Competitor Analysis: Why Your Business Needs It
There are over thirty million businesses in the US, which account for 99.9% of all companies. Each month, an additional 543,000 businesses are started, bringing the annual total to 6.5 million. However, not all these businesses succeed. By the end of the first year, 20% of new companies fail, and this number rises to 30% and 50% for the second and five year marks, respectively. Contrary to what many people think, businesses do not necessarily fail because their value proposition was weak. Unfortunately, many external factors play a role, one of the most significant being competition. Competitor analysis can help prevent this.
Undoubtedly, as more businesses are formed, markets become saturated, and the level of competition rises. As a result, companies have to go above and beyond with the products and services they offer in order to thrive. Nowadays, this requires you to conduct competitor analysis to gain insight on how best to position your brand.
Do you want to learn how you can increase the chances of success for your business? Read on to find out the importance of competitive intelligence in modern-day business and how to conduct competitive analysis.
Today, it's crucial to have a comprehensive view of the business landscape. This means knowing your market, customers, suppliers, competitors, trends, and other relevant factors. Any significant shift in one of these elements may have a major impact on your enterprise. To gain a bird's eye view of the industry, companies are now investing in competitive intelligence (CI).
Such insight can only be drawn from extensive and effective competitive analysis. Also referred to as competitive research, competitive analysis is a process of collecting and analyzing an organization's market and competitors.
According to the State of Competitive Intelligence Report by Crayon, 94% of businesses invest in competitive research. But is it worth it? Here are some eye-opening stats about competitive analysis you should note:
Among the fortune 500 companies, 90% conduct competitive analysis
73% of large companies strongly believe that their previous campaigns would have been more successful with CI
70% of executives indicate that competitive research is the most important data insight tool when making senior-level decisions
How to Conduct Competitor Analysis
In order to draw valuable insight from competitive analysis, the process must be strategic and guided by your brand's needs.
1. Identify Your Competitors
The first step with competitive research is identifying your competitors. Though it may seem obvious and easy, it's not just about knowing your industry's biggest brands. Whereas they may influence the sector greatly and may be good for benchmarking your progress, it's also crucially important to identify those at your level.
For e-commerce sites, regardless of the product and services you offer, you are likely to find dozens of competitors. Narrow down this list based on other factors such as target area depending on whether you are a local, national, or international brand. Google is the perfect place to begin your search for competitors. Just enter your products and services as the search query.
It is important to hone in on the right competitors, or the insight you will get will be worthless. This is why having insight into your own company is key before you begin a search for competitors. The differentiating questions to ask are:
What is the problem you intend to solve?
Who are your target customers?
How are you going to solve this problem?
2. Do an Assessment & Comparison of Competitor Content
In the digital era, creating awareness about a brand, its products, and generating traffic greatly relies on content. After you have identified your competitors, go through their websites and social media pages to understand the type of content they use.
Are they focused more on YouTube videos, blogs, or social media? This information will give you a good idea of the best platforms and content to reach your target audience. More importantly, compare the quality of their content with what you publish on your site and social channels.
For your content to out-perform theirs, it must be of better quality and more informative and relevant to users' needs.
3. Assess their SEO Performance
Once you've understood what type of content works for your competitors, it's time to go deeper and find out what sets the ones that perform best apart. In most cases, the deciding factor on search engine performance is the SEO strategy.
SEO is what makes content relevant to a user's search query. This is why search engines increasingly invest in gaining a better understanding of search intent. Keywords play a crucial role in search rankings. However, even if you identify effective keywords, avoid stuffing them as this could backfire and have a negative impact on SEO.
While assessing your competitors’ performance on search engines, focus on:
The areas where they have a strong presence
Content that generates the most organic leads
How their rankings have changed over time
Their backlink strategy
If your competitors have an article that ranks high, create yours on the same topic, but make sure yours is more relevant and up to date. To outrank them, you need to use the relevant keywords and other semantically related words and phrases that your target audience is searching for.
4. Take a Look at Their Social Media Engagement
Without over 3.5 billion users worldwide, social media plays a crucial role in digital marketing. Social media platforms enable businesses to interact with fans and customers in a non-formal way. Over time it increases brand recognition and loyalty.
According to 73% of marketers, social media is a handy marketing tool. Each social media platform is suitable for different marketing strategies. Assess your competitors' social media engagement and the platforms they rely on most.
Identify Key Areas to Improve On
The purpose of conducting a competitor analysis is not to replicate what competitors are doing but to gain insight that will help shape your strategy. Once complete, take the positive things that they are doing and identify areas you can improve on. This will ensure you always stay ahead.
Customer feedback is a vital element when it comes to scaling a business, and it’s a core element of competitive analysis. If you don’t have a good grasp of your own customers, it doesn’t help to know what your competitors are doing. Remember that this is a critical comparative and relative metric, it needs to be considered in conjunction with your own data and your own insights.
Want to know more about how to implement competitor analysis and get the most out of your customer feedback data? Contact us today to schedule a demo for your company.