“I am still doing my job, but also keeping my ear to the ground.”

Let’s start with some basic questions:

How well do you really know your competition? Do you follow their activities closely, and are you interested in what exactly they have to offer their clients?

Many entrepreneurs assume that they should focus primarily on their own business and simply improve their product and their offer for their clients, regardless of what their competitors are doing. In many cases, this is the right approach.

But how do we know if our product is actually better - especially in relation to what the competition is offering? How can we be sure that our value proposition is ahead of the market - and stays this way?

Before we enter any market, we should have a product that is at least as good as what our competition is offering - and if we’re trying to offer something better, then we need to first know what we have to beat.  

That’s why we have to analyze how our direct competitors operate and keep track of their actions and strategies. Nevertheless, a few questions immediately arise – what exactly should we be observing? And what are some key areas to focus on in the first place?

Of course, there is a lot to learn about our competitors, but our experience has shown us that the three areas listed below are especially significant.

Top 3 things to check for during a competitive analysis

Unique Selling Proposition (USP)

What is it?

Long story short, your USP is the set of things that make your business or product better than the competition’s. In terms of market success, your product must stand out from, and even beat, competing offers.

Question to ask:

• How are your key competitors positioned on the market?
• Who are they targeting with their offer and how are they doing this?
• What is their strategy to win customers?
• Which functionalities of their product do they emphasize, and how do they communicate this information

Why is this information important?

By answering each of these questions, you can compare your product with theirs, check to see if they share the same functionalities, and then determine if your product is at least on the same level as your competition’s. In addition, this information also allows you to define the advantages of your offer more easily and confirm whether you really have something that distinguishes you from the rest of the market.

Pricing

What is it?

The price of a product tells us more than just how much it costs. It is also a very valuable piece of information about the market and similar products. Knowing your competition’s pricing strategy is essential to determining your own price levels.

Question to ask:

• What are the prices for this product?
• How are price lists structured?
• What is the range of services that the competition is offering?
• How many pricing options are available?
• Do competitors conduct additional sales through various forms of up-selling or cross-selling?

Why is this information important?

Constantly monitoring your competition’s pricing lists allows you to adapt and be aware of how the market evaluates individual elements in your offer. This does not mean that you have to react to every single change in your competitors' pricing, but it is better to keep your ear to the ground.

User Experience (UX)

What is it?

Convenience can be one of the most valuable features for many people. That’s why you need to have a good UX to attract more clients.

Questions to ask:

• What does the purchasing process look like for your competitors?
• How do they acquire customers? Is it through inbound traffic (generated spontaneously via inquiries from potentially interested parties) or outbound traffic (advertising campaigns, active sales, and by entering the market)?
• How much website traffic do they generate? Do they have more visitors who spend more time on their websites - or just the opposite?
• How is their application rated (if they have one), and what is the trend among these ratings?
• Finally, how are their purchasing processes structured, and how good is the customer service? (E.g.., what is the average response time for a customer inquiry?)
• Is the bidding process conducted in an organized and consistent manner, and are the sales closed effectively?

Why is this information important?

The answers to these questions will not only allow you to learn more about your competition’s actions and strategies, but also potentially improve similar processes within your own organization.

Should I conduct a competitive analysis?

For the most part, most of this information can be collected independently without the support of any external entities. This is especially relevant for companies that are still in the beginning stages of their path – such as startups with limited funding – that need to reduce costs and watch every dollar.

Nevertheless, at some point, an entrepreneur's time will become his main asset, and every hour spent collecting and analyzing this kind of data becomes a measurable cost.

Is delegating competitive analysis to a full-time employee a good idea?

Hiring a new employee just to run a competitive analysis might seem like a good way to solve this problem. However, this solution has considerable disadvantages.

The responsibilities of this role can often be handled by a junior-level employee, and this usually means someone without too much experience. Every time you hire a new employee, it is about more than just money - it is also about the time you have to spend training them, and showing them where and how to look for information and then how to draw relevant conclusions.

Of course, there is no guarantee for how this will turn out. Moreover, that new hire would not be doing this on a long term basis, as competitive analysis usually is not a full-time job. It is project-based work that should be carried out periodically, from time to time. Keeping track of select key metrics (e.g., price changes) is the only thing that needs to be done constantly.

Most of the information that you need in order to conduct a competitor’s analysis is available for free, but that may not be the case for certain pieces of company-specific data. And while there are ways to gain access to this information, it may be pretty inconvenient – why do you need to pay a fee for annual access to any databases if you only need to obtain this information once?

Many database subscriptions or access to monitoring tools can be quite expensive, making them inefficient in relation to the value that they bring to the table.

The most efficient way to conduct a competitive analysis

A good compromise between conducting your own research and hiring someone who would be dedicated to this task is to find a specialized partner who knows how to do it right.

This gives your company:

• flexibility (one-time cost),
• specific know-how on how to effectively conduct market analyses
• access to data/information that would simply be too costly to obtain on your own, from paid sources.

In addition, industry-specific experts can also offer you an independent view of your company's business model. As valuable thought-partners, they can advise you on the most important things that you need to pay attention to, helping you to better understand the market and its needs. 

This kind of knowledge can be a real game-changer for your company and help you find the best course of direction for further development.

If you are looking for a company like this, then you should give us a try. Our professionals from Dive In Data can help you gather and process all the information that you need, and help you become much better prepared to achieve market success.

Tomek