Competitor analysis is often treated as an after-thought or a task for the marketing intern, but competitor analysis is a vital part of many of the cycles that businesses go through. In this article, I explore the whys and hows behind a successful competitor analysis strategy, and its integral place in the planning process when starting up.

“Competition is always a good thing. It forces us to do our best.” — Nancy Pearcey

Why focus on what your competitors are doing?

While many businesses prefer to keep their focus on their own activity, conducting a competitor analysis has a range of benefits for businesses of all sizes — this means that not only do you have data on your competitors but that you have a deep understanding of your competition. Having up-to-date analyses allows you to:

Track pricing, product or market changes
Define your own unique selling points (USPs)
Create Key Performance Indicators (KPIs)
Create SWOT analyses: Identifying competitor strengths, weaknesses, opportunities and threats
Benchmark the standards in your industry
Be proactive in your sales and marketing, not reactive

In the initial stages of building a business, it’s important to be aware of what’s going on both within the market itself and in the wider industry. Using industry benchmarking to compare your processes, performance and customer satisfaction with your competitors is a useful method of getting to grips with your place in the market.

When developing a new product or service, competitor analysis and benchmarking data allow you to understand the norms when it comes to pricing, product options, customer service and more — giving valuable insights to help shape your own offering and business plan. For example, you could use this data to price your product above or below the industry standard or use their manufacturing processes to streamline your own processes before you start.

What should I look out for?

It’s important to start by creating a list of your competitors. Be mindful here — this doesn’t mean writing down the names of the businesses you’re aware of who offer similar goods, products and services to you, but it’s also important to identify your online competitors — who are performing successfully on search engines in your industry?

Start with a list of competitors and make sure to keep this updated, as any new entrants to the market could be disruptors, and it’s important to keep an eye on these.

Once you have your list of competitors, create a document or spreadsheet, and start with some of the following questions:

What size company are they?
What’s their annual turnover?
What are their price points and profit margins?
Are their products seasonal? When are their peaks and troughs?
How long have they been running for, and how long have they been in this industry?
How do their products or services compare to yours? (Pricing, options, costs of manufacturing, and so on)
How does their customer service, support or sales aftercare process work?
What do they do currently do to market their business both online and offline?
What are their objectives and future plans?

You may not be able to find the answers to all these, but much of this information will be readily available on places like LinkedIn, Companies House, company websites, in annual company reports or in published white papers. When looking at marketing and outreach strategies, these are often uncovered by looking at their public social media accounts, utilising search engines (try brand terms, product terms and other industry keywords) and by using tools such as SpyFu to understand their current search engine marketing and traffic acquisition priorities.

Next steps

Once your competitor analysis is complete, you should have a clear overview of your industry as a whole: average business sizes, product offerings, market penetrations, customer acquisition methods and any future expansions planned. Be sure also to add your own data to your document, to see how you stack up.

It’s important next to analyse this data. Are there any reoccurring themes or trends? Which best practices can you uncover from your competitors? Are there opportunities to replicate their successful marketing activities for your own business? Are your decision-makers engaging more frequently with your competitors on one or two channels?

Understanding the way the industry currently works can allow you to both replicate their success of your competitors by planning similar activities and gives you the chance also to exploit gaps and missed opportunities, such as new marketing channels, cost-effective manufacturing processes or efficient approaches to sales, allowing you to boost your profit margins from the get-go.

How to leverage your competitor analysis

The final step is to leverage the data to make it work for you and your business, particularly when starting out. Use your competitor insights to inform crucial business decisions such as staffing, product costs, processes, marketing channels, acquisition methods, customer relationship management and more.

By regularly updating this data (including the insights from your own business as you grow), you are able to create a structured and longer-term strategy. This will give you a strong sign of where your business priorities should lie — allowing you to be proactive in your planning, rather than reactive to changes or, worse still, taken by surprise.

The keys to creating a successful competitor analysis plan include taking the time to identify your true competitors, putting in the groundwork to understand the industry standards and best practices, and leveraging this information in your own business to create a unique offering that stands out from the crowd!