How To Conduct A Competitive Analysis & WhyJan 17, 2023
When was the last time you ran a competitive analysis for your business? A quick perusal of a competitor's website and social media presence doesn’t count!
To build a successful business, you need to stand out from the competition while understanding what they offer. That requires studying who they are and what they bring to the market. To keep pace, you should schedule a full competitive analysis at least once a year.
If you cannot remember your last deep look at how similar businesses operate, you're likely missing out on important intelligence that could help your business grow.
A competitive analysis will point out your own unique advantages as well as any potential barriers to growth. Only then can you strengthen your marketing and business strategies. Once you learn the ins and outs of how your competition works, you can identify potential opportunities where you can out-perform them.
This exercise also keeps you on top of industry trends and ensures your product is consistently meeting — and exceeding — customers’ expectations.
Comprehensive competitive market research focuses on finding and comparing key market metrics that help highlight differences between your products and services and those of your competitors.
This research builds the foundation of an effective sales and marketing strategy that helps your company stand out from the crowd.
Want to conduct a thorough competitive analysis in two to four weeks? Follow these steps:
1. Determine who your competitors are
You need to figure out who you're really competing with before you can compare data accurately. What works in a business similar to yours may not work for your brand. Types of competitors include:
Direct Competitors – businesses that offer a product or service that could pass as a similar substitute for yours, and that operate in your same geographic area.
Indirect Competitors – businesses that provide products that are not the same but could satisfy the same customer need or solve the same problem.
The market can and will shift at any time, and if you're not constantly researching your competitors, you won't be aware of these changes.
This Statistics Canada tool helps you quickly narrow down your list of competitors.
2. Gather information on your competitor
Next, analyze your competitor's complete product line and the quality of the products or services they offer.You should also take note of their pricing and any discounts they offer customers.
3. Learn about your competitors’ systems and processes
Want to win against the competition? Then you need the same systems that reduce friction, increase momentum and make the customers feel like a million bucks. Here are a few examples;
For instance, perhaps you've seen positive reviews about a competitor's customer service. As you dig deeper, you learn the customer uses powerful customer service software you haven't adopted – yet.
Good customer relationship management (CRM) handles all your vital customer data, such as demographics, purchase records and previous messages across all channels. Now, your employees will have what they need to know about the customer at their fingertips. As a result, they can provide a better customer experience, which tends to boost customer satisfaction.
With an up-and-running CRM, you can streamline your sales process and analyze all of your sales data in one centralized place, potentially increasing sales and productivity.
Aside from facilitating communication between your business and your customers, a CRM makes it easier for your employees to communicate with each other. This software shows what other employees say to a potential customer, which helps your team maintain a unified brand voice.
Time and money matter for any business owner and an all-in-one point of sale (POS) system will help you save both. An easy-to-use POS system speeds up your checkout process during peak hours, which drives more sales.
It also prevents waste and loss via its inventory management system. This is particularly important if you’re running a food and beverage business with perishable goods.
4. Research your competitors’ sales tactics
Running a sales analysis of your competitors compares their performance with your own. Summarize everything that would make a consumer choose (or not choose) each one. These helpful pieces of information will give you a better idea of how competitive their sales process is.
Once you have this intelligence, you can prepare your sales reps to compete throughout the sale process.
5. Determine your competitive advantage
Don’t be shy about playing up a distinctive strength that appeals to your target market. This is a cornerstone for your brand image and messaging.
By seeing how the results of your competitive analysis fit with your business strategy, you may identify new areas of opportunity: a “sweet spot” you can take over or a gap you can fill to take your business to the next level.
If you see a weakness in the competition, you could lower your prices and launch new promotions to take advantage of the opportunity. Either way, you’re getting customers’ attention and showing them what you have to offer.
By conducting a thorough competitive analysis, you'll start to uncover areas for improvement within your own business. That way, you can better position your company for a brighter future.
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