What Is Competitive Analysis?
Competitive analysis is a business management strategy that identifies how your industry's top competitors perform and where you rank among them. With this information, you can effectively strategize how to provide your target audience with superior products and services. The information gathered can reveal opportunities in the marketplace and help you identify your unique value proposition.
Why Is It Important?
Performing a competitive analysis will strengthen your strategic planning. If performed thoroughly and updated regularly, it will become a valuable tool allowing you to effectively compete in the marketplace and differentiate yourself among your competitors.
How to Get Started
Getting started without a plan will likely result in information overload. Not only that, but the information may not be relevant or useful. While it could be helpful to know the number of employees and the year founded, knowing the executive team's career history might not be useful for your first competitive analysis. However, it may be helpful later down the road when you are looking to expand your business. For example, if you understand the skill set required to perform specific roles, you can save time interviewing the best candidates.
Most importantly, be willing to allow new information to reveal itself and be flexible with the process. As you dive in and discover nuances previously unseen, you may wish to add more categories or perhaps an unexpected competitor to your competitive analysis template. To help you get started, we've put together a list of 8 steps to creating the ultimate competitive analysis template.
Step 1 - Create Your List of Competitors
First and foremost, you'll want to generate a list of 3-10 competitors to analyze. These are companies in your industry that share the same customer, solution, or both as you do. Include companies who most closely resemble your company's size and annual revenue. Don't forget to include at least one disruptor in a similar market. It is imperative to keep an eye on the competitor who can steal market share, perhaps in an innovative way. Starting with a larger, diverse pool of competitors is beneficial. You can whittle down the list as you begin collecting and organizing your data.
Step 2 - Build a Spreadsheet
Now that you've identified the competition and have decided what information you'll be researching, it's time to build a spreadsheet to store all of your data. This spreadsheet is the foundation of the competitive analysis template and will be unique to your organization's goals.
Here is an example of how you may wish to layout your template to include all of your competitors and the criteria you’ll be searching for (download our template):
You can store your references for data such as website links, articles, press releases, social media handles, and the date you access the information on additional tabs. This way, it will be easy to update your data and track your progress over time.
Step 3 - Rank the Competition
With your list of competitors handy, rank them into one of three categories:
- Primary - Direct competitors that are selling a very similar product or service to your ideal customer. From the consumer standpoint, you and these competitors may be interchangeable based on various factors like price and availability.
- Secondary - These competitors are selling products and services similar to yours, but they target a different customer.
- Tertiary - They are targeting the same audience, but with a different product or service. The offerings may be complementary to yours, but they might also be cornering the market of this particular buyer persona.
Ranking competitors can help you understand what criteria to evaluate. Utilizing a competitive analysis template will allow you to filter data for an easy-to-view dashboard of information at a glance.
Step 4 - Select Criteria for Analyzation & Collect Data
If you are unsure why you are gathering information, even the most potent data won't be useful. Refine your goals and have a clear objective. Do you want to build a world-class facility and offer tours to the public? Are you looking to break the mold on an everyday product? For example, if you are trying to figure out how to market your products more effectively and grow your online following, studying your competitors' social media presence is more valuable than researching their year-over-year revenue.
Here are several key components to consider when creating your data list:
- Company overview: year founded, size, location, revenue
- Types of products/services, pricing, special promotions
- Sales and distribution channels
- Social media and online marketing presence
- Target audience and customer personas
- Brand identifiers such as tone and voice
- Key objectives in the digital marketing strategy
There are many free online tools available to help you gather research and monitor trends. By using these platforms, you can be confident in the data while saving valuable time and money. Let’s take a look at a few robust online tools that may be beneficial to your goals:
- SEMrush offers over 40 tools to monitor digital marketing performance. Their competitor analysis features make SEMrush one of the most widely-used SEO tools available. Analyze qualitative metrics on organic search, SEO, social media, advertising, content marketing, public relations, and more. While not entirely free, they do offer a 7-day free trial.
- Google Alerts is the original solution for monitoring web activity for specific news articles, mentions, and keywords. Add your competitors' names to receive an alert any time they are mentioned across new stories, press releases, or company reviews.
- Moz is a well-known SEO software toolkit, offering several free resources to monitor the competition's website performance and digital marketing strategies. Install the Moz Bar into your Chrome browser for metrics on any site you visit, or use their free domain analysis tool and see instant SEO metrics such as top pages, ranking keywords, and other competitive data.
- SimilarWeb provides informational website and app tracking intelligence. When you enter a URL into their search engine, you get a downloadable company overview with metrics on website rankings and traffic overview.
- Talkwalker Free Social Search gives you a snapshot of various social KPIs such as reach, engagement, total mentions, intent, related hashtags, demographics, and top-performing posts. They focus on hashtag tracking, campaign tracking, event performance, and brand reputation.
Step 5 - List Their Strengths
Now that you know a bit more about your competitor's operations, you can conduct a SWOT analysis. The first step in a SWOT analysis is generating a list of strengths. If this is something you haven't yet done for your organization, now is the time. Strengths could be their large social media following, an impressive collection of content, superior customer service, or innovative technology.
Step 6 - List Their Weaknesses
Weaknesses are specific to the market in which you compete. For example, a potential weakness might be a less-than-specialized sales team or an underwhelming marketing strategy. Always includes weaknesses in their online presence (if applicable), such as inadequate mobile response or complicated user interface.
Step 7 - Identify Their Opportunities
When identifying opportunities, look back to their weaknesses. If they have low domain authority, there is an opportunity to improve that score. While this opportunity might take some time to build, others can be fixed quickly, such as broken links or slow response times.
Step 8 - Identify Their Threats
Threats can include negative press or media coverage, upcoming regulatory changes, and disruptions in the supply chain. Pay special attention to what threats you and your competitors are both facing, as well as the critical threats that are specific to them. Your competitor's threats can become valuable opportunities for your organization.
You’ve done the work to research, categorize, and compile data into the competitive analysis template. Now what? The intention is not to replicate what the top performers in the industry are doing. Instead, it is to discover where you fit in the market and how you can provide the best service in your industry, thereby allowing you to rise above the competition. When you have a clear picture of your rankings, you can prioritize your goals and strategize your upcoming quarter, year, or product launch.
What to Do
Take action. The information you've gathered is most valuable right now, so it's time to put together an action plan. Refine your marketing plan, refresh your content, consider a new product offering or pricing strategy. Whatever your findings tell you, now is the time to put together a strategic plan and execute it. Take into account the evolution of your competitor's business tactics. Knowing where they've been and where they are now can help you better estimate where they're going so you can get there first.
What to Avoid
Remember that this data is going to change over time. Be sure to plan regular sessions to review your competitive analysis template and update information as necessary. The best practice is to review every 6-12 months. Utilize the wealth of data available online and save your team time. Many tools can run in the background and aggregate data into a live dashboard. Always let the data inform your decisions rather than your own bias.
We’re Here to Help
If you are inspired to learn more about how we created our competitive analysis template, we’d love to hear from you. Our goal at Wide Narrow is to streamline your analysis efforts. We do this by creating customized reporting solutions that allow your organization to make informed decisions with only the most essential information. Contact us today to get started.