What is it?
A competitor analysis helps you to see how your business is positioned in the market in comparison to your competitors. It will help you identify new trends in the market, and show you if you are still keeping up with industry standards.
It is much more than simply taking a nosey on their Facebook page, although that might form part of it. When you run a competitor analysis you are looking much deeper into their business model and activities, and analysing what they are doing well and what they are doing badly.
January is a perfect time to run a competitor analysis as typically it’s a time to take stock and make a strategy for the year. To make the most out of this process though, it is recommended you do it more regularly than that. You don’t want to get left behind, so try to check in with your competition quarterly.
How will a competitor analysis help me?
Essentially, it’ll help you grow your business and make more money!
Done well, an in-depth look at the market around you will give you ideas of new opportunities, and possible threats to your own business. You’ll use the data to position your business better in the market so you’re filling neglected areas and taking advantage of your competitors weaknesses. Plus, you’ll clearly see areas your competitors are out shining you.
If you feel like you are always competing for the same customers and are working hard to stand out, then a competitor analysis will really help you. If all your competitors charge the same price and offer the same stuff then it means you are competing on the same terms as everyone else. This means your customers have too much choice and will struggle to differentiate between you all. Your competitor analysis will help you identify a hidden niche, which means you’ll have much less competition, and your’ll become the obvious choice.
Who are your competitors?
Before you put your detective hat on, you’ll have to figure out exactly who your competition is. You have two kinds of competition, direct and indirect.
Your direct competition are those alternatives that do the same stuff as you. If you are a mobile dog groomer, your competition is the other mobile dog groomers that serve your area. Your indirect competition are all the alternatives that aren’t the same but do solve the same problem. In this example, they are the salon dog groomers, the DIY dog wash stations, and at home dog bathing!
An afternoon tea delivery business has direct competition with other afternoon tea delivery companies that cover the same area. Indirect competition might include local cafes, restaurants and caterers, plus gift delivery companies such as wine, flowers, chocolate and cupcake delivery, you might also be indirectly competing with supermarkets that offer the elements for a DIY afternoon tea.
A website design company is obviously in direct competition with other website designers, location is not an issue as this can be done online. Indirectly, they might be competing with the likes of Etsy and Amazon for eCommerce sites, JustEat, booking sites for hotels and hairdressers and site builders.
So, how do you do a competitor analysis?
There are lots of ways you can do this, but lets keep this simple and start by just Googling them! You’ll be surprised by what other people might be saying about them and their services. While you do your research make plenty of notes about what they are up to. What products and services do they offer, their price points, and their branding. How do they sell? Do they have a shop or office, or are they primarily online? How do they market themselves? Do they use social media and if so what platforms are they on, do they use it well? Do they have a blog or offer a newsletter, if so sign up for it! Check for paid ads, videos, do they offer regular deals, media coverage, and do they offer complimentary services such as delivery, bundles, upsells?
While you are on Google you can take a look at their reviews to see what other people are saying about them. You can also search for reviews on their socials, their own website, although they’ll probably be limiting the number of bad reviews that are shown there! Check review sites like TrustPilot, Feefo, and TripAdvisor. If you can, read a full range of good, bad and ugly reviews. This will give more clues as to the pain points of your shared customers.
Also look at their own social medias to see what are they talking about, what kind of content are they sharing, and how are their clients responding. You’ll be able to see how they are serving their own customers, and what you could be doing that they don’t appear to be doing.
As you work through each of your direct competitors you should start to see some themes coming through. It will help to organise your data a bit for more clarity, so I recommend doing a simple SWOT analysis.
If you’ve never done one, a SWOT analysis is a simple way of identifying the Strengths, Weaknesses, Threats, and Opportunities of your business. It’s pretty simple to do, just take a sheet of paper and divide it into four by drawing a cross through the middle. Then you make notes of all your strengths, weaknesses, threats and opportunities in each corner. It’s worth doing, especially for new and small business, as it pushes you to think of your business in a more strategic way. Plus, if you ever want to get finance for your business you’ll need a good one, so you may as well get into practice!
For the purposes of a competitor analysis though, I suggest doing one big one and making notes about all your direct competitors on it.
Do an in depth analysis for your direct competitors, but don’t forget about the indirect competitors! They will be a great source of ideas too, so spend some time researching them too.
How are you doing?
Once you have all the data you’ll have a clearer picture of what your competitors are doing. Now you can start asking yourself some questions, such as…
- What’s new and does any of it interest you, how could you improve on it?
- What are they doing well? How are you performing on those elements?
- What are they doing badly? How do you perform on those elements?
- What are your main selling points? How do they perform in comparison on these elements?
- What are the price points of your competition? Are they budget, affordable, premium, family, mid-range?
- How does your pricing compare? Is there a gap you could be filling rather than competing in the same range?
- What are their values? How do they communicate them and do they do it well?
- Did any of your research surprise you?
- What inspiration can you take by their processes/offering?
- How does their marketing compare to yours? What changes could you make?
The most important thing is to look for the gaps. Don’t fall into the trap of copying another business, instead take inspiration from what they are doing, and then take it to the next level. Filling gaps makes you the obvious choice when people are comparing you with your competition, it also makes your marketing easier. If you are the only one doing afternoon tea delivery to a specific location, then you have the market to yourself. Likewise, if you are the only premium web designer that offers all the whistles, bells and a cherry on top, then you are the obvious choice for that client!
How would your business benefit from a 1-1 with an experienced business adviser/coach?
Book a consultation with us now and we’ll help you figure this stuff out and make a strategy that is perfect for you!