Analyzing competitors can also help businesses discover new niches and new ways to reach and engage your target audience. All this relies on building a comprehensive competitor analysis report — one that is thorough, data-backed, and goal-oriented. Here are seven steps to take when designing your competitor report.
Step 1: Define Your Competition
Before you start working on analyzing your competitors, you need to know who that competition is. While you might already understand the niche that your company exists in, not all competitors within that industry impact your business.
At the same time, if you spend too much time reporting on the dealings of competitors who aren’t taking customers away from your company, you will fail to achieve anything from this exercise.
Look at the different kinds of competitors in your field — direct, indirect, and tertiary — to identify who you want to research. Listening to feedback from customers or searching online for similar businesses is a good place to start. Majority of your direct competitors will be the ones on your competitor analysis list, but a few from the other lists might sneak in as well.
Step 2: Analyze Your Competitors’ Strategies
Once you have identified your main competitors, it’s time to start looking through their strategies.
Here are the primary areas you should focus on:
- Product growth
- Market share
- Pricing strategies
- Distribution strategies
- Sales process
- Sales channels
- Growth strategies
- Marketing strategies
- Content strategies
While a lot of this information is available through companies’ annual reports, if you’re not in a large industry, you might need to do additional research through online marketing and sales channels.
Step 3: Build Customer Personas
You know which competitors to focus on and you’ve studied their strategies. But you also need to look at the target audience. Why do some customers prefer your brand, while others prefer your competitors? How can you win their market share and grow your company?
The best way to do this is to design customer personas — an exercise that is more crucial now because of the demand for improved customer experiences. To learn more about your customers in order to create the ideal personas, you should be asking these questions:
- What demographics are buying the products sold by you and your competitors?
- What is the response to your products and services?
- How does the buying process for your brand compare to your competitors’?
- How easily can customers find/ recognize your brand?
- How comfortable are they navigating your website and checkout process?
- What improvements would they like to see in your handling of customers?
- Which areas of another business would they like you to replicate?
You can collect these answers from survey questions, one-on-one interviews, or digital focus groups. Once you compile the responses, you will have a fair idea of who your customers are and how you can better tailor your brand to their needs.
Step 4: Analyze the Customer Journey
Understanding your customer profiles is an important aspect of the competitor analysis process, but you also need to know what stage your customers are in relation to you—this will help you implement strategies that draw in audiences.
A typical buyer’s journey generally follows four core stages — awareness, consideration, purchase, and retention. These can sometimes be followed by loyalty and advocacy stages where the customer returns to the brand multiple times and starts advocating for it without incentive.
Start by mapping out your customer’s journey—create a timeline infographic to illustrate each stage and how it relates to your buyers.
Not only should you examine how buyers engage with your company at these stages, but also what emotions your brand is trying to evoke. With a thorough understanding of your customers and their interactions with your business, you can move on to the next step in the analysis process.
Step 5: Find Market Gaps
With a clear idea of how your customers engage with you, as well as where your competitors stand in relation to you, now you can start looking at possible market gaps. There are a few areas where you can possibly extend your reach or get a leg up over your competitors. Look at what your competitors are offering in the following fields:
- After-sales services
- Brand personality and reputation
- Customer service
- Loyalty programs
- Pricing strategies
- Product accessories
- Product features, range, and quality
- Product warranties
- Value addition
This information should be readily available to anyone who has already purchased products from your competitors. You can also learn about these services by subscribing to your competitors’ newsletters, following them on social media, and by interviewing their customers. Chart out existing market gaps left by your competitors to find out how you can employ them to better engage with customers.
Step 6: Conduct a SWOT Analysis
A SWOT analysis or Strength, Weaknesses, Opportunities, and Threats is a key aspect of any competitor report—this method helps you break down company initiatives to understand what could work, and what might derail a strategy.
Though the SWOT doesn’t give you actionable items to work on, it does help to determine strategies. For instance, examine your products and compare their strengths against that of your competitors’. Are they better quality, better priced, offer more after-sales opportunities? What about weaknesses? Could your customer service for this product line be better? Are your competitors targeting a market you hadn’t thought of? Perhaps your pricing system could give you the opportunity to encourage multiple purchases—through BOGO, packages, or referrals?
Threats could be running out of products, or new competitors exploiting an area you aren’t equipped to enter as yet. A SWOT analysis will help you think of these strategies and find ways to improve them for your customers.
Step 7: Implement and Repeat
Share the report across your entire organization and work to implement your findings. Improving the customer experience is not just a job for the marketing department. Everyone can play a role — and should.
Building this report shouldn’t be a one-time exercise if you want to see real results. Businesses and industries change quickly these days and what worked at the beginning of the year might not work right now.
The competitor analysis exercise isn’t a simple one—it takes time and research to be so thorough. But once you have the necessary data, and you’ve put that data to use, it will be worth it.