“You should really do a competitive analysis for your business…”
If those words fill you with dread or confusion – just keep reading, because we have a step-by-step method for getting you through a competitive analysis for your SMB with no tears and hopefully minimal frustration.
What is a Competitive Analysis?
It’s a method for closely examining your company and your competitors, finding out about their brand and their positioning, and comparing your strengths and weaknesses so that you can create strategies that capitalize on them. Usually, companies do a competitive analysis before a rebrand or relaunch, but anytime is the right time to do one for the first time! In a small company, usually it’s the (co)founder(s) and the design person (or team) that’s involved, but if you’re a bit larger, you’ll want to include relevant stakeholders and a person who is in charge of the brand (the brand steward).
How to Do a Competitive Analysis
Find out who your competitors are, and learn all about them. List all of them out, making sure to include both the giants of your industry and that place down the street. Remember to distinguish between your direct and indirect competitors. Your direct competitors are those who offer virtually the same product or service as yours in your local geographic area, and indirect competitors are those who provide products or services that aren’t a direct substitute for yours but satisfy the same customer need. For instance, if you are a small coffeeshop, a direct competitor may be a coffeeshop 3 streets away, while an indirect competitor might be a bakery just around the corner. When doing a competitive analysis, you should focus on your direct competitors, but be aware that your indirect competitors might become direct competitors at some point in the future. In the example above, if the bakery started selling coffee, it would become a direct competitor. If you’re not sure who your competitors are, you can do a Google search for related:yourwebsitehere.com and that will give you some ideas to start.
Divide them into two groups: Current – these brands are the ones you compete with day-to-day, and Aspirational – these brands are the ones you dream of competing with (the Big Guys)
Click here to download our interactive template!
Use our template to analyze your competitors. Fill out the template for each of your competitors, both current and aspirational. You’ll need to examine every aspect of each of them (sorry folks, this isn’t a quick process – but it’s necessary!) and really think about all of the boxes on the template. You can get *really* detailed when doing this, or you can do a more high-level analysis; both methods will help you identify trends, similarities, and differences.
Analyze your own company brand with our template. Try to look at it from an outsider’s perspective – what would a target consumer think?
Try “ghost shopping” at some of your competitors. Make a purchase of their product or service and review the entire buying process. How do they sell? Do they upsell? Offer discounts? Is their customer service friendly and helpful? Are they trying to retain you as a repeat customer, and if so, how?
Review the results. Take a look at the template analysis of your company and your competitors, along with your findings from the “ghost shopping,” and see where your company stacks up.
What to Do with Your Competitive Analysis Results
So now you can see where you stand relative to both your current and aspirational competitors. You can use insights you have gained in many ways. One of the easiest is to “borrow” some of your competitors’ great ideas and make them your own! You can also see from the SWOT Analysis at the end of the template the weaknesses of your competitors, which can translate into strengths for your company, if you can figure out how to incorporate them into your marketing strategy. You can learn from the mistakes of your competitors, and make sure you don’t repeat them yourself. And you can also see any gaps in your current business plan that could be exploited by your competitors, and work to address them.
One thing to remember is that a competitive analysis is not a one-time process; it should be updated every year since you, your competitors, the market, and your target audience will likely change over time. As we said above, it’s also not a quick process, if you do it correctly. But the insights you can gain from this research will help guide you in a data-driven manner toward a more powerful and effective marketing strategy. Don’t forget: the most important result of a competitive analysis is action…you have to actually put your findings to work for it to be worthwhile.
