When it comes to competitor analysis the objective is to research your competitors, understand how they operate, and what tools, strategies and methods they use to optimize their efforts. To get off on the right foot, you also need to define what the analysis is for – are you looking to best your competition, learn from them or maybe even partner with them?
To truly maximize your efforts, however, it takes more than research. Before you head out on your quest, here are some point to consider:
1. Are you sure you know who your competitors are?
Many companies look at others in their space and right away label them competition. But that’s not always the case.
For example, a high-end burger joint may consider the neighboring McDonald’s competition. Sure they both sell burgers, but the audience who goes to a burger joint selling $ 10 burgers is probably not the same audience buying a big mac for $ 1. It would be similar to a Porsche dealership considering a Toyota dealership as competition. If they were to truly consider McDonald’s competition, they’d need to start lowering prices to the point that they would be losing money, while McDonald’s wins out by bulk buying and owning their own farms and factories.
Before you start analyzing competitors, establish what a actually competitor looks like.
2. Are there companies that are not competitors you can learn from as well?
While competitor analysis is aimed at your competition, you may want to expand your research and look for companies who share your audience but don’t compete with you directly.
As an example, take two airlines – both have a fleet of planes and work hard to secure customers, however, none of their destinations crosses paths. They’re both in the extremely competitive airline business, but they’re not actually competitors.
Recognizing this different can open up various opportunities to leverage each company’s offerings and audience to support and expand each others business, as opposed to competing.
3. Don’t put all your trust in your competitor
Just because they’re a competitor doesn’t mean they’re doing everything right, it’s easy to look at the top company in your industry and simply try to copy everything they do – many companies try to be the next Google or Facebook. But what worked, or works, for them might not work as well for you.
It’s great to learn from successful companies, but you have to keep in mind they have the infrastructure budget and experience to do what they’re doing. Moreover, the bigger a company gets, the more mistakes they’re likely making, Google, for example, has more failed products than winning ones, it’s just that the wins make up for the losses. Google Buzz, Google Notebook etc, imagine if you were a startup and decided to emulate one of those Google products.
4. Make sure you understand what you’re analyzing
Companies use many tools for various reasons – it’s not enough to know what tools they’re using, you need to also understand why.
A tool like the Chrome extension Tag Explorer, for example, can tell you what tags have been implemented on a competitors’ site – if they have a tag for Facebook, Google, Mixpanel and so on. This can give some insight into what tools they’re using, but many of these tools can be used for various functions, so it’s important to gain an understanding of how they might be used before jumping to conclusions.
5. See the big picture
Most successful companies have a method to their madness – it’s not one thing they do it’s a collective effort, with they have various levels of support. Before you choose to go down their path, make sure you have a similar support structure in place.
6. Believe in yourself
It’s great to see what the competition is doing, but that can also lead companies away from what they originally set out to do. If your company is failing and the competitor analysis is an attempt to right the ship, that’s fine, but if all’s going well and your own strategy is working, be careful not to steer away too much – or you might be headed for an iceberg.
Competitive analysis can be a great way for a company to learn its ecosystem, define goals and perfect its strategies, so long as you keep in mind that the grass isn’t always greener on the other side. Hopefully these tips help refine your own competitor analysis efforts.