What's a Competitive Analysis & How Do You Conduct One?

When was the last time you ran a competitive analysis for your brand?

And most importantly, do you know how to do one efficiently?

If you're not sure, or if the last "analysis" you ran was a quick perusal of a competitor's website and social media presence, you're likely missing out on important intelligence that could help your brand grow.

A competitive analysis can help you learn the ins and outs of how your competition works, and identify potential opportunities where you can out-perform them.

It also enables you to stay atop of industry trends and ensure your product is consistently meeting — and exceeding — industry standards.

Let's dive into a few more benefits of conducting competitive analyses:

• Helps you identify your product's unique value proposition and what makes your product different from competitors', which can inform future marketing efforts.
• Enables you to identify what your competitor is doing right. This information is critical for staying relevant and ensuring both your product and your marketing campaigns are outperforming industry standards.
• Tells you where your competitors are falling short — which helps you identify areas of opportunities in the marketplace, and test out new, unique marketing strategies they haven't taken advantage of.
• Learn through customer reviews what's missing in a competitor's product, and consider how you might add features to your own product to meet those needs.
• Provides you with a benchmark against which you can measure your own growth.

Convinced, yet? Next, let's dive into how you can conduct a competitive analysis for your own company.

Competitive Analysis in Marketing

Every brand can benefit from regular competitor analysis. By performing a competitor analysis, you'll be able to:

• Identify gaps in the market
• Develop new products and services
• Uncover market trends
• Market and sell more effectively

As you can see, learning any of these four components will lead your brand down the path of achievement. 

Next, let's dive into 12 steps you can take to conduct a comprehensive competitive analysis.

1. Determine who your competitors are.

First, you'll need to figure out who you're really competing with so you can compare the data accurately. What works in a business similar to yours may not work for your brand.

So how can you do this?

Divide your “competitors” into two categories: direct and indirect.

Direct competitors are businesses that offer a product or service that could pass as a similar substitute for yours, and that operate in your same geographic area.

On the flip side, an indirect competitor is one that provides products that are not the same but could satisfy the same customer need or solve the same problem.

It seems simple enough on paper, but these two terms are often misused.

When comparing your brand, you should only focus on your direct competitors. This is something many brands get wrong.

Let's use an example: Stitch Fix and Fabletics are both subscription-based services that sell clothes on a monthly basis and serve a similar target audience.

But as we look deeper, we can see that the actual product (clothes in this case) are not really the same; one brand focuses on stylish everyday outfits while the other is workout-centric attire only.

Yes, these brands satisfy the same need for women (having trendy clothes delivered right to their doorstep each month), but they do so with completely different types of clothing, making them indirect competitors.

This means Kate Hudson's team at Fabletics would not want to spend their time studying Stitch Fix too closely since their audiences probably vary quite a bit. Even if it's only slightly, this tiny variation is enough to make a big difference.

Now, this doesn't mean you should toss your indirect competitors out the window completely.

Keep these brands on your radar since they could shift positions at any time and cross over into the direct competitor zone. Using our example, Stitch Fix could start a workout line, which would certainly change things for Fabletics.

This is also one of the reasons why you'll want to routinely run a competitor analysis. The market can and will shift at anytime, and if you're not constantly scoping it out, you won't be aware of these changes until it's too late.

2. Determine what products your competitors offer.

At the heart of any business is its product or service, which is what makes this a good place to start.

You'll want to analyze your competitor's complete product line and the quality of the products or services they're offering.

You should also take note of their pricing and any discounts they're offering customers.

Some questions to consider include:

• Are they a low-cost or high-cost provider?
• Are they working mainly volume sales or one-o purchases?
• What is their market share?
• What are characteristics and needs of their ideal customers?
• Are they using different pricing strategies for online purchases versus brick andmortar?
• How does the company differentiate itself from its competitors?
• How do they distribute their products/services?

3. Research your competitors sales tactics and results.

Running a sales analysis of your competitors can be a bit tricky.

You'll want to track down the answers to questions such as:

• What does the sales process look like?
• What channels are they selling through?
• Do they have multiple locations and how does this give them an advantage?
• Are they expanding? Scaling down?
• Do they have partner reselling programs?
• What are their customers reasons for not buying? For ending their relationship with the company?
• What are their revenues each year? What about total sales volume?
• Do they regularly discount their products or services?
• How involved is a salesperson in the process?

These helpful pieces of information will give you an idea of how competitive the sales process is, and what information you need to prepare your sales reps with to compete during the final buy stage.

For publicly held companies, you can find annual reports online, but you'll have to do some sleuthing to find this info from privately owned businesses.

You could find some of this information by searching through your CRM and reaching out to those customers who mentioned they were considering your competitor. Find out what made them choose your product or service over others out there.

To do this, run a report that shows all prospective deals where there was an identified competitor.

If this data is not something you currently record, talk to marketing and sales to implement a system where prospects are questioned about the other companies they are considering.

Essentially, they'll need to ask their leads (either through a form field or during a one- on-one sales conversation) to identify who their current service providers are, who they've used in the past, and who else they are considering during the buying process.

When a competitor is identified, have your sales team dive deeper by asking why they are considering switching to your product. If you've already lost the deal, be sure to follow up the with prospect to determine why you lost to your competitor. What services or features attracted the prospect? Was it about price? What's the prospect's impression of your sales process? If they've already made the switch, find out why they made this decision.

By asking open-ended questions, you'll have honest feedback about what customers find appealing about your brand and what might be turning customers away.

Once you've answered these questions, you can start scoping out your competitor's marketing efforts.

4. Take a look at your competitors' pricing, as well as any perks they offer.

There are a few major factors that go into correctly pricing your product — and one major one is understanding how much your competitors' are charging for a similar product or service.

If you feel your product offers superior features to that of a competitors', you might consider making your product or service more expensive than industry standards. However, if you do that, you'll want to ensure your sales reps are ready to explain why your product is worth the additional cost.

Alternatively, perhaps you feel there's a gap in your industry for affordable products. If that's the case, you might aim to charge less than competitors' and appeal to prospects who aren't looking to break the bank for a high-quality product.

Of course, there are other factors that go into correctly pricing a product, but it's critical you stay on-top of industry pricing to ensure you're pricing your product in a way that feels reasonable to prospects.

Additionally, take a look at any perks your competitors' offer and how you might match those perks to compete. For instance, perhaps competitors' offer a major referral discount, or a month-long free trial version. These perks could be the reason you're losing customers, so if it feels reasonable for your brand, consider where you might match those perks — or provide some unique perks of your own, if competitors' don't offer any.

5. Ensure you're meeting competitive shipping costs.

Did you know expensive shipping is the number one reason for cart abandonment?

Nowadays, free shipping is a major perk that can attract consumers to choose one brand over another. If you work in an industry where shipping is a major factor — like ecommerce — you'll want to take a look at competitors' shipping costs and ensure you're meeting (if not exceeding) those prices.

If most of your competitors' offer free shipping, you'll want to look into the option for your own company. If free shipping isn't a practical option for your business, consider how you might differentiate in other ways — including loyalty programs, holiday discounts, or giveaways on social media.

6. Analyze how your competitors market their products.

Analyzing your competitor's website is the fastest way to gauge their marketing efforts. Take note of any of the following items and copy down the specific URL for future reference:

• Do they have a blog?
• Are they creating whitepapers or ebooks?
• Do they post videos or webinars?
• Do they have a podcast?
• Are they using static visual content such as infographics and cartoons?
• What about slide decks?
• Do they have a FAQs section?
• Are there featured articles?
• Do you see press releases?
• Do they have a media kit?
• What about case studies?
• Do they publish buying guides and data sheets?
• What online and offine advertising campaigns are they running?

7. Take note of your competition's content strategy.

Then, take a look at the quantity of these items. Do they have several hundred blog posts or a small handful? Are there five white papers and just one ebook?

Next, determine the frequency of these content assets. Are they publishing something new each week or once a month? How often does a new ebook or case study come out?

Chances are, if you come across a robust archive of content, your competitor has been publishing regularly. Depending on the topics they're discussing, this content may help you hone in on their lead generating strategies.

From there, you should move on to evaluating the quality of their content. After all, if the quality is lacking, it won't matter how often they post since their target audience won't find much value there.

Choose a small handful of samples to review instead of tackling every single piece to make the process more manageable.

Your sampler should include content pieces covering a variety of topics so you'll have a fairly complete picture of what your competitor shares with their target audience.

When analyzing your competitor's content, consider the following questions:

• How accurate is their content?
• Are spelling or grammar errors present?
• How in-depth does their content go? (Is it introductory level that just scratches the surface or more advanced topics with high-level ideas?)
• What tone do they use?
• Is the content structured for readability? (Are they using bullet points, bold headings, and numbered lists?)
• Is their content free and available to anyone or do their readers need to opt-in?
• Who is writing their content? (In-house team? One person? Multiple contributors?)
• Is there a visible byline or bio attached to their articles?

As you continue to scan the content, pay attention to the photos and imagery your competitors are using.

Do you quickly scroll past generic stock photos or are you impressed by custom illustrations and images?If they're using stock photos, do they at least have overlays of text quotes or calls-to- action that are specific to their business?

If their photos are custom, are they sourced from outside graphic professionals or do they appear to be done in-house?

When you have a solid understanding of your competitor's content marketing strategy, it's time to find out if it's truly working for them.

8. Learn what technology stack your competitors' use.

Understanding what types of technology your competitors' use can be critical for helping your own company reduce friction and increase momentum within your organization.

For instance, perhaps you've seen positive reviews about a competitor's customer service — as you're conducting research, you learn the customer uses powerful customer service software you haven't been taking advantage of. This information should arm you with the opportunity to outperform your competitors' processes.

To figure out which software your competitors' use, type the company's URL into Built With, an effective tool for unveiling what technology your competitors' site runs on, along with third-party plugins ranging from analytics system to CRMs.

Alternatively, you might consider looking at competitors' job listings, particularly for engineer or web developer roles. The job listing will likely mention which tools a candidate needs to be familiar with — a creative way to gain intel into the technology your competitors' use.

9. Analyze the level of engagement on your competitor's content.

To gauge how engaging your competitor's content is to their readers, you'll need to see how their target audience responds to what they're posting.

Check the average number of comments, shares, and likes on your competitor's content and find out if:

• Certain topics resonate better than others
• The comments are negative, positive, or a mix
• People are tweeting about specific topics more than others
• Readers respond better to Facebook updates about certain content
• Don't forget to note if your competitor categorizes their content using tags, and if they have social media follow and share buttons attached to each piece of content. Both of these will a ect engagement activity.

10. Observe how they promote their marketing content.

From engagement, you'll move right along to your competitor's content promotion strategy.

• Keyword density in the copy itself
• Image ALT text tags
• Use of internal linking

The following questions can also help you prioritize and focus on what to pay attention to:

• Which keywords are your competitors focusing on that you still haven't tapped into?
• What content of theirs is highly shared and linked to? How does your content compare?
• Which social media platforms is your target audience using and the most active on?
• What other sites are linking back to your competitor's site, but not yours?
• Who else is sharing what your competitors are publishing?
• Who is referring traffic to your competitor's site?
• For the keywords you want to focus on, what is the diffculty level? There are several free (and paid) tools that will give you a comprehensive evaluation of your competitor's search engine optimization.

11. Look at their social media presence, strategies, and go-to platforms

The last area you'll want to evaluate when it comes to marketing is your competitor's social media presence and engagement rates.

How does your competition drive engagement with their brand through social media? Do you see social sharing buttons with each article? Does your competitor have links to their social media channels in the header, footer, or somewhere else? Are these clearly visible? Do they use calls-to-action with these buttons?

If your competitors are using a social network that you may not be on, it's worth learning more about how that platform may be able to help your business, too. To determine if a new social media platform is worth your time, check your competitor's engagement rates on those sites. First, visit the following sites to see if your competition has an account on these platforms:

• Facebook
• Twitter
• Instagram
• Snapchat
• LinkedIn
• YouTube
• Pinterest

Then, take note of the following quantitative items from each platform:

• Number of fans/followers
• Posting frequency and consistency
• Content engagement (Are users leaving comments or sharing their posts?)
• Content virality (How many shares, repins, and retweets do their posts get?)

With the same critical eye you used to gauge your competition's content marketing strategy, take a fine-toothed comb to analyze their social media strategy.

What kind of content are they posting? Are they more focused on driving people to landing pages, resulting in new leads? Or are they posting visual content to promote engagement and brand awareness?

How much of this content is original? Do they share curated content from other sources? Are these sources regular contributors? What is the overall tone of the content?

How does your competition interact with their followers? How frequently do their followers interact with their content?

After you collect this data, generate an overall grade for the quality of your competitor's content. This will help you compare the rest of your competitors using a similar grading scale.

12. Perform a SWOT Analysis to learn their strengths, weaknesses, opportunities, and threats

As you evaluate each component in your competitor analysis (business, sales, and marketing), get into the habit of performing a simplified SWOT analysis at the same time.

This means you'll take note of your competitor's strengths, weaknesses, opportunities, and threats any time you assess an overall grade.

Some questions to get you started include:

• What is your competitor doing really well with? (Products, content marketing, social
  media, etc.)
• Where does your competitor have the advantage over your brand?
• What is the weakest area for your competitor?
• Where does your brand have the advantage over your competitor?
• What could they do better with?
• In what areas would you consider this competitor as a threat?
• Are there opportunities in the market that your competitor has identified?

You'll be able to compare their weaknesses against your strengths and vice versa. By doing this, you can better position your company, and you'll start to uncover areas for improvement within your own brand.

How Does Your Business Currently Stack Up?

Before you accurately compare your competition, you need to establish a baseline. This also helps when it comes time to perform a SWOT analysis.

Take an objective look at your business, sales, and marketing e orts through the same metrics you use to evaluate your competition.

Record this information just like you would with a competitor and use this as your baseline to compare across the board.

Ready to get started with the full ebook and template?Click here to access the complete Competitive Analysis Kit.

Editor's Note; This post was originally published prior to July 2018 but was updated in November 2019 for comprehensiveness.

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