Let’s face it.
You aren’t the only business in town. There are gazillion businesses that sell similar products to yours.
They are in the same niche. They go after the same target market. Heck, even their product or service is eerily similar to yours.
That’s why you need to learn how to do competitive analysis. Done right, competitor analysis helps you identify gaps in your competitors’ strategy. You can then position your brand strategically and stand out from the sea of sameness.
What Is A Competitor Analysis?
Competitor analysis is a strategic business management process of assessing the strengths and weaknesses of your main competitors’ marketing strategies.
Once you identify your competitors’ strong and weak points, you position your own brand favorably so buyers choose you over your competitors. You learn from their strengths and capitalize on their weaknesses.
Doing a competitive analysis gives you a competitive advantage. It puts your nose ahead. Your target audience buys from you, not your competitors.
4 Benefits Of Competitor Analysis
Smart competitive analysis has many benefits including:
Uncovering Gaps In The Market
After you research your opponent’s strategies, you identify openings you can fill. Whether it’s going to an area they are underserving or coming up with a better pricing model, you get a chance to fill the gaps and reap the rewards.
Benchmarking Your Performance
Every industry and niche has set standards you should meet to compete let alone thrive in that space. By studying competitor strategies and tactics, you get to understand industry trends and touchstones. Then you benchmark your performance to match or beat your rivals.
Improving Your Products And Services
To win in business, you first have to know what you are up against. Without top-notch products/services, you won’t get your portion of the juicy market share pie. When you see what others are selling, you can improve your own products. A better product will make consumers choose it over the competitor’s product.
Fine-Tuning Your Unique Selling Proposition
At the end of the day, when the quality of the product/service is neck and neck, your unique selling proposition becomes the clincher or deal-breaker. A unique selling proposition is a unique value you promise to deliver to your customers. It separates you from similar brands and makes customers choose you.
How To Do A Competitive Analysis In 6 Steps
Let’s now look at the exact steps you should take to conduct a thorough competitive analysis that’ll give you a competitive advantage.
Here are 6 building blocks of an effective business rival analysis.
Step 1: Identify Your Competitors
The starting point when doing competitive analysis is determining your competitors.
Your business rivals aren’t the same. They come in different shapes and sizes. There are two types of competitors direct and indirect:
These are rival business foes who sell products or services that are like yours. Name and branding aside, customers would think you are the same company because you sell the same things. For instance, if you sell toys, the toy shop across the road is a direct rival.
Unlike direct competitors, indirect competitors don’t sell products and services like yours. But they serve the same target market you are after.
Let’s say you sell burgers. The hotdog stand close by is an indirect competitor. Hungry people can satisfy their needs either through your burger or grab a hotdog and end up not buying from you.
A tertiary competitor is a brand that serves the same clientele as you but they don’t compete with you directly or sell the same products. But they might become your competitors in the future.
Compile a list of competitors vying for the same market.
A simple way to analyze your competitors is to do a swot analysis.
Competitor SWOT Analysis
Swot is an acronym for:
Your assessment should include everything on competitors’ websites: their content, search engine optimization tactics, pricing, positioning, sales, shipping, and more.
The whole idea is to gauge your strong and weak points against your competitors. Poke holes into their strategy to see how to capitalize and get ahead.
In summary, competitive research helps you know:
Step 2. Analyze Your Competitor’s Website Traffic
At the heart of running a modern business is your online presence.
Your website is the hub of your online marketing efforts. It’s where you drive traffic to, build trust, and close the sale. Without a viable website, you won’t be able to compete.
That’s why a thorough analysis of competitors’ websites is a vital step.
The big question:
Where do they get their traffic from?
Your first port of call when doing website competitor analysis is to analyze their traffic sources.
In online business, nothing happens until you drive relevant traffic to your website.
Zero. Zilch. Nada.
Maybe you are asking yourself what relevant traffic is. It’s traffic that comprises people that fit your target audience or ideal buyers. These are people whose needs your product or service solves. They are more likely to buy.
Here are the 4 types of web traffic sources.
These are visitors who arrive on your website from a search engine such as Google, Yahoo, or Bing. If your competitors are getting a lot of organic traffic, it means they have a smart content marketing strategy. They produce excellent content that scratches the itch of the target audience demographic. So they appear on top of the search engine result pages (SERPs) when people search for information related to what the company does.
Paid traffic refers to people who come to your site because they clicked on an advertisement you paid for.
Examples of Pay Per Click (PPC) ads are:
Direct traffic is when potential customers type your company’s name directly into a search engine’s search bar or through browser bookmarks. Also, someone may type the brand’s URL into their browser.
These visitors arrive at a website directly without going through a secondary source. So what’s the big deal if competitors are getting direct traffic?
They’re have become recognized brands. People know about them firsthand or they heard about them through word-of-mouth marketing (WOMM).
Referral traffic means visitors who arrive on your website via another source, such as a website. It differs from direct traffic because it’s indirect.
Visitors first visit another site, click on a link that takes them to your site.
Competitors who generate tons of referral traffic have mastered inbound marketing strategies like:
Email traffic refers to people who visit your website after clicking a link in an email you have sent to your list of subscribers.
Is the competitor getting decent email traffic?
Their secret is writing engaging emails subscribers open and click.
They produce informative, entertaining newsletters that their audience gobbles up.
Social traffic comes from social media channels.
These include Facebook, Twitter, Instagram, TikTok, and LinkedIn. We will dig deeper into social media campaigns and traffic in the next section.
This graphic sums up all the web traffic sources very well.
The goal of traffic analysis is twofold:
Here are tools you can use to discover your competitor’s website and traffic secrets.
For insights into a website’s traffic stats, competitor numbers, and traffic sources.
For keyword research, competitor backlink analysis, traffic stats, and content gaps.
For SEO, content marketing, competitor research, PPC, and social media marketing.
For a complete 360-degree view of your industry, competitors, and consumers.
Let’s say you want to sell dog and cat food. Your chief competitor is Pet Flow. If you pop their website URL into Similar Web, here’s what you will see under the traffic sources section.
As you can see, search engine traffic drives the brand.
There are many other paid competitive intelligence platforms and website analysis tools you can use for analyzing competitor website’s strengths/weaknesses but these should be enough to get you started.
Step 3: Analyze Your Competitors’ Content Strategy
In eCommerce, content marketing strategy is key to success.
That’s why you must also do a competitive analysis of your rivals’ content strategies.
Use Buzzsumo (or similar content analysis tools) to see the content that performs best for your competitors.
Just pop your competitor’s website URL into the search box and let the algorithm work its magic.
Within a few moments, the system will spit out the top content on the website.
Dig deep into the results:
To get answers to all these questions, you mustn’t just read your competitor’s blog. You must study the content and tear it down.
Step 4: Scrutinize Their Pricing Strategy
Identified your competitors? Check.
Gone over the competitor website? Check.
Examined their content strategy? Check.
Then the next step in the competitor analysis framework is exploring the competitors’ pricing strategy.
Pricing determines buyer behavior immensely.
Often, the first words out of a would-be customer’s mouth are: How much is it?
So seeing how competitors price their goods or services can help you set competitive prices that will attract potential customers. Analyzing prices also gives you an overview of the competitive landscape.
First, check the competitors’ pricing pages.
Identify patterns on the pages.
Competitor Pricing Analysis: 5 Key Factors To Inspect
Here are 5 questions to consider about your competitor’s pricing approach:
1. For service-based business owners, does the competitor publish their prices or keep them a secret?
How can you use this knowledge to your advantage? For instance, if the competitors hide their prices, you could publish yours to remove the extra step potential buyers have to take in their buyer journey.
2. What incentives do they use to entice buyers?
3. How do they use copy on the sales page?
Weigh the copy they used to sell the product. How long is their copy? Do they include a FAQ section? How do they present the product benefits? How do they overcome potential objections? What’s the tone and style of their pricing page copy? e.g. level-headed, cheeky, casual, professional, or witty.
4. How do they structure their pricing pages?
Do they use pricing tables or product categories?
5. What’s their SaaS products pricing strategy?
How do their prices scale? What’s the average monthly cost per user? Do they offer a freemium plan? What’s their most popular plan and why do users opt for it more than other plans?
Armed with competitor pricing data, you can then use a penetrative pricing strategy to break into the market, especially very competitive ones.
Penetrative pricing is introducing yourself to the market by selling your products and services at a lower price than your competitors. This makes it easier for you to break into the market and grow your customer base faster. Potential customers are more likely to buy from you as a new player on the market if your goods are markedly cheaper than your competitors.
Once you have grown your customer base, you increase your prices gradually.
Planning to price higher than your competitors?
But you must add more product features and improve overall product quality. This will tempt people to buy your new product. If the features of your product are similar to your competitors, you will have a hard time persuading people to buy at the same price point.
Worse, you will be a new player on the market so people would rather stay with brands they know and love, not a Johnny Come Lately.
Step 5: Analyze Competitors’ Funnel And Onboarding Processes
Let’s move on to the fifth step in the competitor analysis strategy: a look at funnel and onboarding processes.
At the heart of a successful business is a high-converting funnel.
So you must explore competitor funnels.
Go through their entire buyer journey. Become your competitor’s customer. Yeah, I know it sounds like a sneaky competitor analysis trick but it works wonders. Think about it for a sec. How best can you mine your rivals’ money-making secrets besides going undercover and letting them serve you as their customer? Nothing beats this tactic.
What do you look for?
First, find out how people become customers. How many steps do they typically take to move from strangers to delighted buying customers? Where do they come from? Which pages do they usually visit before they take out their credit cards?
To get all the inside info:
As a case study, here is a paid traffic conversion funnel.
Notice the two routes that lead to a sale—the direct route from the FB ad and the indirect route for those who didn’t buy the first time around via FB remarketing.
Here’s a funnel example of a service-based business that starts with a free report.
As you go through competitor marketing funnels, to get maximum value from your competitor analysis, tick the following boxes in this checklist:
Your funnel competitive analysis must also include how rivals onboard new customers. A powerful customer onboarding process gives customers a delightful experience and also boosts customer loyalty. So you make more money in the long run.
See how they roll out the carpet for new buyers.
In your onboarding competitive analysis, ask 3 crucial questions:
Dig into the competitor’s customer profile.
Step 6. Spy On Your Competitors On Social Media
Ready for the last step in the competitive analysis blueprint?
A sure way to get intel about your competitors is doing social media espionage. No, not the hair-raising movie type of mission, but a mission nonetheless 🙂
Follow your competitors on social media:
Use social media brand monitoring tools like Hootsuite and Sprout Social to make the task easier.
The entire process is about learning from their social media activities and using that info to bolster your brand position in the market.
Ultimately, competitive analysis helps you determine your...
Unique Value Proposition
The insights you get from competitive analysis help you come up with a powerful value proposition.
A value proposition is a value a brand promise to deliver to your customers. Consumers can’t get it elsewhere. The value is unique to your brand.
That’s why a value prop is a vital element to your entire marketing messaging. It sharpens all your marketing campaigns. That’s the reason marketers spend countless hours on it.
Make sure you get it right.
Because if you do, you will instantly stand out from the rest of the companies in your space.
Competitive Analysis Template
Here’s a competitive analysis template that simplifies the process.
Simply fill in the blanks of the free template and you are good to go.
Competitor Analysis: Stay A Step Ahead Of The Competition
That my friend is how to do a competitive analysis.
Use competitor intel to improve your strategy, position your brand uniquely, and break into new markets.
Leave your contenders trailing in the dust through smart competitor analysis.
Last Updated on February 6, 2023 by Hanson Cheng
Excellent and extremely thorough article! Thank you for the invaluable information and tips. I’m looking forward to implementing it!!
I’m glad you liked it Kathie!