You already know that performing a competitive analysis is probably important…(because idk..it has the words “competitive” and “analysis” which sound kind of important)…
But do you know why?
Or even how to do one?
Never fear! By the end of this post you’re going to…
- Learn what a competitive analysis is (and why you should care)
- Easily be able to conduct your own competitive analysis (because I’m breaking it down into three easy steps)
- Get an example of what one looks like (for easy reference later)
- AND be able to download your very own competitor analysis template down below.
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Let’s get to it.
What Is A Competitive Analysis?
Let’s start with the basics - what is a competitive analysis?
It's exactly how it sounds - it’s analysis of your competitors!
Every business has competitors…
(tbh - the smaller you are, the more vulnerable you are to competition - so performing a competitor analysis isn’t just for the Nike’s of the world)
...and understanding the strengths and weaknesses of your competition (or even potential competition) is SUPER important to the success of your business.
And that’s where the competitive analysis comes into play.
Besides getting the lay of the land when it comes to evaluating your competition, conducting regular competitive analyses also helps you:
Understand the market…
Forecast the future of the market (especially related to the economic climate)...
Better target current customers…
AND helps you find new customers.
Said another way - conducting a competitor analysis is crucial to how you decide to operate your entire business.
Now before we get into how to do a competitive analysis…
Let’s get the *official* competitive analysis definition (for the sake of thoroughness).
Competitive Analysis Definition
According to Entrepreneur, the competitive analysis definition is this:
“Identifying your competitors and evaluating their strategies to determine their strengths and weaknesses relative to those of your own product or service.”
Basically, performing a competitor analysis is more than just figuring out what your competitors are (or are not doing)...
It’s about taking what you learn from the competitor analysis and optimizing your business. 💸
So without further ado…
Let’s jump into how to do a competitor analysis!
How To Do A Competitive Analysis
Performing a competitive analysis (while it might seem daunting at first), isn’t that complicated.
And to prove it - I’ve broken down how to do a competitive analysis in THREE (yes, just three) easy steps.
Step 1: Identify Your Competitors
Seems obvious - but first, you need to identify your competitors.
All you really need to do is perform a simple Google search of the products / services YOUR business offers, and make a list of companies that also show up in the Google search.
For example, if you sell paddle boards, you would type “paddle boards” into the Google search, and then review the results, and compile a list of companies who also sell paddle boards.
One thing to note here - you also need to be realistic about who your actual competitors are.
Here are a couple examples:
If you’re a small business owner with a local brick-and-mortar retail store that sells trendy women’s clothing, your competition is not the men’s retail store across the street (even though they are also selling clothing).
The competition you should really focus on would be another women’s clothing store who is literally selling the exact same product as you. They are the ones who will have the largest impact on your success.
If you’re a 10-person marketing agency in Sioux Falls, South Dakota, your direct competition is other similar sized marketing agencies in the area - not Ogilvy (a major advertising agency) in New York City.
And once you feel confident about your pool of competitors, it’s on to the next step!
Step 2: Research Your Competitors
After you’ve identified who your direct competitors are, it’s time to research them!
To be honest, this is the hardest step in the process, mostly because it can be rather time consuming. But, it's also is the MOST important step. Because the data you collect here will directly impact the outcome of your analysis.
Said another way - no cutting corners allowed. 😉
The first phase of the research should be focused on the business of your competitors.
Things you should look for include:
- How are they priced compared to you?
- Are they just an online retailer? Brick-and-mortar only? Or a combination?
- What is included in their product line?
Next - you need to figure out why a customer would go with you versus your competitors.
The *best* way to really get a feel for this is by surveying new / current customers AND implementing a survey for former customers.
(Note: it’s not easy for all businesses to collect information from former customers, especially if you’re in retail. BUT if you are able to get info from former customers (which is much easier if you have clients or run a subscription service where they literally have to cancel their membership to stop paying) this is a HUGE opportunity to gather critical information).
Here are a few questions you could ask new / current customers:
- What other business were you considering before you picked us?
- What do we have that our competitors did not have?
- Is there anything you wished we did have that our competitors do have?
And here are a few questions you would want to ask a churning / old customer:
- Why do you no longer use / work with / go to our business for X product/ service?
- What would have kept you from leaving our business?
- Do you now use / work with / go to one of our competitors? If so, why did you choose them over us?
^Asking questions like this in your survey is a GREAT way to get honest feedback, and will help you get a feel for how you *really* stack up against your competitors in the eyes of your customers. And while there are plenty more questions you could ask - these should help get the wheels turning. 😌
Finally, you need to dig into their marketing strategy and comb nearly every aspect of their website (and how they rank with similar keywords)...and do a clean sweep over their social presence.
Here are the major things you need to consider:
- What are they doing with their marketing content?
- What are there overall strategies when it comes to demand generation, PR / social media, and product marketing?
- Who is their target audience? (I.e. Young professionals? College students? Professional marketers?)
- How many followers do they have on all the social networks?
- How are they positioning themselves in the market? (I.e. Are they the highest / lowest $$$ option?)
And once you’ve collected all that^ data….
You’re onto the final step!
Step 3: Compare Your Business
The last step (and IMO - the fun part) is to compare yourself with your competitors!
The best way to do this is by performing a SWOT analysis for each competitor, which helps you identify your own strengths and weaknesses, and in turn, identify your future opportunities and threats (this is where the term SWOT comes from).
Once you’re done, you will have a clear picture of how you stack up against your competitors, and have all the information you need to decide what changes need to be made to optimize your business.
And just like that….
Your competitor analysis will be complete. 🙌
Competitive Analysis Example
Now that you’ve gotten the scoop on how to do a competitive analysis, let’s jump into a competitive analysis example.
Our guinea pig is…
...Isle Surf and SUP - a (you guessed it) surfboard and paddle board retailer. For the sake of not overcomplicating this example, we are going to focus solely on their paddle board competitors.
Step 1: Finding Isle Surf and SUP’s Competitors
First, let’s see what Google brings up for us and we can evaluate from there (for best results, search for your competitors product or service in Incognito mode).
Listed below are the search results (psa: for the sake of example, I removed a few annoying ads that were in the way 🙄).
^Looking at the above list, the competitors that Isle Surf and SUP should focus on are YOLO Boards, Tower, Boardworks, Walmart, REI, and DICKs.
Before we move on, you might be wondering…
“Why Walmart, REI, and DICK's? Those are HUGE retailers!”
Even though Isle Surf and SUP is a much smaller retailer, they are selling the *same* product - paddle boards - as Walmart, REI, and DICKs. So Isle Surf and SUP should also include them in their competitor analysis.
And now that we have Isle Surf and SUP’s list of competitors*…
...it’s time to move onto the next step!
*There are probably MANY more competitors for Isle Surf and SUP - but for the sake of getting you through this example faster...I kept it to seven. 😉
Step 2: Research Isle Surf and SUP’s Competitors
Pick one of the listed competitors, and start researchin’!
For the sake of the example, we are going to research just one of the listed competitors (Boardworks), and then you would just repeat the same process for each competitor.
First, let’s jump into researching the business side of Boardworks and find answers to these three questions:
- How does Boardworks pricing model compare to Isle Surf and SUP?
- What type of retailer is Boardworks compared to Isle Surf and SUP?
- What is included in Boardworks product line compared to Isle Surf and SUP?
In this stage, it was easy to find all the information by visiting Boardworks and Isle Surf and SUP’s product pages on their website, and here’s a breakdown of the business side of Boardworks vs Isle Surf and SUP via infographic:
Next, we need to figure out why a customer would go with Isle Surf and SUP versus Boardworks (and vice versa).
The best way to execute this portion of the competitor analysis (and would provide them with information on all their competitors) would be for Isle Surf and SUP to create a survey they could email to new / current customers - or in this case, someone who has just bought a paddle board.
They could easily include a link to the survey in an email thanking the customer for their purchase (separate from the order confirmation).
Here’s an example of the email:
And an example of how the survey could look if a customer chose to fill it out:
A key to a great survey?
Use a mix of open-ended and multiple choice questions. This ensures you get the answers you need, plus long-form answers written by customers (which are great for Isle Surf and SUPs marketing team to use when they are writing marketing copy).
Finally, let’s get all the marketing deets we can on Boardworks.
As a refresher, here are the major things that Isle Surf and SUP should consider:
- What is Boardworks doing with their marketing content?
- What are there overall strategies when it comes to demand generation, PR / social media, and product marketing for Boardworks?
- Who is Boardwork’s target audience?
- How many followers do they have on all the social networks?
- How are they positioning themselves in the market?
Based on my research throughout Boardworks (and Isle Surf and SUP) website, here is a breakdown (via infographic) of the differences between their marketing strategies:
Let’s move onto the final step!
Step 3: Compare Isle Surf and SUP With Boardworks
AKA...time to perform the SWOT analysis!
Here’s a nice visual of how this would look:
^The most important part of the SWOT analysis is how you use the information you learn from it…
So in this case, it looks like Isle Surf and SUP should capitalize on their main strengths, their website and overall marketing strategy, since both are far superior from Boardworks’...but it also looks like (based on their threats) that they should consider making adjustments on pricing and potentially their target demographic (depending on their overall market strategy) - or Boardworks might be able to close the gap on market share.
And once Isle Surf and SUP is finished researching and comparing their business against all their competitors...
They would have a clear picture of how they stack up against their competitors, and have all the information they need to decide what changes need to be made to optimize their business.
And just like that….
Their entire competitor analysis would be complete!
(Well, until they decide to do it again- which *cough* you should do every few months to make sure you’re making business decisions based on the most current information out there). 😉
Download Your Competitive Analysis Template
Get your *exclusive* competitive analysis template here.
Perform Your Own Competitor Analysis
Now that you know what a competitive analysis is (and why you should care)...
How to conduct your own competitive analysis (in three easy steps)…
You’re equipped with an example of a competitor analysis (for easy reference later)
AND you have your very own competitor analysis template.
It’s time to get to it.