What is competitor analysis?
What is competitor analysis?
Hello there, my name is Martin Henley this is the what the series and in this, episode number 16, we’ll be answering the question what is competitor analysis and is it competitor analysis that’s the shortcut to your business success?
How are we going to define competitor analysis?
In addressing the question what is competitor analysis there are six things we’ll be sharing with you. We are going to entrepreneur.com for a definition of competitor analysis; we’re going to think about what a competitor is; why competitor analysis is so important; what to ask in your competitor analysis; how you do competitor analysis and when to do competitor analysis.
Let’s go Ricky.
Did we manage to find a definition of competitor analysis?
In addressing the question what is competitor analysis we’re going to need a definition and we found one at entrepreneur.com. What they tell us is that competitor analysis is about “identifying your competitors and evaluating their strategy to determine their strengths and weaknesses relative to your own products and services.”
This is a great definition of competitor analysis. The only two things that I would add is that competitor analysis isn’t limited to your products and services – this is about everything that your company does, everything that your company offers, including the service levels. I would also say that competitor analysis is not limited to the strengths and weaknesses – you need to know everything about your competitors if you’re going to be successful in your business.
What is a competitor?
When people think about competitor analysis they typically think about the most obvious competitors – competing businesses, businesses that offer similar products or services and compete with you for your customers. Actually competition isn’t limited to other businesses that might provide similar products and services, competition might also be alternative technologies – technologies that do the things that your products or services could be doing for them or it could be alternative methods. If your prospects have a challenge in their business how are they overcoming that challenge currently?
What’s important when you think about competitor analysis is that you don’t just think about those businesses that look like you, that sound like you, that offer similar products and services. You need to think about how if a potential customer has an issue are they overcoming that issue currently. When you do your competitor analysis you need to think a little bit more broadly about what a competing thing might be, it might be another business, it might be another process.
Why is competitor analysis so important?
I’ve got three good reasons why you should be investing in competitor analysis.
The first is about existence. It’s great to have an innovative new product but the simple truth is that if nobody’s making money in your market selling the solutions you provide to your prospective customers that tells you something about your market; ie that market may not exist. If you don’t have competitors that’s not good news. You want to have competition in your market, you want to see how people are making money in your market with the products and services that you’re looking to provide.
The second reason is about shortcutting the process to your business success. If you want to be the best in your market all you need to do is everything that your competitors are doing that is good and add your 10% on top. Your 10% of innovation should be the icing on the cake – do what your competitors do which is good, cut out everything that they do which is bad, add your 10% of innovation and you will be the best in your market.
The third reason is about external perspective. We’ve spoken a lot in the course of these videos already about how your perspective is likely to be different from that of your customers or of your market. Competitor analysis will show you how your competitors are talking to your market about the same issues and it might be different to how you talk about those things. Do your competition analysis and so you will have two ways of talking to your market or you might have one way which is better.
So there you are three good reasons to be investing in your competitor analysis.
What should you be asking in your competitor analysis?
Hopefully you’re hearing me and you’re thinking yes competitor analysis sounds really interesting, really useful, really important – but I don’t know what I’m supposed to be asking. You need to ask everything you can possibly imagine; the more you know about your competitors the more successful you will be in your marketing.
You want to be thinking about who your competitors are, you want to be thinking about who their customers are; who they are targeting; what they are taking to market – what their products and services and solutions are; you want to think about which of their products and services are most successful, most attractive, most useful to their customers; you want to think about when they go to market; you want to think about where they go to market – which channels they are using and you want to think about how they get their customers – which of all of their marketing initiatives are the ones which are actually driving customers to their business. The most important thing is to understand why – why do their customers choose their business over other businesses that might be providing similar services, why do their customers actually buy from them.
If you knew all of this about your competitors then you would be really well dressed for some really successful marketing.
How do you do competitor analysis?
So now you’re thinking Martin of course I would be much better off if I knew all of this information about my competitors but who in their right mind is going to provide me with this information?
The good news is that there are a number of places that you can go to for this information. In the UK we have a government service called Companies House which publishes the profit and turnover results of every limited company in the country, this will give you an idea of how your competitors are performing – or at least how they’re performing as far as the taxman is concerned. Beyond that you can go to their website where they will list all of their products and services this will tell you what it is that they are taking to market. You can subscribe to their email lists and then every time they email people you will know what it is that they’re marketing right now maybe what some of their customers are achieving by using their products and services. You can look at their their social media and follow them on Twitter, Facebook and LinkedIn and wherever else they might be where they will be talking about what it is that they do, what’s good about what they do – this will give you a sense of what their messages are.
This level of competitor analysis will give you an overall sense of what and how your competitors are doing – but you might be thinking, because you’re sharp, yeah but what they tell the taxman isn’t necessarily true and what they put out through their marketing probably isn’t true, it’s just what their marketing people thinks is interesting and useful.
Like I say this level of competitor analysis will give you an indication but if you’re not happy with that you can resort to my absolutely favourite way of doing competitor analysis which is to pick up the phone and speak to somebody. What you’re looking for here is a mouthy sales person, and what you need to remember is that sales people are paid to talk to people and typically nobody wants to talk to them. I’m not saying you should phone up and ask them all of these questions straight off the bat, they might rumble you in that instance, they may not want to talk.
If you phone up and you say I’m interested in the products and services that your business provides, and you know I’m kind of interested in marketing and how you do your marketing then you can very easily get into a conversation where they will tell you everything. If this sounds a little bit to subterfuge, if this sounds a little bit too sneaky you should know that some industries, very competitive industries, do this regularly. The hospitality industry do this, all sorts of industries do this work because it’s important to know how your competitors are doing.
I have a for instance for you.
At one time in my life I was selling to a business that were converting cars to run on LPG and we had a competitor spring up in London who was doing fantastically well. I picked up the phone and spoke to that business. I got hold of the business owner and we had a conversation – I’m interested in LPG, I’m interested in you converting my car from running on petrol so that it is more energy efficient, maybe save myself some money. We spoke and we spoke and we spoke and within about 40 minutes he had told me all of the answers to all of the questions above – because he was hugely proud of what he was achieving. Do you know why he was doing so well? He was doing so well because he was putting a 20 pence sticker on the bumper of every car that he was converting and the sticker read I’m not paying the congestion charge – are you? The sticker had his telephone number on and he claimed he was getting twenty to thirty telephone calls a day from that sticker. In this instance this competitor analysis gave us all of this information above and it answered the mystery of how do we reach these people and what motivates these people to convert their cars to LPG. Before you tell me that no competitor is going to give you all of this information try – because you will be surprised and amazed and you will be ahead in your marketing once you have done some effective competitor analysis
When should you be doing your competitor analysis?
You should be doing your competitor analysis like we are now as part of your marketing analysis, as part of a situational analysis. And you should do competitor analysis regularly. We’ve spoken already about getting yourself on the email list of your competitors then this information or some of this information is going to come in to your inbox constantly. When you do your marketing analysis you want to do an in-depth job of your competitor analysis and then you want to have an ear out for what it is that your competitors are doing all of the time. You need to do competitor analysis at every single opportunity.
The other source of great competitor information that we haven’t spoken about here is people who might be buying from them. Their customers might tell you about their business. If you’re talking to your customers and they are buying similar products and services all over the market you should be asking the questions; how are the competitors doing? what are they doing that’s different? what are they doing that’s good? what are they doing that’s bad?
The answer to the question when should you be doing your competitor analysis is do a good job now as part of your situational analysis, do a good job regularly, keep an ear out for what they’re up to and take every opportunity to find out what it is that your competitors are doing that’s good, that’s bad, that’s indifferent – whatever it is your competition are doing, you want to know.
Did we manage to define competitor analysis effectively?
If you are still with us well done you now know exactly what competitor analysis is; you know what a competitor is; you know why competitor analysis is so important; you know what you’re looking to find out through your competitor analysis; you know how to do competitor analysis and you know when to do competitor analysis.
Which leaves only one video left in our situational analysis series which is what is SWOT so make sure you join us in video number 17 what is SWOT analysis?
What should you do if you have found this competitor analysis useful?
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We are done here Ricky.
WHAT DO YOU THINK?
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