3: Competitor Analysis
In order to be successful, you must know who you’re up against. In the past, it was easier to determine who your competition was. Today, small business owners or solo entrepreneurs aren’t just up against other small businesses or entrepreneurs, but with companies that make tools for people with no design experience to create their own designs.
A formal business plan always contains a section on the competition. You need to be aware of your direct competition, and you also must research companies that potentially make your service or product unnecessary.
The easiest way to do competitor analysis is to do an online search using the same keywords that your business targets. If you’re selling handmade jewelry you know that you’re not the only on doing this. But unless you’re starting out with millions of dollars in capital, you’re more likely to be competing with smaller companies like the ones who sell through Amazon.
Make a list of your largest direct competitors. Next, you’ll need to take a look at your indirect competitors. These are companies who sell products and/or services that eliminate or reduce the need for what you offer.
You’ll need to list these competitors as well, and brainstorm ways to counter objections from potential clients who are looking into these services or products.
Start with their website and take notes on each page. Learn about what they do and how they do it. Take notice of any gaps in the marketplace your company can fill.
Next, contact your competitor (or hire someone to do it) in an attempt to discover their sales process. Come up with a project, request pricing, and if you can afford to, purchase a product or service from your competitor. This gives you a complete picture of what they do and how they do it.
If you’re starting an ecommerce business, this step is much simpler. Repeat the process with a couple of competitors. You also may want to test what happens if you leave the site with a full shopping cart but do not checkout. Good ecommerce businesses have a process for capturing sales from abandoned shopping carts.
When you’ve identified your top competitors the best approach is to determine where their money is going. As it pertains to marketing, you should be asking, “what channels are they actively invested in?” Determining if your direct competitors focus on PPC ads or social media marketing will illuminate business strategies that work (and how you can improve them).
Utilizing a tool like SimilarWeb is the key to understanding these analytics and traffic statistics in regards to your competition. There are free and paid versions of the tool that allow you to break down and quantify the online world to help your business prosper. Figure out where your competition’s resources are going to guide your own.
Next, you should do a deep dive of their content and imagery to determine how they communicate with their customers. It’s important to research their website as well as their complementary social media profiles and take note of any differences across mediums.
First, take note of the primary types of content they utilize. Is their website flush with infographics? Do they seem to focus on long-form authoritative content? Pay special attention to the images that depict the ideal customer experience, and, by extension, the typical customer. What types of people pop up on their website? Does it seem to match the buyer personas you created? What age groups and ethnic demographics stand out?
Try to summarize the stories your competition is telling with its imagery and copy in one or two sentences. What does your competition want a visitor to their site to take away? By answering this question and transforming it into a story of a few sentences, you can categorize their overall marketing strategy and decide if you want to build upon that groundwork or go in a different direction to fill a different niche.
Once you’ve built a mini-profile of your competitor’s marketing tactics, locate their highest-performing content and see if you can identify why that’s the case. Tools like BuzzSumo allow you to quickly analyze content that consistently performs well and breaks down what’s shared the most often in your industry.
Is your competition providing actionable content? Are they irreverent and easy to read? Do they deliver their products and services with as little fluff as possible? Break down the attributes of their best content and see what you can evoke and build upon in your own content.