Scrutinizing the competition is a valuable tool. Learn the importance of competitive analysis and what it can add to your business strategy.
No matter what your customer base looks like, chances are they are moving more and more toward doing everything digitally, including how they find companies, products, and services. Your customers now have instant access to a host of brands to compare, so it’s more important than ever to stay ahead of the game and keep your competitive edge.
When attempting to grow or sustain your business, one of your main concerns should be finding out what the competition is up to. Almost all Fortune 500 companies (90 percent) have some kind of competitive intelligence strategy, according to research published by Emerald Publishing. And if the big companies are doing it, there’s likely a very good reason.
Studying what competitors are doing right is helpful to any growing business. But it’s equally worthwhile to analyze what these other organizations are doing wrong. This opens up a world of opportunities for entrepreneurs who are trying to stand out.
Here’s a look at how competitive analysis works and the key benefits of the practice.
Identifying key competitors
Before you can perform a competitive analysis, you have to know which companies and brands you should be analyzing. This involves identifying both direct and indirect competitors:
- Direct competition: These are the companies that provide the same or very similar services to your business. You’re essentially targeting the same audience, and clients will compare you with these organizations when making a final decision.
- Indirect competition: Indirect competitors are businesses that provide different products or services from you, but who are still vying for the attention of the same audience. They may be in the same industry as you, for example, even though exactly what they provide is different.
While direct competitors are the most important entities in competitive analysis, your indirect competition is still worthy of an evaluation.
Finding your closest competitors takes research. It’s smart to get feedback from your clients or potential customers when possible, asking them who else they are (or were) considering for certain goods or services. You can also ask them questions about how they were unhappy with another company, giving you more insight into how to stay competitive.
Another way to identify competitors is to engage with your customer base on social media and track the conversations they’re having. This also helps you figure out which competitors are using which social media platforms.
Measuring online metrics
Keyword research is one of the easiest ways to find competitors and evaluate the strategies they’re employing for marketing and outreach. What kinds of keywords are they using, and what are they not using? This can open you up to opportunities to bring in new keywords and outperform your competition, or to show you what part of their strategy is working.
Once you have this information, doing a simple Google search with these keywords will give you new insights and will also reveal competitors that you may not yet be aware of.
Another strategy for evaluating competition is using pay-per-click ad monitoring. Using a tool like Spyfu allows you to see what kind of advertisements your competitors are purchasing. This tool also shows you which keywords companies buy on Google AdWords.
Other metrics to track and analyze include your competitors’ backlinks, the questions their customers are asking online, social media mentions, and their online reputation overall.
The benefits of a competitive analysis
Now that you know the basics of how to get started, let’s go over the benefits of competitive analysis.
- Identify and take advantage of industry gaps. When you know what your competitors are doing, you can think through what they’re not doing, too. These gaps in the market give your company more opportunities to stay competitive by taking a different angle or offering something that’s missing.
- Keep up with industry trends. One of the most important parts of running is business is making sure you’re keenly aware of what’s going on in the industry. Competitive analysis keeps you on top of current trends and what’s no longer popular. This keeps you closer to your customer base and its needs.
- Market more effectively and grow your business. When you can reach more of your ideal audience and sell more of your products or services, this keeps your business on the path for continued growth.
Using the Entrepreneurial Operating System
Any entrepreneur knows how challenging it is to manage every part of your business while trying to focus on growth and outreach. The Entrepreneurial Operating System (EOS) has all the tools you need to stay competitive, improve the skills of your leadership team, obtain focus on what matters, and continue growing. Part of the EOS is ensuring you have the data you need for better decision-making, both within the business and about how to challenge your main competition.
At Provident CPA & Business Advisors, we are committed to helping you keep your business on track. We help you implement the EOS so you can define and achieve your vision. Contact the Provident team today to learn more about how we can help.