How To Perform A Competitor Analysis (And Why You Need To)
It’s perfectly okay to spy on the competition. In fact, it’s your only option if you want to take your brand beyond what it’s currently capable of. If you’re worried that an in-depth competitor analysis sounds confusing and time-consuming, you’re not alone. It can be if you go in blind, unsure of what to do.
Simply put, doing a competitor analysis can be challenging if you think your competitors’ success is owed more to luck than hard work. As many experienced entrepreneurs will tell you, success requires both luck and hard work.
Performing a competitor analysis (also called a competitive analysis) is something every entrepreneur needs to get intimate with. Not just once, but several times throughout your brand’s life. It’s not like going to the doctor for the routine poke-and-cough (ahem). A competitor analysis is a regular (read: several times a year) surveillance check to determine how you’re performing against similar brands in your market.
In this article, you’ll learn what a competitor analysis is, why you need one, how to perform one efficiently, and tools that will help you through the process.
If you get to the end of this article and realise that your Shopify site could be better optimised, let us know. We’re Shopify website designers and marketing experts, and we’ve helped many ecommerce owners get more sustained traffic and sales.
WHAT IS COMPETITOR ANALYSIS?
A competitive analysis is a strategy to identify and investigate your most significant competitors and their products or services, sales volume, and marketing strategies.
Essentially, you want to find out who they are and what strategies contribute to their success. Then, you use that information to formulate an action plan to improve your own business strategies. The point here is not to mimic their activities or branding but to use both as a starting point for enhancing your customer’s experience.
Performing a competitor analysis teaches you a lot about how competition works. No business is perfect. Strategies can always be improved. You need to find the holes in their approach and capitalise on them.
Some people suggest that a competitor analysis is valuable for the following reasons:
- Pinpoint gaps in your market
- Adapt competitor campaigns to out-sell them, which leads you to:
- Develop new (read: better) products and services
- Identify market trends
- Improve marketing and sales
All those reasons are valid. But as you’ve probably realised, there’s more to it than that. Developing a great brand and building effective growth strategies isn’t just about winning or being a mere step ahead of the other guy (or even giving him the old kibosh).
Real, sustainable business growth and brand personality and presence require a focus on how your business can be more effective in its own right, as well as outshine the competition.
So, a proper, in-depth, no-holds-barred competitor analysis helps you:
- Develop or rework your Unique Value Proposition
- Improve your product by identifying what customers like and don’t like
- Establish benchmarks to measure your growth
- Identify gaps in the market (where the customer isn’t being served)
How to Perform an In-Depth Competitor Analysis
The most critical step is properly identifying who your competitors are. If this step is inaccurate or inadequate, the rest doesn’t matter. Those competitors determine the insights that are going to help you in the end. Then, you need to identify the aspects of your competitors’ strategies that are worth analysing.
But, how do you get those data, and how can you use them?
Let’s start at the top:
Identify Your Competitors
All your competitors, direct and indirect, big business or small business to gain more comprehensive results. You need to look at who your competitors are and how they solve the customers’ problem.
There are three ways to look at this within a Who-What-How Framework:
- Direct competitors that have the same customers and offer the same solution
- Indirect competitors that have the same customer but offer a different solution
- Indirect competitors that offer a similar solution to a different customer
Who is the competitor? What is the problem they’re trying to solve? How do they solve it?
Identifying one of each type is the minimum. The more you collect to analyse, the more comprehensive your results.
Get a Company Overview
This is a bit like stalking someone on Facebook, except you do it on LinkedIn or using a tool like Crunchbase. What year did they start? Who are the CEO and other VIPs? Where are their offices located? How many employees do they have? These are starting points.
Then, who are their investors, and how large is their customer base? Dig around Google for press releases or interviews where your competitors have bragged (ahem) about their status.
Evaluate Their Product or Service Offering
This step may require more time and effort than other parts of your analysis. In this step, you conduct a thorough evaluation of the products and/or services your competitors are selling.
Identify and evaluate any technology they’re using to promote and sell their product or service. Tease out the features of their offering and organise them by relevance. Include the obvious ones, but dig a little deeper to identify more, as many as you can.
Then cross-compare. Evaluate the benefit of each feature to the customer on a core emotional level. What’s hitting the mark? What’s missing? What does your product or service have that others don’t? Where do they fall short? Is there more on offer than just the product or service itself? A bonus bundle, money-back guarantee, or freebies?
Perhaps the most critical question in product evaluation is: what is their core selling point? That should always speak to the core emotional benefit to the customer.
Include and compare price points across the board.
Brand Awareness / Reputation
Brand awareness and reputation have everything to do with what the customer is saying about your competitors. Check out their reviews and note the voice of the customer. These data provide you with a specific customer-centered perspective of how they use the products or services and their experience with them––the good, the bad, and the ugly. This is an excellent jumping-off point for improving your product and the copywriting used to attract, explain, and sell your product or service.
There are four major considerations here: SEO, social media, influencers, and content marketing.
How are they marketing? What social media platforms do they use? Are they big into video marketing? How do they rank in SERPs? Do they have any endorsements? Are they paying for advertising or relying on organic methods?
Find out what keywords they rank for and how many backlinks they have (and what they are). It’s critical to know what search terms drive their traffic and sales as that will help shape your keyword strategy. Information on backlinks will provide a list of any authoritative sites pointing to their site, which may be relevant to your site too.
Investigate which social networks they use and how active they are. How large is their following? How engaged are their customers? What types of posts do they put out and when? These data provide a benchmark against which you can develop or improve your own social media marketing strategy.
A GOOD STARTING POINT...
We hope this article has been a useful tool to get you started on performing a competitor analysis. While this depth of research isn’t necessary every time you analyse your competition, it’s a critical start.
We’re Shopify experts and ecommerce website specialists, and we can help with nearly any aspect of your competitor analysis. If you’re stuck on how to move or add elements to a product page, restyle your homepage, or optimise your site speed to improve your customer’s experience, let us know.
November 13, 2020