No matter what industry you’re competing in, and if you’re in business you’re most definitely competing, it pays dividends to understand your competition – what they’re doing, where they’re succeeding, and where your efforts overlap. Understanding who they are and what they offer will help you to define how your customers define “superior”. That word is all that matters in competition. Whoever is described as superior wins. It’s that easy. Getting insight into where they’re winning, where they’re considered “superior” can help you overtake them where it matters most.
There are several steps you can follow to get the most from your efforts into competitive analysis – not to mention some tools that may make it even easier for you to get what you need.
We’ve shared them all below to give you the tools to undertake your own analysis of your local, regional, national, or international competitors. We’re available to help should you need more than what’s available here:
- Defining the Competition: Before any analysis can take place you need to identify who your biggest competitors are, or any rival that has taken a bite out of your business in a specific service or product category, then you’ll have a list to work from going forward. This will allow you to begin profiling each of them to better understand their strategies and any potential responses to your own initiatives. That’s key as it will allow you to prepare for any “retaliatory” moves they make after your own have been implemented – especially undercut attempts at defusing your promotions. They whole exercise should be aimed at identifying their strengths and weaknesses where your own efforts are concerned.
- Build A Market Share Array: This may be something you’ve never even heard of, but it’s not difficult to understand when you have it laid out for you. A market share array is actually just your own thoughts on your competition given meaning through weighted number ratings of 1-5. We’ve broken the individual steps out below:
- Determine the competitors: Choose the companies you wish to include in your array. You may include as many as you wish, but each will need to be rated from your own experience, so we recommend using your top 3-5.
- Identify benefits common customers expect: In order to properly rate each company in your array, including your own, you’ll need to imagine your ideal common customer and their specific expectations. These will be your key success factors.
- Identify key success factors: As stated above, your customer expectations will be your key success factors. These should include everything you believe is important to your customers. For example, innovation, advertising, branding, customer service, reputation, industry competence, etc.
- Rank factors: With your factors in hand you need to give them each a weight rating. When added together, all of the weight ratings should equal 1.0. So, one factor may be weighted .10 while another is .25. However, all added together must equal 1.0 exactly for your array to hold value.
- Rate each company: Now you just have to give each company in your array a value for each weighted factor. These values should be from 1-4 with 1 being the worst and 4 the best. When ratings have been given to each factor just multiply it by the weighted rating to get the weighted score. Add these weighted scores for each factor together and you’ll have a total combined score for each company. Use this to compare your efforts in key areas!
- Understand Their Strategies: This is where your instincts, experience, and creativity will serve you well. After all, knowing what a company is doing online doesn’t necessarily translate to seeing the big picture – particularly if you’re not informed about how individual initiatives mesh with others. If you get it, you can use it to your benefit. Imagine knowing the keywords your site is sharing with your three biggest competitors. If you knew their value you could adjust your approach to take advantage of areas they’re missing. You could allocate more budget to areas they’re winning and try to unseat them from their position. There’s no limit to what you can do once you know how they’re spending their own budgets – where, how much, and with what success. That’s pure gold in the right hands!
Cost-Benefit Analysis: So, your competitive analysis is complete. You have all your rated competitors neatly arranged. You know their efforts and have seen their impacts on your own bottom line. There has to be more, right? There is – cost-benefit analysis. CBA allows you to gauge the relative risk in moves you’re considering making. And, because you have the insights you’ve garnered through study of the competitors in your vertical you can be confident your estimates of project benefits will be as accurate as possible. Having real, actionable data on the potential risk/reward in any endeavor is going to prove useful – priceless even.