The new year is here. Congratulations on getting through 2020 – we know it was tough and for many businesses, the conditions created by the pandemic meant that survival was the most important thing. The thinking was done in the here and now, often looking just until the end of the month, and there was very little room for grand strategy. Now though, the future looks more clear, and with two vaccines now in roll-out across the UK, a mid-February kickstart has been promised by the government. Now is the time to look ahead, and to invest in a longer-term strategic plan that may have escaped you in 2020. To create long term strategies for our clients, we begin with a structured, effective competitor analysis – and at the end of this article, we’ll include the template for our own work, free for you to download.
Conducting an Effective Competitor Analysis
Choosing the Right Competitors
What’s the purpose of your competitor analysis? Your business is likely to have a number of competitors. Generally speaking, there are three types of competitors in the digital space
– Direct competitors are businesses that offer the same solution to the same customers as you
– There are also two kinds of indirect competitors. These businesses will offer either the same solution to a slightly different customer or a slightly different solution to the same customers.
– In the digital space, there are also visibility competitors. These are companies which may offer a totally different service to you, but may have gargantuan advertising budgets so that they are able to dominate a wide space online. This encroachment might prevent your business from appearing on the first page of search results. The more vague your keywords are, the more of a problem this is likely to be.
It’s important to include a mix of your competition in your analysis. Direct competition is obvious, but it’s important not to dismiss your indirect competition or your visibility competitors as well. Ultimately, your customer only has one wallet and it is only so deep, and thus any business which is marketing to them is your competition. Moreover, if you can bring in marketing techniques and angles from other industries, you might be able to stand out in yours. Effective competitor analysis isn’t just about seeing what other companies are doing – it’s about understanding why they’re doing it and whether it’s working.
How Are They Performing?
Once you’ve chosen your competitors, it’s important to gather as much data as you possibly can. Check their website – have they published any end-of-year summaries? Have they acquired any desirable or high-profile clients in your sector? Look on sites like Indeed and Glassdoor to see if they are hiring and read the job adverts, and look on LinkedIn to see how many employees they have.
To conduct an effective competitor analysis, you need to have an understanding of the outcomes as well as the input. Moreover, if your competitors are not doing as well as you are, don’t dismiss the analysis. They might have some processes which you can take inspiration from, or they may be giving you an illustration of how not to go about business in your sector. Either way, analysis of a worse-performing company can still provide important feedback for your own strategy – and knowing what they’re doing even in your rear-view mirror will give you as early as possible an indication that they may be planning an overtake.
What Are They Saying?
Analysing your competitor’s marketing messages is critical. How are they advertising their solution? How do they imagine the customer and what do they think is important to them? Do they have a USP which sets them apart from the competition and how do they go about introducing that USP?
Aside from just their messaging, it’s important to analyse the media and the platforms on which they are distributing their adverts. From plain text to video, and from social media to search engines, how a company advertises is often just as important as the content of the advertisements.
What Are People Saying About Them?
Social listening tools are a great way of finding out how a company’s image is being received. If you don’t have access to this technology, a manual search in the main social media sites for the company name can give an indication of how people are reacting to their messages – although you may have to sift through messages which do not apply to the business, as you will simply be running a keyword search.
Understanding how your competitors are being reacted to can help you to pinpoint exactly how they’re connecting with the audience, and effective competitor analysis that incorporates social listening might give you some quick tips that you can replicate in your own strategies.
Benchmarking for Success
Fundamentally, effective competitor analysis has to inform your future strategy. There are a few ways of setting benchmarks, depending on your goals and where you are in relation to your competitors.
A great way to start benchmarking is by choosing your primary weakness, and setting a target which is in line with your competition. You could aim to surpass your top competitor, to beat the average of your competitor output or, if you have the data, to bring the percentage of your revenue attributable to said area of business in line with your competitors.
These benchmarks will help you to evaluate the success of your strategy in the long term.
Effective competitor analysis allows you to draw inspiration from the businesses around you and, by incorporating it into your development strategy you can make strides towards a successful 2021. To help you, we’ve made our competitor analysis template free to download for any business – the one we actually use for marketing analysis. Enter your information below, and an email will automatically be sent to you to retrieve your download.