5 steps to conduct a competitor analysis
Surely you’ve heard the saying “Friends close and enemies closer” and that phrase makes a lot of sense for this article because you should have your friends (customers) close, but you should keep your enemies (competitors) even closer, in fact, always in sight.
By doing an analysis of your competitors, you will not only understand how you can stand out, but it will also help you not to bite off more than one can chew.
What is competitive analysis?
Competitive analysis, also known as market study, is research on what your competitors’ companies offer to the public, how they run their business, and how they are perceived by customers and potential customers.
This is an important practice for the planning and sales management stages because it allows:
- Making decisions based on good practices, i.e. not biting off more than one can chew
- Identify the risks and opportunities that are capable of harming or boosting your sales.
The importance of conducting a competitor analysis
But why should you invest time and money looking at competitors when there is so much work to be done in-house?
This is a very common question… to which we have a very simple answer: to ensure that your company is always one step ahead, the one that offers the best solution and the best conditions for customers.
In this way, you can say that analysis allows you to create strategies and implement changes that will be able to increase your sales, leverage your revenue, and, consequently, better position your brand.
It is clear that the initiatives that drive your business should not only be based on what your competitors are doing.
The information obtained by a good analysis of the competition is another element to be considered for the strategic plan, added to the knowledge of your audience/customers, the results, and history of your sales, among many other factors.
Analyzing the competitors in 5 steps
Although it may seem complex to carry out an analysis when you have limited resources, it is not an impossible task.
Ideally, there should be a person or a team dedicated to this type of analysis.
But if this is still not possible, you should at least incorporate the following steps when drawing up a new plan that considers a broader market scenario.
You should take into account these 5 steps:
1. Set clear objectives of your competitor analysis
Every kind of study or research needs clear objectives to be achieved during its execution.
If you do not outline these questions at the very beginning of the work, it may result in wasting time on not very useful data or, even worse, in missing the most important information.
So, at this stage of your competitor analysis, try to set some priorities when doing the market study.
Some examples might be:
- Having a solution with better positioning to set prices for your services or products;
- Improving the perception of your brand, being recognized as the company that provides the best customer service;
- Conquer new customers within the active base of your competitors, knowing the weak points of your products and services.
These types of objectives will guide you throughout the study, giving you guidelines on the type of KPIs (Key Performance Indicators) that you should take into account and what conclusions should be presented.
2. Choose the criteria to be analysed
Once you have defined the objectives of the analysis, it is time to select all the relevant KPIs that should be found on each of the competitors to achieve that objective.
These are some KPIs that are usually researched in a market study:
- Data on the foundation and management of the company;
- Main products and services;
- Price and discount policy;
- Differentials in the market;
- Marketing and communication strategies
Did you know that you can automate KPIs?
3. Identify the best collection method
Although much of this data is exposed in public databases, it is still necessary to carry out important deeper research work, consulting former clients, using analysis tools, and searching for data on the internet.
For this reason, once the information needed for the study is defined, you also need to set the ideal method for collecting it, foreseeing the costs and the time to be dedicated by the team.
Tools that help you analyze competitors:
- Google Alerts
- Facebook Library
- Social Media Analysis Tools
4. Collect and interpret data
Ideally, there should be a very well-defined period of time for this, as sales, marketing, and communication strategies can change due to campaigns and seasonal events – like Christmas or holidays, for example.
And from there, compare your competitors’ data with your company’s data.
5. Present the results of the competition analysis to the areas involved
Finally, the data should be consolidated in a study and presented to all interested areas.
Far beyond the commercial area, the analysis of competition should reach the Finance department, the Marketing area, and even Human Resources, which can elaborate training and benefits for salespeople that motivate them to sell more.
As you have just seen, it is not a 7-headed monster nor is it necessary to spend a fortune to analyze the competition, and it is certainly an added value for the growth of your company to do this study.
Remember to set clear objectives and relevant KPIs, any questions you can always talk to us!
Continue reading: Benefits of Data-Driven Marketing for agencies.