Competitive analysis is one of the most important tasks that an entrepreneur can perform.
There is a reason why every successful company invests a lot of time (and sometimes even money) in the process and why most new businesses start their journey by evaluating their competitors. But it is something you need to do, no matter where you are in the life cycle of your business.
That’s because the competitive analysis is like a multi-tool for your business. It not only allows you to understand the competitors you are facing, but it also shows you all the ways your company could be doing better. Looking outside, you can better understand what you need to do inside. Examining your competitors’ success and failures allows you to plan the long road ahead.
And this is really what entrepreneurs want: to understand how you can find an advantage in your industry. How can you stand out and become the biggest fish in the lake?
That’s why your company must invest time and money in competitive analysis. Because it can very well make a difference that ends up increasing your sales and success.
Why is it important (to continue) to evaluate the competition
If you are just starting your business, you know that you will do everything to get the right competitive analysis. If you have already had reasonable success, it is likely that you did a good job the first time.
But whether you’re just starting or have been serving people for years, it never hurts to know what your competition is doing. And, probably, your competitive analysis can always be better.
Do you think Starbucks has reached the top of the coffee industry and has completely forgotten about its competitors? These companies are at the top of their industry for one reason: they always look for things that can make them better.
And it is impossible to do this without investing in the resources to find out what you are up against.
What contributes to a good competitive analysis
Many people think that the question for assessing the effectiveness of competitive analysis is: “Do I understand my competitors better?” The question they need to ask is, “Do I know my competitors better? “
Because if you’re going to invest time and effort, you better do the best job you can.
Stephanie Nivinskus, CEO of SizzleForce Marketing, shared her competitive analysis strategy during the DigitalMarketer Certified Partner Training Day. Stephanie helped many clients do the cutting-edge competitive analysis that allowed them to gain an edge over their competitors.
Any level of competitive analysis will be useful. But when the most strong companies do competitive analysis, they go all in. They examine their competition from every possible angle and try to put themselves in the shoes of their competitors.
So, if there was a general rule for good and effective competitive analysis, it would be this: be creative. Those who think outside the box will not only be able to examine their competitors effectively; they will also be able to find the solutions that will set them apart.
But, if you want a little more specificity, here are some best practices that can help you turn your competitive analysis form from good to great.
1 Do this over the course of a few days
Competitive analysis is not that difficult – just having the ability to research and identify the differences between you and your competitors.
But it is time-consuming and this part should not be discarded. It is reasonably the most common mistake that business owners make when it comes to competitive analysis.
A truly effective competitive analysis cannot be done in a day. There is no way for you (or your team) to do the research necessary to draw a complete picture of your competition in less than 24 hours. To build that understanding, you need time to do the right process.
Because, after doing the research, you will still have to analyze and organize the results you found. So you have to compare and contrast that information with what you do.
It is a multi-step process and should not be rushed. So, when it’s time to work with your team and examine your industry scenario, be prepared to spend as much time as you need. If you dedicate an entire week to the process, you will probably be much 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 companies. When trying to identify the differences between them and their larger competitors, they say that one thing that sets them apart is that “we care” or “we are more personal”.
And even if these things may be true, new and potential customers will not care.
Differentiators are noticeable or tangible. These are things that make you unique, as well as things that your client can say almost immediately. Great service and personality is an expectation, not something that sets you apart from the competition.
When you become known, people will start to like and appreciate your company’s personality traits.
Just ask Chick-Fil-A – the politeness of your employees is the foundation of the business.
Now, this does not mean that there can be some differentiators that may not be immediately noticeable, but can still be effective if marketed correctly. If you are a coffee shop, you may offer a variety of organic options or your coffee is “from a responsible source”. These are potential differences that can set you apart from your competitors, it’s up to you to make that known.
Other than that, their differentials should be relatively obvious. It will be based on the product or service you offer, as well as its price.
These expectations that you set for yourself and your company are great and can often be what ends up making your customers loyal. But they won’t be able to know that without going through the door, so you can’t count on them to stand out.
3 – Think beyond price points
The key to effective competitive analysis is to think of all how you can gain an edge over your competition. So what this means is that the key to effective competitive analysis is to ask yourself the right questions.
And yes, these questions often go well beyond the price.
Price may be the most important factor for most consumers, but there are many other things that can help you stand out and make people choose you.
This can be things like diversity. If your business is a woman or a minority, this is something you should make yourself very well known (and knowing that means you can find programs or scholarships you can qualify for).
It may also be finding an advantage in the marketing strategy. Perhaps, by examining your competitors’ content marketing efforts, you will be able to discover unique strategies that can differentiate you. Or maybe you’re developing 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 are bigger than you.
There are many other things that you need to discover. What niche do you fill? Does your customer’s avatar differ from your competitors’ avatar?
What is the history of your company and how can you use it? All of these are valid questions that can help you find ways to stand out and those that people won’t even think about unless they dedicate time and effort.
Every aspect of your business is important. Don’t forget to announce to them if you think it will give you an advantage.
If you remember these practices when doing competitive analysis, you will come out with an analysis that will help you know how to position your business.
Then, after figuring out how to make these differentiators work for you, you’ll gain more customers than ever before.