Analyzing Competitors Without Driving Yourself Crazy

Last week, we talked about what a SWOT analysis is and why you should be doing one on a regular basis. This focuses on you and your business, plus the external things that can affect it. Your competitors are only a small part of a SWOT Analysis. 

This week, we’re focusing on competitors. Or rather, how you can do an in-depth analysis that outlines what they’re doing without comparing your brand to theirs. 

First off, a competitive analysis is a strategy that allows you to identify who your competitors are and what they do by researching their products, sales, and marketing strategies. This analysis, used in tandem with your SWOT analysis, will give you in-depth information about your market and help to guide your efforts more efficiently. 

Alright, so you’re sold on the idea… where do you start?

Who are your competitors?

I’m willing to bet you already have a short list of businesses who you keep an eye on. You consider them your competitors in some way shape or form, but they aren’t necessarily who we’re going to focus on for this analysis. 

On that list of businesses, you need to determine who is a direct competitor and who is an indirect competitor. 

A direct competitor is a business on your list that offers a product or service that could directly fill your niche if you went out of business tomorrow. They solve the same problem, for the same demographic, in the same geographic area. 

An indirect competitor provides products that aren’t necessarily the same, but could satisfy the same customer or indirectly solve the same problem. 

For example, you run a breakfast restaurant. There are two other restaurants in your little town, one that serves breakfast and one that serves lunch and dinner. Both of these restaurants are competitors. They exist in the same geographic location as you and solve the same problem, hungry guests. However, only one is a direct competitor… the other breakfast restaurant. 

Make sense? Make a list of both competitors and then put a massive ex through all of your indirect competitors. We are not focusing on them for this analysis. 

Take stock of everything your competitor is doing.

And I mean everything. 

Make a list of their complete product line and the quality of what they have to offer. Get specific, down to how many SKUs you estimate they may have. Take note of their pricing, the discounts they’re able to give customers, and who their vendors might be. 

With this information, start to ask a few questions: 

  • Do they have a plan in place for recurring purchases, or are most of their products one-offs?
  • Do they have a wide array of products?
  • What are their stock levels like?
  • How do they distribute their products?
  • What is their market share and how long have they been in your market?
  • How are they different from you?

Know where their business and their products differ from yours and how they stand in the market in comparison. Don’t beat yourself up over products you wish you had or discounts you’d like to give, in order to make a strategy you need to know where you stand. 

Take in as much information as possible including their supply chain and how they get their products into the market. 

You’re going to need this for later when looking for possible opportunities.

Check out their sales tactics and the results that you can see.

What does their sales process look like?

Do they post and watch the customers roll in? Are they constantly sending out sales emails? Do they cold call potential customers for bookings or appointments?

In order to create a strategy for your business, you need to know what your competitor’s sales process looks like. You should know where they are selling their products and how. Whether they’re looking to expand their reach or further entrench themselves in this market. Do they have multiple locations? Are they using influencers to tap into new markets? Do they partner with other local businesses? 

Take stock of who they work with and why. 

It can be hard to pull this information without physically being in their store, but sometimes it doesn’t hurt to just come out and ask. It’s likely that you share a customer base with these competitors. While I’m not telling you to interrogate your clientele for information, a casual survey sent out to your email list may help you pull some information about what sales tactics work and where else they shop. You can ask them questions about why they may shop at a competitor, what draws them to that particular location, and what they purchase from them instead of you. 

Don’t take the answers to heart, think about it more as reconnaissance. You’re looking for information, not a reason to brow beat yourself for missing an opportunity in the market. 

Know their prices and why they set them. 

Do you know what your customers are paying elsewhere for similar products? If you don’t know, then how can you say you’re pricing competitively?

A lot of different processes go into pricing. For example, you sometimes price high to convey a sense of quality or perceived value. Other times, there’s a gap in the market for something more affordable and you can price it low. 

If your competitor’s prices are different from yours for similar products, then you need to understand why. Are they using a different vendor and they’re able to make a larger margin while still undercutting you? Alternatively, are you pricing higher because you provide an additional service or guarantee for the same product? Are you prepared to explain why you’re priced higher if asked?

You may find yourself able to make some adjustments to your existing margins by looking at the pricing scheme of a competitor. 

A quick note on fulfillment…

How long does it take your competitor to fulfill an order placed online or over the phone? How long does it take you?

What do they charge for shipping? Are you able to adjust your shipping costs?

In this lockdown economy, curbside pick-up and online fulfillment times are more important than ever. You are competing with the likes of Amazon and Walmart for next day shipping. Make sure you’re not losing out to another small business competitor. 

As an FYI, long fulfillment times and high shipping costs are the NUMBER ONE reason for abandoned carts. No one wants to pay more in shipping than they do on an actual product. 

Quick tip: if you find yourself in a situation where you absolutely can’t adjust the shipping costs on a product in order to retain a profit, consider upping the price of the product. It will all total out to the same amount but customers are more likely to pay more for a product than they will for shipping costs. For example, for a $15 product + $10 shipping, consider adjusting prices and manually inputting a shipping rate that looks more like a $20 product + $5 shipping. 

Understand their marketing tactics. 

First step? Look at their website. 

You can learn a lot about a company’s marketing style by looking at their website. Do they put a lot of emphasis on signing for an email newsletter? Do they really want you to follow them on social media? Do they even have a website? 

This may not give you a complete picture of their offline marketing tactics, but it’s a good place to start. 

Consider everything about their content from how they write the copy for their products, down to any blogs or blurbs written on the site. 

From there, take a look at their social media. How often do they post? What kind of content is most prevalent and how does that differ from your marketing? What kind of engagement do they get on their posts and based on those numbers, what is resonating most with them? Check out the average number of comments, shares, and likes in contract to their followers to get an idea of their engagement rates. 

You can determine engagement rates by looking at the amount of followers and then totalling the likes and comments on any given posts. If they have 1000 followers and get 100 likes and comments on a post, that’s a 10% engagement rate. 

The marketing standard for engagement rates on Instagram is actually a measly 4.7%. Facebook is even less with anything above 1% being better than average. Keep that in mind when you’re looking at your own. 

By looking at the content that is resonating with their audience, you can determine how you may adjust your content to hit the same metrics with your own following, or expand your existing audience. 

How do they promote their content?

When they put up a new post, publish a new blog, or launch a product, how do they promote their content? Do they repost frequently? 

You undoubtedly see it online. Maybe they’ll create a reel featuring the newest product, knowing that the algorithm will take it further than a simple post. Maybe they’re always up on their story doing tours of their store, live events happening frequently. 

It can sometimes be more simple than that, like keyword density in their copy or amazing search engine optimization. 

When you have an understanding of how they promote their content, you can start thinking about the gaps in your customer outreach. Are there hashtags or locations you could be posting in that would boost your reach? Are they using a social media platform that you haven’t figured out yet? 

Use their failures and successes as a way to determine a plan to find the most engaged customers. 

Now you have all of this information, what do you do with it?

You have successfully creeped every inch of your competitors and you know them better than the back of your own hand. What do you do with all of this information?

Start to identify trends in the local market based on what you do, what was determined by your SWOT analysis, and what they’ve been doing successfully. Knowing these trends, whether it’s pricing, products, or sales tactics, allows you to identify opportunities to capitalize on their gaps or create a strategy to manage your weaknesses. 

More information always means you will have a higher likelihood of success. ALWAYS. Be an expert in everything about your local market and you’ll never miss another opportunity. 

If you would like some help evaluating marketing tactics or you need someone to take a look where you might need some improvement, we’re happy to help! We run a full audit for every client we work with to create a custom tailored solution for them. 

We don’t sell packages, we create strategies. 

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