Philosopher and writer Baltasar Gracian said, “A wise man gets more use from his enemies than a fool from his friends.” While you may not consider your competition your enemy, you certainly can learn a lot from them.
You would be hard-pressed to find any field or product that doesn’t have some kind of competition. Even the ubiquitous Snuggie, though original in its approach, soon sparked a string of knock-offs that offered a better product. Now, we have Slankets, Freedom Blankets, and Blankoats, all of which are thicker, plusher, and more enjoyable than the original (at least according to this guy).
A humble ad proposal to the Freedom Blanket marketing team.
So, what’s a business to do when your competition starts gaining on you?
To keep things professional, though, we’ll call it “competitive research.” This involves going beyond understanding what the other company sells. You need to deeply penetrate their strategies, marketing, SEO, and customer service tactics, then figure out what your customers like about those facets of your competitors.
Now, as fun as it would be to repel up the side of their building, drop in through the skylight, and use a nifty gadget to steal all of their secrets, that’s all super illegal. We don’t recommend it. Instead, try out these 8 methods for conducting (legal) competitive research.
1. Identify Your Competition
To start, you need to figure out who you’re competing against. You can eliminate anyone who doesn’t sell the same product or service that you do. Past that, it’s pretty easy to pull a list together.
Begin by talking to your sales team. They’re the ones who are most often in the trenches, gaining vital information about who your customers are choosing over you. Your marketing team can also help, as they are the ones likely dealing with your social media profiles. Customers aren’t afraid to tell you that “so-and-so” sells the same thing for less, and throws in a free gift with purchase. Marketing will likely be keyed into who those “so-and-sos” are.
Once you’ve shaken down your departments, Google it. Websites like Clutch, Yelp, and UpCity make their living compiling lists of the best companies in a particular city, state, region, or nation. For example, when we search “digital marketing Minneapolis,” one of the first results is a Clutch Top 20 list:
2. Analyze Their Content Strategy
Put on your glasses and grab a cup of coffee because you’ve got some reading to do.
When it comes to competitive research, you have to look through the lens of your shared audience. If you were buying whatever it is that you’re selling, what would you be interested in reading about? What questions or keywords would you use in a search engine to help you find that product? Before you’re ever ready to buy your product, what problem do you have that your product could solve?
There are infinite numbers of factors that your competitors could be pushing through their content that you won’t be able to perfectly replicate unless you got your hands on their content strategy and whoever is writing for them.
What you can do, though, is take a scientific approach. Eliminate one variable at a time. Do you publish once a week, while they publish twice a week? Try that for a while. Are they pushing out webinars once a month? Take on that challenge. Whatever it is that’s working, you may have to do some digging to discover it. Along the way, though, you might hone in on content strategies that increase your marketing presence.
3. Determine How They Define “Success”
Sometimes, we can get wrapped up in the things going on at the micro level that we start to ignore industry trends.
Let’s say that you sell quality backpacks, for example. While, true, that there is a huge market for backpacks, these once humble sacks are getting all kinds of amenities. From wireless chargers to laptop pockets, there’s no limit to the features you could include.
This Kickstarter Campaign for the “Udee” bag boasts 19 different functions, including a built in camera bag, portable cooler, waterproof composition, luggage belt, and more. It has already been fully funded and beyond, though it retails for a hefty cost of $120.
If you’re not keeping up with what your customers are looking for from your product, competitive research can be a great way to start coming up with your own innovations to the field.
4. Evaluate and Consider Their Brand Equity
Outside of work, what do your competitors do to give back to their community?
People want to buy things that make them feel good. When it comes to making the sale, it’s not uncommon for the edge to go to the person that does a paid volunteer day for their employees at the local animal shelter.
Data says that standing for a cause is quickly becoming a non-negotiable. A study by Cone Communications notes that 91% of consumers believe that brands should “address social or environmental concerns.”
Making a positive impact on your community or a larger cause helps you appear more human. Often, businesses take on the persona of a machine built to make profits. Breaking through that image helps build trust and rapport with your customers.
5. Analyze Their Social Media Tactics
If you’re not following your competitors on social media, you’re doing digital marketing all wrong. Keeping abreast of everything they’re saying, doing, and sharing on public platforms can help you monitor and adjust your own marketing strategies. Frankly, this may be the cornerstone of competitive research.
Gather data about what kinds of information they’re posting, how often, and who follows them. What posts get the most likes? Are they keeping their tone formal or casual? What personality are they projecting, and how effective is it at drawing in followers?
While it wouldn’t be advisable to “mimic” their patterns, there’s nothing wrong with making changes to your own social media strategy to better match what your customers are seeking. If you notice that your competitor’s weekly post about an “Employee of the Week” is getting a ton of likes, shares, and comments, you may want to start creating employee profiles to share a little about the people you work with.
Get creative and don’t be afraid to branch out. There’s a whole world of multimedia social marketing that you can do, from video seminars to a monthly giveaway. But, in order to narrow that whole world down, you need to figure out what’s already working.
6. Dig Into Porter’s 5 Forces
Once you’ve done your competitive research, it’s time to put it into action. One way you can do that is with the Porter’s 5 Forces model. First noted in Michael Porter’s 1980 book “Competitive Strategy: Techniques for Analyzing Industries and Competitors,” many of the strategies still hold up after nearly four decades. Perhaps the most popular of the “Big 3” models for competitive research, it involves looking at 5 “forces” that can define an industry:
Threat of Potential Entrants
Involves other companies that are likely to crop up and how easily they can do so. If your industry is easy to break into (restaurants, auto shops, salons, and the like), you’re going to be at a higher risk of competition. On the other hand, industries that are difficult to enter (utility services, telecommunication, creating a new social media platform) give the most innovative companies more protection for longer periods of time.
Bargaining Power of Suppliers
If your company has a large number of different suppliers, you’re going to get better deals. On the other hand, if you only work with a limited number of suppliers, or those that have speciality products you can’t get anywhere else, you place a lot of the power in their hands.
Intensity of Industry Rivalry
This is a basic look at how many competitors you have and how much of a market share they claim. According to the Corporate Finance Institution, “Lack of differentiation in products tends to add to the intensity of competition. High exit costs like high fixed assets, government restrictions, labor unions, etc. also make the competitors fight the battle a little harder.”
Threat of Substitute Goods/Services
Remember the Snuggie we talked about earlier? If there is a high chance that a substitute product is going to come along and emulate your product well enough (and inexpensively enough) to take customers, it’s going to be a struggle to maintain your competitive edge. While there is some power in brand name, any kind of worthwhile substitute is going to cut into your bottom line.
Bargaining Power of Buyers
When you and your competitors have market power, your suppliers are going to provide their products to you for less. In some situations, you have the upper hand when it comes to negotiation, especially when you are making up the bulk of your suppliers’ sales.
7. Conduct an Internal SWOT Analysis
You can read our full post on SWOT analysis here, but here’s a quick summary:
SWOT stands for strengths, weaknesses, opportunities, and threats. It can help you get a macro- and micro-view of your business and your industry.
Identify Your Strengths
Think about what your business is good at, where you’ve seen growth, and what you pride yourselves on. What are the advantages do you have that others do not?
Identify Your Weaknesses
While it can be difficult to look at your business from an objective lens, it’s necessary to understand your weaknesses. Every business and person has things that they could be better at. Some are optional, like remodeling an unattractive building, while others are absolutely necessary.
Identify Potential Opportunities
Think about opportunities in the community and beyond to hone your competitive edge. What resources is the landscape that you work in offering to your business? Think about the connections that individual team members have for networking and what competition exists around you that might also seek those opportunities.
Identify Potential Threats
When you’re talking about threats, you’re really thinking about the outside forces that could make running your business more difficult. Threats exist in your environment, and they often come from sources like the government or competition. While you can’t stop the other party from doing what they’re doing, you can plan to mitigate them before they turn into full-blown problems.
8. Conduct a PEST Analysis
A PEST analysis is the most broad of the three major forms of competitive research. It takes into account more of the outside influences that your industry is dealing with. There are four components to a PEST analysis: political, economic, technological, and socio-demographic.
Understand Their Political Influences
This would include anything that the government influences in your industry. While it, of course, focuses mostly on taxes, labor policies, tariffs, and local regulations, it also takes into account political stability and endorsements by the major governing parties.
Understand Their Economic Influences
The big picture of the economy has major pull on your competitive edge. Think GDP, inflation, your access to capital, and the general trends of what buyers spend their money on.
Understand Their Socio-demographic Influences
There are two major components of the socio-demographic factor: demographics, such as age, gender, and socio-economic status, and behavior trends in your industry. Those trends can be anything from social movements to fashion preferences.
Understand Their Technological Influences
What advancements and access to technological capital do you have versus what your competitors have? New advances in technology can change the way that you do business, and falling behind can force you to lose your competitive edge.