A competitor analysis is an important process of digging deep into the weaknesses and strengths of rival businesses. Running a competitor analysis is key when looking for new opportunities to outpace your competition, particularly in a crowded market space.
In this guide, we’ll help you understand the benefits of a competitor analysis and provide you with a step-by-step guide to running your own. From here, you can take this information, put it into action, and adjust your current marketing strategy to outpace your toughest competition.
Why Run a Competitor Analysis?
Whether you are running an auto repair shop in a small town or a plumbing company in a major metropolitan area, there are undoubtedly numerous other businesses operating in the same vertical as you, competing for the same customers. A competitor analysis helps you get to know your competition on a deeper level. By gathering key data points, you can analyze what your competition is doing to win over customers, which is imperative to improving your own strategy.
A competitor analysis will help you understand:
- How many businesses are operating in your vertical
- Who is your toughest competition
- What is your unique value proposition
- What strategies are earning your competitors leads
- Where your competition is weakest
- How you can adjust your marketing strategy to take a competitive lead
This information is critical when building out your own benchmarks and goals. If you don’t know what your competition is doing, you risk losing customers or missing out on key opportunities for driving revenue.
1. Find Your Competition
The first step in running a competitor analysis is to create a list of your direct and indirect competitors. Your direct competitors are the businesses most closely aligned to your company. They are businesses that offer similar services or products in the same area as you are. Think of these competitors as the ones most motivated to fight for the same customer as you.
Your indirect competitors are companies that might overlap your space but aren’t operating in direct competition with you. In some cases, they might only offer a few of the same services as you, or might be focused on a different niche market than you are.
You can probably list at least a handful of your competitors, both direct and indirect. However, for this first step, take the time to not only research further, looking for any competitors that might be new to your market space, but also to list each competitor in a document.
This list should be revisited at least once a quarter. As new competitors enter the market and older businesses exit, you can update the list to reflect the latest information.
2. Build Out Information on the Competition
Once you have a list of your competitors, it’s time to gather preliminary information about each company. Create a profile for each competitor that lists the following information:
- What services do they offer?
- Their pricing structure (if you can’t find this information readily available, take the time to secret shop the company and pull quotes)
- Estimated market share
- The total number of employees they have
- Their unique value proposition
- Their website information
- Their social media channels
3. Analyze Marketing Strategies
Once you know more about your competition, it’s time to analyze how they are marketing their business to customers. This is a critical step, as it can provide you with a detailed look at where your competition might siphon off your business.
Break down your analysis of their marketing into two key buckets.
1. Paid Strategies
Is your competition running paid ads? If so, gather as much information as possible on how they are marketing their business via paid ads. Examples of paid strategies include:
- Google Ads
- Social Media Ads
- Radio Ads
- YouTube Ads
- Television Ads
- Newspaper Ads
- Direct Mailers
Create a checklist for each competitor and mark whether they are using these paid strategies. If possible, find out information about how much they are spending in each category and how successful these campaigns are. While this information might be more difficult to dig up on your own, there are numerous tools on the market that can help you unearth this data. The following are a few examples of do-it-yourself options:
- Google Ads Auction Insights (this is built into Google Ads, so if you’re already running a Google Ads campaign, take advantage of this report)
Another way to gather this data is to work with a marketing agency. For example, at J&L Marketing, we can help you put together a competitor analysis report that will show you where your competitors are spending their marketing dollars, complete with actual examples of your competitors’ online ads.
2. Organic Searches
When customers are searching for businesses similar to yours, they will often turn to Google for quick answers. As part of your analysis, you need to understand where your competition is outranking you organically, or where they might be leaving you room for opportunity.
Start by putting together a list of keywords that are important to your business. This should include the services you offer and the phrases your customers are most likely to use when searching for your company.
You can find out how well your competition is ranking for shared keywords by doing a manual search, or you can use a tool like Ahrefs to put together a full report on how your business ranks against the competition.
4. Research Customer Feedback
Another powerful tool for analyzing the strengths and weaknesses of your competitors is to take the time to read their online reviews. Going back through your list of competitors, visit each business’s Google Business Listing and any other listing sites where you can find reviews for their company.
Sort reviews from best to worst, and look for key trends. Questions to answer about each competitor include:
- What is the number one complaint of customers? This can become a powerful insight into where your business could outperform your competitors.
- What is the number one praise customers are singing? This will let you know how your competition is building loyalty. It can also give you a better insight into what your competition’s unique value proposition is.
- What is the overall rating for a business? Aggregate ratings from across the web to gauge how happy customers are with each business.
5. Compare Your Business
Once you have built out a robust data set on each of your competitors, it is time to compare your own business against the competition.
To do this, you will need to build out your own business profile. Gather the same information as you did on your competitors. This will ensure you have direct data to contrast against their businesses.
As you compare your business objectively against others, highlight important insights that stand out to you, such as:
- What are you doing the same? For example, are there specific channels of marketing where you and your competition are overlapping? Do you offer the exact same services or pricing?
- What are you doing differently? Look for ways you are operationally different. For example, perhaps you provide a handful of services that your competitors don’t. This can become a key differentiator for your brand.
- What are your greatest risks? Are there areas where your competition is doing exceptionally well? Perhaps they are outpacing you in organic search, which puts you at risk of losing customers during the research stage.
- Where are your greatest opportunities? Is there anything your competition is doing poorly? Are there areas where they aren’t investing in marketing that you could? Look for areas where you can easily take the lead.
6. Build Out Actionable Insights
Now that you have a wealth of information about your competition and understand how you compare, it is time to put this data to work. Fill out an action plan using the following categories. List each task by order of priority based on where you are losing the most business to competition or where you see the easiest opportunities for a quick win.
- New channels: List out any new channels you discovered where your competition is earning leads and you aren’t. Put together a plan for how much you will spend on each new channel and what ads you will run.
- Existing channels: Take note of what channels you currently market through and whether you want to continue your spend, decrease your spend, or optimize your ads.
- Keywords to target: Based on where your competition is outranking you, put together a list of keywords you plan to target aggressively with SEO tactics. Include a list of the keywords you currently outrank your competition for and what strategies you will use to ensure you don’t lose those rankings.
- Content strategy: List the strategies you will use to increase organic reach through content. This could include videos, blogs, and social media content. You can base this on areas where your competition is doing better than you, or areas where you see a huge wealth of opportunity for reaching untapped audiences.
- Strengthen your unique value proposition: Now that you understand better how customers feel about your competitors, take the time to revisit your own unique value proposition. Lean into this when building out your marketing and brand messaging.
- Improve customer service: Make a list of areas where you need to improve your own customer service. Are there certain processes that your competition is handling better? Should you invest in further training for employees? Think through how you can tackle customer loyalty.
Use Our Free Competitor Analysis Tool
Running a competitor analysis takes time, but it can become an invaluable tool in helping you decrease marketing costs while increasing leads. If you are interested in understanding how your competition might be out-smarting you, give our free Competitive Analysis Tool a try. You can also reach out to our team, and we will be happy to do an in-depth analysis for you. Our goal is to help you understand how other businesses in your vertical are targeting your customers. By gleaning insights into their strengths and weaknesses, we can help you take a strategic approach to your marketing.