Did you ever look at a competitor and think to yourself, why can’t our business be more like theirs? Or, on the other hand, that company is really good, but we are still beating the pants off of them. Or do you not even think about such things? If not, you should think about it. But not should you only think about it, you should actually do a competitive analysis. While the definition of a competitive analysis seems self-explanatory, entrepreneur.com clearly and concisely sums it up: Identifying your competitors and evaluating their strategies to determine their strengths and weaknesses relative to those of your own product or service. Still skeptical of the benefits? Maybe the following 4 reasons to conduct a competitive analysis will change your mind.
By analyzing your competition, you should be able to see clearly what they do well and not so well. Compare these findings to your own business. You may see some opportunities to tell your story better than others. Likewise, you can see how your competition tells a more compelling story than you – forcing you to up your game. Some factors that can help define your competitive advantage, and see how the competition defines themselves, include:
The foundation for Scaling Up relies on the 4 Pillars – People, Strategy, Execution, and Cash. “People” is listed first, and for good reason. In doing a competitive analysis, you can learn how others structure their management teams, how they recruit employees, learn about their turnover and employee morale, and compensation issues.
For competitors who are falling short in these areas, you can play offense. For example, you can recruit key employees from the competition and promote your business as being one that truly takes care of its people.
And when the analysis shows that the competition is better than you on employee issues, you should play defense. You can improve your employee retention strategies, you can make sure you have the right people in the right seats doing the right jobs that they love, and address other “people” issues that are holding your company back.
By looking at the competition’s processes, you can gauge if you are ahead or behind them. For example, if a competitor has figured out how to use certain technologies to move customers to the sales funnel thereby having a more efficient process and a higher close rate than you, you will be at a disadvantage. You will lose out on acquiring customers and your price per new customer will be higher than the competition.
At the end of the day, the information gained can make your business more profitable by streamlining processes. Profits will come from the creation of a better customer experience which brings loyalty – repeat business and referrals. Of course, you may also find other operational opportunities or deficiencies with this information.
Any competitive analysis must include a marketing analysis. How are your competitors attracting new business? Are they advertising, using social media, what is their spend, getting media coverage, and what are their key messages (competitive advantages)? Look at their website, social media pages, customer reviews, print materials, trade show participation, advertisements, and media mentions.
This information will allow you to find gaps in the marketplace, identify market trends, launch new products or services, improve the customer experience, implement best practices, and so forth.
Again, determine what they are doing well to gain market share or what threats are there to your market share.
At the end of the day, a competitive analysis will help you make better business decisions. It will also help you to strategically allocate resources. However, once the analysis is complete, you must implement change on offense or defense – or both.
Where to start? I say, call me and let’s have a conversation. In the meantime, I hope you find these 4 reasons to conduct a competitive analysis compelling and I am happy to answer any questions.