, if most businesses have moved to accepting mobile payment systems such as Apple Pay, it’s worth considering. In crowded fields, standards are established quickly, and you’ll want to meet them sooner rather than later.
Leverage what makes you different. “How do you stand out? What differentiates you from your competitors? It has to be something or it’s never going to work,” said Beck.
Once you figure out what sets you apart, you need to message that to stakeholders, she noted.