8 Steps to Stay Ahead of Your Competitors and Grow Your Business
Regardless of the business sector you operate in, your industry will have competitors. With competitor research, you’ll gain insights into these players and discover general market trends that can help you differentiate your product and increase sales.
Competitor research and analysis provide key insights into each industry, such as differentiating factors, industry weaknesses and gaps, current marketing strategies, and business opportunities.
If we’re being honest, however, it is a time-consuming task that many people have not mastered. We’ve got you. In this article, we’re going to overview the main steps for a successful and efficient analysis that causes the least headache.
Let's get started by defining the term competitor research.
What Is Competitor Research?
Competitor research is a detailed study of your competitors to learn about their products, sales, human resource management, and marketing tactics. Such studies help you stay ahead of trends, identify growth opportunities, and spot threats to your business. It is also a powerful self-evaluating tool to reflect on the strengths and weaknesses of your business.
In short, periodically overviewing the practices of other businesses in your sector will guide you in your business decisions, will help you rank yourself within your specific market, and ultimately help you reach your target customers.
Why Should You Research Your Competition?
In every business sector, you’ll likely find several companies that are providing goods or services that, on some level, overlap the ones offered by your company. This means that you are essentially pursuing some of the same customers.
Understanding the market is the first step to securing a solid customer base and avoiding missing out on business opportunities.
4 Reasons to Start Researching Your Competitors Today:
- Understand your market better. With a comprehensive understanding of the market, your competitors’ position, and your own, you are in a better condition to make informed decisions and recapture your ideal customers.
- Find a sound basis for marketing decisions. From your research, you'll get a good sense of how to price your product, how to distribute it, and which platforms to advertise it on. Such information will assist you in making informed marketing decisions, highlighting your strengths, finding the right tone to communicate with your target customers, and the appropriate platforms to use.
- Identify business opportunities and gaps in the market. By identifying your competitors' strengths and weaknesses, you may find fractions of consumers who are not being serviced or are being under-serviced. This data will assist you in evaluating where your competitors are falling short and give you a headstart in reaching those consumers.
- Plan for the future. Take your business where it needs to go with the data collected from competitive analysis. This includes areas to improve your product/ service, added features, reformulating pricing models, and improved external communication of your products.
If your business is struggling to grow, reach its target customers, or stand out in a saturated market, your next strategic move should be investing in competitor analysis.
What Are The 3 Types of Competitors?
According to a 2020 report, carried out by Crayon, businesses faced 29 competitors on average, an increase from previous years. When carrying out competitive analysis, we typically look at 3 types of competitors: direct competitors, indirect competitors, and replacement competitors.
Direct competitors are directly at odds with your business. This means they offer identical or comparable solutions, have roughly the same target customers, and use the same communication channels. Usually, direct competitors are a direct risk of swaying your customers, but this doesn’t always happen. For example, Netflix and HBO are direct competitors but a customer could subscribe to both streaming platforms due to the different content they offer.
Indirect competitors, on the other hand, are businesses that offer entirely different products but operate in the same market. For example, fast food chains with different menus compete with each other even if they offer different products. Similarly, private transportation services compete with electric scooter rental companies.
Lastly, replacement competitors offer distinct services/products and operate in different markets, but address the same issue. Harder to identify, these competitors are still relevant to take note of due to their disruptive potential. For example, a cinema chain could identify other forms of entertainment as replacement competitors, such as streaming services.
8 Steps For a Rewarding Competitor Analysis
Whether your sector is prone to rapid changes or more stability, a business that is not adapting to the competition is risking stagnation or becoming obsolete. Follow the next 8 steps to stay ahead of the market and build a competitive advantage.
Step 1: Identify Your Competition
The first step in competitor research is identifying the biggest threats to your business. Even if you know already who the most well-known competitors are, there may be new players in the game that you are not aware of yet. Whether you are looking at high revenue, fast growth, or the most promising potential, take note of the businesses you will be tracking.
For example, if you are a startup in healthcare insurance, try competing with other small/startup healthcare insurance companies rather than considering UnitedHealthcare as your competitor. A common way to determine competitors is doing the mental exercise where you imagine your business does not exist and take note of where your customers could turn to for the same or similar products/services.
Business News Daily advises choosing 10-12 competitors to track and including direct competitors, indirect competitors, and replacement competitors.
Step 2: Define the Indicators to Track
Analysis can focus on different indicators, depending on your company type, growth objectives, target customer, etc. The aspects under examination should be relevant to the market you operate in and your specific goals. Some examples to track are company size, pricing, warehouse space, quality certifications, monthly volume of deliveries, market share, annual revenue, innovation, and more.
Step 3: Act Like Your Competitors’ Customer
The best way to collect authentic information is to go undercover and mimic a true customer’s interaction with a brand. Subscribe to their newsletter, follow them on social media, and sign up for any campaign they may have undergoing. If social media is an important component of your strategy (as is for an increasing number of brands), take note of how many followers they have, how often they’re active on social media, and the interaction they have with their followers.
Depending on the type of business, you may even consider purchasing some of their products to verify the quality, shipping process, and expediency of service. Check out their customers’ reviews and take note of repeated feedback, especially if there’s any negative feedback that could be addressed by your company.
In other words, you’ll want to have an understanding of the customer experience, in addition to the other analytics.
Step 4: Analyze Your Competitors’ Web Presence
Almost every business, bigger or smaller, will have a website to showcase its product or service. Study their online presence to understand what's well achieved, what could be improved, and what you could do better.
When browsing websites, take note of the following aspects:
- Is the website easy to navigate?
- Is the website mobile friendly?
- Is there a blog? If yes, how often do they post, and on what topics?
- Are they active on social media platforms? If yes, on which platforms?
Step 5: Complete the Research on the Chosen Indicators
Whatever indicators you have determined as relevant for your analysis, it is now time to fill in those fields. This may be a cumbersome stage that leaves some information incomplete, as most companies will not have some of their data public, such as expenses, sales volume, or exact team size.
At this stage, focus on the equally useful information you can easily find, such as pricing systems, user reviews, and product features. After this research phase, you may need to reevaluate the indicators under analysis to make sure you’ll be able to make a comparative analysis.
Step 6: Take Note of Their Strengths and Weaknesses (And Turn Them Into Opportunities)
With the information collected, you should now be able to identify some of your competitors’ strengths, weaknesses, and opportunities. Starting with the strengths, you may look at elements such as pricing, fast deliveries, strong website traffic, or SEO optimization.
Weaknesses should be evaluated in light of the market in which you compete in. Some examples of potential weaknesses would be low gross profit margin, high personnel turnover, an unintuitive user interface, or an insufficient online presence.
The weakness identified are potential opportunities you can explore in your business and learn from the competitors’ mistakes. This exercise will reveal several opportunities, which should be adapted to your specific business model, goals, and resources.
Step 7: Spot Potential Threats
New competition, new or improved products, appealing pricing, and new business models, are examples of threats to take note of when carrying out the research. Although not every threat requires your action, you should still be aware of them and adjust your strategy accordingly.
Step 8: Share the Data
At the end of this time-consuming research, take full advantage of the results by turning them into a short and actionable report. Make sure it is easy to overview by team members and staff, namely by using visual graphs, and that it paves the way to the proposal of solutions to improve identifiable weaknesses.
There are numerous websites and research tools that can assist you with your competitor research. The following list provides our recommendations for their effectiveness and specific insights:
- Crunchbase: This tool includes information about startup investments, funding information, founding members, mergers and acquisitions, and industry trends.
- Product Hunt: This is a community of startup founders, early adopters, and product enthusiasts that share new products every day, such as the latest mobile apps, websites, hardware projects, and tech creations.
- Semrush: This research tool helps you track SEO, PPC, keyword research, and study your competitors’ ad copy.
- SpyFu: This tool identifies your competitors’ purchased keywords and tracks the keywords and backlinks.
- BuzzSumo: This website helps you identify your competitors' content frequently shared on social media compared to others.
- Owletter: This website can track and analyze emails sent from your competitor's website, allowing you to evaluate their email marketing strategy.
Do You Think Your Time and Energy Could Be Better Employed Somewhere Else?
We’ve got you covered.
As we’ve seen, online research takes a methodical and comprehensive approach, requiring you to go through multiple websites, articles, blogs, social media, or even resort to online tracking tools just to find valuable and accurate information. A case study on competitor analysis found that 6 out of 10 marketers claimed they weren't very good at competitor research.
Imagine how easy it would be if you could get comprehensive and valid data on your competitors without going through these multiple websites.
By signing up with Pareto, you get custom-made data from your competition based on your requirements. Here’s how Pareto’s data operations can help you in your market research:
- Our team of expert data analysts will scan the Internet for your competitors, searching on Google, Product Hunt, Crunchbase, AngelList, among others.
- Define the search terms and get a competitive advantage by learning about market trends, your competitors' hiring history, customer feedback, and more.
- Stay on top of the market by receiving weekly updates on competitors' product offers, significant features, pricing, online activity, news mentions, and more.
By trusting Pareto to carry out the research on your behalf, you can focus on developing business strategies and focus your energy on where it matters the most.
Are You Ready To Explore The Power Of Pareto?
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Goodbye to burdensome and time-consuming competitor research.
Define your search criteria, get matched with a project manager, and leave the repeatable tasks with us. Communicate with your Pareto project manager 24/7 over Slack, Discord, or email and get valid actionable data at your fingertips.