What is a competitor analysis?
A competitor analysis is when an organization sets out to evaluate and categorize their market or industry competitors to have a better understanding of their strengths, weaknesses, and processes with a direct contrast to their own. These competitors will have similar services, pricing, products, strategies, or audiences and should be evaluated based on a predetermined set of business criteria.
When done correctly, and with the right competitive intelligence tools, a successful competitor analysis makes it possible for a business to see competitors through the eyes of shared customers as a way to identify areas to improve for continued success.
Steps of a competitor analysis
As an organization conducts a competitor analysis to evaluate other companies, products, or marketing strategies, it’s important to follow these steps for the analysis to be as useful as possible.
- Choose the competitors to analyze within a sector or market
- Determine the aspects of a competitor’s business to analyze
- Narrow down where to start looking for the data, whether it be their website, within search engines results pages, financial reports, or social sources
- Apply insights to the business model as ways to improve and grow
Basic elements of a competitor analysis
What a competitor analysis will look like will depend on the industry a business is within. The common elements that are typically included in a competitor analysis are:
- Website features: search tools, design, menu layout, product images, calls to action
- Customer experience elements: mobile design, customer support workflow, checkout process (if applicable)
- Social media strategy: platforms used, posting frequency, customer engagement
- Content marketing: content types, posting frequency, SEO strategy, link building strategy
- Marketing initiatives: promotion types, discounts, or coupons
- Email marketing strategy: abandoned card campaigns, newsletter, promotions
- Customer reviews: common complaints, the language used to describe products/services
Benefits of conducting a competitor analysis
Whether conducted by business owners, startup founders, marketers, product managers, or entrepreneurs, there are many benefits to seeing a competitor analysis through from start to finish.
- Narrow down the ways a business, service, or product needs to be improved
- Remain up to date on marketing trends, industry best practices, and product offerings
- Provide insights into how to adjust processes to better serve an audience or group of customers
- Uncover new strategic opportunities to improve products or services
- Better set benchmarks and measure future growth of an organization
- Come to more informed decisions
- Discover new ways to speak to customers
- Reveal where competitors are throughout every stage of business
Competitor analysis best practices
Before a business begins a competitor analysis, an understanding of the best practices involved is key to ensure no data is left uncovered.
- Understand who the direct (offering the same service or product in a similar geographical area), indirect (offering the same service or product in a similar area but serving a different need or audience), and tertiary (offering a product somewhat similar but doesn’t compete) competitors are
- Conduct the analysis over the course of multiple days
- Learn the technology or software a competitor is using
- Deep dive into a competitor’s website, customer experiences, pricing models, social media feedback, online reviews, company culture, and market position
- Pinpoint the ways a competitor is unique and what is being advertised as their best quality
- Use tools to continuously stay aware of competitors and fill any business gaps
- Make any improvements deemed necessary to remain a successful organization