Ah, competition; rare is the business which truly doesn’t have any; however, many small businesses operate as if they have none. When did you last look at your competitors’ websites? How about their social media pages and strategies? Can you summarize their strengths and weaknesses? If your answer to any of these questions is a “no,” read on!
I recently had a client hire me to re-Brand their ten-year-old wealth management firm. As part of the re-Brand, we included a competitive analysis to get a feel for where they ranked in comparison to others in their industry and location. Through our work, we not only discovered where there was significant opportunity for growth, but which competition was ahead in market share, or behind them, respectively.
Our research also gave them a sense of certainty around the re-Brand direction I was suggesting because the advice was no longer subjective, but based upon observable proof. The re-Brand meant everything would change from logo design to how they spoke to clients, so they needed confidence in my research if they were to move forward with my recommendations.
So how do you measure competition against your own business?
By completing a competitive analysis. Completing a competitive analysis involves four parts: identifying your competitors, gathering competitive information, analyzing the information, and determining your competitive position. Let’s look at each in turn.
1.Identifying your top three competitors.
When you identify these competitors think about your entire line of products and services. What niches do you fit into? Are there substitutes for your products or services? Does your competition offer something similar, or better in comparison?
Let’s look at the cereal market, one of my all-time favorite industries to look at because they are so fiercely competitive. There is quite a bit of competition in the space. They are competing against each other for shelf space in supermarkets—and for market share. So, how do they gain market share (and increase sales)? They need to consider the competitor that is one stage bigger than they are at the time—and the one that is one stage smaller. They need to review each one to see if the competitors are trying to reach the same target market, or if they are going after different audiences. You need to ask yourself similar questions and perform the same research in order to narrow your list of competitors down to three. You could compare against more, but why complicate things? Three will suffice.
2. Gathering competitive information.
The web will be your best friend for this process, but don’t discount offline methods such as focus groups or “secret shops.” There is a lot you can glean from a room full of people who have had exposure to your competition that can help you to get an understanding of their experiences. When I was in the home building industry, I would perform secret shops on the competition by going in and acting as if I was interested in purchasing a home so I could observe their processes and closing skills. I would take that information back to my builder and pivot (if necessary) using the real-time research by implementing appropriate changes to my own sales team.
You might want to set up a table in a Microsoft Word or Google document to help organize your information. (I’m a visual learner, so a table works great for me.) Then, you can brainstorm what you want to compare before you begin. For example, if I’m at the stage of branding a business, I’ll pay attention to brand promise, colors, style, tone, etc. If I’m building a business with a focus on marketing, I’ll add my competitor’s special offers, social media streams, benefits and features, hours of operation, and so on. It’s easy to get overwhelmed, which is why I suggest brainstorming what you want to learn before you dive in. You can find yourself on a wild goose chase if you’re not careful, so organization is important.
- Analyze the information.
I’ll show you a way to make comparisons quickly and easily. You’ll need the information you’ve gathered on your customers and your competitors, to pull it altogether. When you’re ready, you can use a table like this one:
|Customer persona/description||Anthony: Savvy small business owner looking for unique swag for multiple events that speak to his brand. (Enter the persona/description here to keep the customer at the core of your decision-making.)|
- Determine your competitive position.
Perhaps your mission includes treating each customer as if he or she is the only one, providing service or products to them quickly and offering each customer a wealth of experience. (Keep in mind I wrote the above example to show you the concept in a neat and tidy package.)
Often the position you’ll want to take won’t be so cut and dried, but can give you a starting point. Armed with your analysis, you can make the decisions that allow you to speak to your potential customers with relevance and confidence.
That’s it! That’s a competitive analysis. Simple, straightforward, and to the point—and that is the point. Backing up your decisions with industry research doesn’t have to be complicated, but it does need to get done. Why? So you can take the next steps in your planning with confidence. And, who doesn’t love a little swagger?
Need help with your competitive analysis. Module 2 of my brand school offers a video tutorial, examples, and fill-in-the-blank worksheets to help you cross this task off your “to do” list. You can sign up HERE: www.brandingformoolah.com