Competitor Analysis: The Secret Sauce to Success

Competitor Analysis: The Secret Sauce to Success

You think you know your competitors. You've done a cursory Google search, glanced at their websites, and bought their product once or twice. But do you know what makes them tick?

Understanding your competitors at a deep level is one of the most critical and overlooked components of business strategy. Getting inside your competitor's head can reveal vital insights into their positioning, messaging, pricing, partnerships, and more. This intel can help you stay one step ahead.

In this article, we'll explore the fundamentals of competitor analysis and how to use these insights to crush your competition. Let's dive in.

Why Competitor Analysis Matters

You're probably thinking – I know who my competitors are; what more do I need?

Here's the thing: your competitors are working day and night to beat you. They're analysing your every move, uncovering your weaknesses, and finding ways to win over your customers. You're at a massive disadvantage if you're not doing the same.

Competitor analysis gives you an intimate understanding of their strategies so you can counter them. It also reveals gaps in the market you can exploit before someone else does.

Simply put, ignoring competitor analysis is negligent. To succeed in business today, you must consistently study and keep tabs on the competition.

How to Conduct Competitor Analysis: A Step-by-Step Guide

Doing competitor analysis effectively requires a systematic approach. Here are the key steps:

Step 1: Identify Your Competitors

It seems obvious, but determining your actual competitors can be tricky. Some options:

• Direct competitors – Companies offering similar products/services to similar customers. Your closest rivals.
• Indirect competitors – Companies solving the same customer problem/need but in a different way.
• Future competitors – Companies you expect to enter your market. Startups working on similar innovations.

Cast a wide net. Companies you least suspect can become your competitors overnight.

Step 2: Research Each Competitor Thoroughly

Your goal here is to learn everything you can about each competitor:

• Leadership – Who are their leaders? What are their backgrounds? How long have they been around?
• Mission and strategy – What are they trying to achieve? How do they plan to get there? Look for quotes, interviews, mission statements, etc.
• Products and services – What does their entire product line look like? How do they differentiate? What do customers say about them?
• Marketing and messaging – What are their primary marketing channels? What messaging do they use to attract customers? Look at their ads, website, collateral, etc.
• Pricing – How do they price and position their offerings? Do they discount? Bundle? Use financing?
• Partnerships – Who do they work with? Strategic alliances? Value chain partners? Co-marketing partners?
• Culture – What are their values and work environment like? What's their reputation as an employer?
• Financials – Revenue, profitability, funding, investors, etc. Look for annual reports and funding announcements.
• Customer base – Who are their target customers? What customer segments do they focus on?

Go beyond surface-level research. Dig into the nuances of how each competitor operates.

Step 3: Organise and Compare Findings

With your research complete, compile your findings into a spreadsheet or doc so you can easily compare competitors across different factors:

• Products
• Pricing
• Marketing
• Partners
• Culture
• Customer base

Look for patterns – where are competitors consistent or differentiated? What unique strengths or weaknesses stand out?

This high-level view makes it easier to spot gaps and opportunities.

Step 4: Uncover Strategic Insights

Now comes the fun part – analysing your findings to uncover game-changing strategic insights.

Look for:

• Product/market gaps – Needs competitors aren't satisfying. New segments or use cases to target.
• Messaging gaps – Misses in positioning/messaging you can improve on.
• Partner gaps – Potential partners competitors haven't tapped that you can leverage.
• Pricing opportunities – Ways to underprice and undercut competitors on cost.
• Feature gaps – Key features competitors lack that customers want.
• Demographic gaps – Customer segments competitors are ignoring.
• Service gaps – Ways competitors fall short on customer service.

These insights inform your strategy and areas to differentiate.

Step 5: Track Competitors Over Time

Competitor analysis isn't a one-and-done exercise. It would help if you tracked competitors on an ongoing basis:

• Set Google alerts on crucial competitors to monitor news.
• Follow leadership and company social media accounts.
• Subscribe to competitor blogs/newsletters.
• Periodically purchase and analyse their product/service.
• Watch for conferences they attend and announcements they make.
• Talk with customers and get feedback.

By continually monitoring competitors, you'll be among the first to know of any strategy shifts that present opportunities.

4 Advanced Competitor Analysis Techniques

Let's look at some pro tips and unconventional methods for even deeper competitor insights:

1 – Infiltrate Their Ranks

Try buying from them anonymously or reaching out with questions as a potential customer. Get sales reps on the phone. What info do they volunteer? This can reveal untapped weaknesses.

You can even find a job opening and go through their hiring process to get behind the scenes. Desperate? Maybe. Genius? Absolutely.

2 – Follow the Money

Research their investors, founders, board members, etc., to turn up relationships, other ventures, and insights into their priorities.

People's money trails tell you a lot about them.

3 – Get Into Their Head

Study founder/exec interviews to understand their thought process. Look for psychological cues in word choice and what motivates them. This can reveal their anxieties, biases, and blind spots influencing strategy.

4 – Role Play War Games

Map out scenarios where you directly attack different pieces of a competitor's business. How would they likely respond? Where are they most vulnerable? Wargaming strengthens your offence and defence.

These advanced techniques take competitor insights to the max.

Turning Insights Into Action

The true test of competitor analysis isn't conducting the research – it's acting on it.

Analysing competitors helps you:

Better position against them – Use your intel to differentiate. If they ignore ease of use, make it your #1 messaging focus.

Predict their moves – Anticipate what products, features, or markets they'll expand into next. Then, beat them to the punch.

Outmaneuver them – Know their roadmap and respond quickly to capitalise when they stumble or pull back on something.

Partner intelligently – See where competitors source key technology, components, etc. and choose their partners rather than directly competing.

Improve competitively – Use the best of their business model to shape your own, like pricing, customer service, or culture.

Target weaknesses – Go after areas competitors are weakest on, like market segments, product features, brand reputation, etc.

Better serve customers – Know exactly how you deliver more value than competitors and to whom.

The more deeply you understand competitors, the more skillfully you can adapt and take their business. It's a constant dance where the best dancers have the upper hand.

Competitor Analysis Tools and Tips

Conducting thorough competitor research requires tapping various sources and tools. Here are some valuable resources:

• Google News – Search competitors and set Google News alerts for the latest developments.
• Social media – Follow leadership and company LinkedIn, Twitter, and Facebook pages for real-time updates.
• Review sites – Check G2, Capterra, etc., for product reviews/ratings.
• App store listings – For software, download their mobile apps and see user reviews.
• Patent databases – Search Google Patents and Lens.org to find patent applications.
• Job postings – Monitor their careers pages for new roles that suggest strategy shifts.
• Funding databases – Crunchbase and Pitchbook to track investors and financials.
• Press releases – Subscribe to competitor PR wires for news announcements.
• Quarterly earnings calls – Public companies detail performance metrics.
• Website monitoring – Tools like BuzzSumo track website traffic and content.
• Search ads – Review competitor ads appearing for critical terms.
• Events/webinars – Attend remotely to hear company reps speak.

Tap these sources regularly to build your intelligence dossier on competitors.

Avoid These Competitor Analysis Mistakes

While competitor analysis is invaluable, it's easy to go off track. Steer clear of these common missteps:

Being reactive – Don't just monitor competitors; think ahead on how to use insights proactively. Don't get caught flat-footed.

Information overload – Gathering tons of data without distilling what matters is easy. Identify key focus areas upfront.

Mimicking mindlessly – Don't just copy competitors. Adapt insights to what makes you uniquely better.

Overestimating – View larger competitors objectively. They have weaknesses and constraints you don't.

Underestimating – Similarly, don't dismiss crafty startups. They could be tomorrow's giants.

Not customising for each – Don't take a one-size-fits-all approach. Analyse each competitor independently.

Neglecting customers – Talk to your customers to complement competitor insights with real demand data.

Undervaluing intel – Don't just gather info. Focus on insights that will directly influence strategy.

Avoid these missteps to keep your analysis targeted, pragmatic and actionable.

Key Competitor Analysis Metrics

To compare competitors effectively, focus on benchmarking key performance metrics:

• Market share – Their share of customers/revenue in your market. Are they gaining or losing share?
• Revenue growth – How fast they're growing provides clues on their momentum.
• Funding – Total capital raised indicates resources available to them.
• Valuation – Estimated company valuation based on funding rounds or revenue multiples.
• Web traffic – Monthly site visitors show their reach and engagement.
• Social followers – Reveals brand reach and traction.
• Reviews – Volume and quality of customer reviews on sites like G2.
• Headcount – Employee numbers suggest company scale.
• Partners – The number/status of their strategic partners.
• Pricing – How their pricing compares and aligns to value.
• Margins – Profitability clues, if available. Lower margins can fund undercutting.

Focus on metrics relevant to your market to quantify competitive positioning.

Competitor Analysis Templates

Creating a structured competitive analysis template keeps your research focused and organised. Here are sections to include:

Overview – The competitor name/description, key offerings, customers, founding date, headquarters, and leadership.

Financials – Funding, revenue, valuation, and metrics like those above. Charts are helpful.

Products – Details on product lines and key features. Use tables to compare features.

Pricing – Pricing structure, tiers, discounts, etc. Again, tables help compare.

Marketing – Key messages/positioning, channels/campaigns, and sample creative.

Partnerships – Strategic alliances, channel partners, and technology partners noted.

Strengths & Weaknesses – Summary of competitive advantages and vulnerabilities.

Strategic insights – Analysis of opportunities you can target.

Fill out a template for each significant competitor for easy cross-referencing—share templates company-wide so everyone benefits from the insights.

Sustain a Competitive Mindset

Competing with other businesses should stay top of mind in your day-to-day work, not just in competitor analysis.

Set Google Alerts – For critical competitors, so you catch every mention.

Designate ownership – Have someone responsible for monitoring competitors.

Create a tracker – A dashboard to monitor competitor metrics and trends.

Watch trade publications – For product reviews/head-to-head comparisons.

Share insights – Ensure sales, marketing, and product teams digest competitor intel.

Hold competitor reviews – Regularly circle back on what you've learned in briefings.

Recruit competitively – Hire intelligent people away from competitors.

Fly on the wall – Attend competitor conferences and events.

Talk to customers – Ask for objective assessments of competitors.

Weave competitive awareness into your workflow so it becomes second nature.

Turn Competitor Obsession Into Competitive Advantage

Apple famously has a “top 100” list of features to add that competitors already have. That's the essence of competitor analysis.

It can feel uncomfortable, even dirty. But obsessing over competitors is how leading companies stay ahead. They don't sit around brainstorming aimlessly – they react to competition.

Practice competitor analysis diligently, and you'll catapult past rivals stuck in their bubble. Adapt from their playbook, find their fatal flaws, offer what they don't, and seize opportunities they overlook.

Outmaneuvering challengers should be at the core of your strategy. As legendary coach John Wooden said, “Don't let what you cannot do interfere with what you can do.”

Go on the competitor's offence. It's how winners are made.

Frequently Asked Questions About Competitor Analysis

Here are some common questions about sizing up the competition:

Staying laser-focused on competitors will keep you steps ahead on the chessboard. Master their moves, improve their playbook, and sustain an obsession that drives growth. Game on.