Importance of Competitor Analysis to Your Business

Competitor analysis is an important component to your business for two very important reasons: it provides both insight and inspiration and helps to guide you in areas that you are not experienced in.  Competitor analysis is important whether you are using a new feature or an entire platform. One of the key aspects of performing competitor analysis is understanding your competition – who are they and how do they compete against you? You need to clearly understand your brand and how it fits into your market as well as having a clear picture of what you offer and what makes your brand unique.

There are so many online tools that you can use to identify your competitors. It is important to determine who they are and what role they play in your niche. You will need to determine which brands are on the high end and which are premium, which are standard, and which are bottom of the barrel. Next you will need to see how they are marketing themselves and there are tools that can help you to determine what works well for them as well as identifying ways that you can duplicate their success. It is equally important to see what is not working for competitors and ways that you can make it work for your business. The most important key to researching your competitors is to identify holes that are not being filled in your niche and covering those off with your business.

Importance of competitor analysis

Competitor analysis is very important because it shows you how your business will fit into your niche. The point of looking at competitors is not to become like them but rather to determine how you can be different from them. When you perform competitor analysis it is a major part of creating your own unique brand.

Competitor analysis in general is a deep look into how a competitor’s busines operates and how well it is doing. The analysis of competitors is not as difficult as other types of analysis because you are not emotionally invested in the business. Equally important is to step back from your own business and look at it from an objective point of view. You need to use a wide range of tools to accomplish this including Facebook Business Manager and Google Analytics to examine all your business’s data.  When you look at your own business using these tools you will be able to see how people interact with your website and how many visitors are landing on your site as well as which pages they are looking at and the bounce rate (whether they stay on the site or leave right away).  Analysis of your own website lets you know how you are doing but reading comments and emails from your visitors will help you to get a better idea of the message you are delivering.

How does competitor analysis help your business?

Competitor analysis helps you to see exactly who your competitors are and what they are doing with their websites. They might not be selling the exact same things you are, they might offer different products and services, but it is important to know this. You should also examine strategies they are using, content they are posting, ads they are running and how these various components are helping their business. This will help you to determine what opportunities there are for you and the areas that you cannot compete in as well as which areas you are winning in.  Having the right information regarding both areas is where you will find the most success.

Many people think that the entire process of competitor analysis is a way of spying on the competition, but you are simply examining information that is available publicly. Rest assured that your competitors are doing the exact same thing when it comes to your business and if they are not it is because they do not see you as competition.

How do you do Competitor Analysis?

There is a certain amount of preparation that you must undertake before you start to analyse your competitors. Firstly, you need to clearly identify your company’s role in your niche market.  Decide exactly what you are offering, what your price point is and the message that you want to deliver through your brand.  Your competitor has a certain profile and you will build up a comparison template using all the questions that you need to answer.  You will include such things as the size of the company, the demographic that they are targeting, their revenue, what their price point is and their market share. You might also want to give them a score based on the quality of their product, their brand (and how well known it is), the experience that customers have and other things you think are important to know. Each time you examine a competitor you will expand on this template and go deeper into what you think is most relevant.  As you make notes from the various ideas you are extracting from each analysis a bigger picture will form.

If you use different tools to complete your analysis this can help you to get a bigger picture of your competitors.  Luckily, Google provides a very comprehensive set of tools including Google Trends which shows what people are searching and how those searches are ranked. Other tools such as Yoast SEO can show you the optimization of competitor blogs, while Penguin 4.0 and Moz show keywords and backlinks. Social media is a great tool for monitoring engagement and tools such as Sprout Social can show a deeper look into your competitors.

The takeaway

Competitive analysis research is a very important step in setting your website and brand apart from your competition.  Once you know what the competition is doing, you can use that information to make a difference with your business and focus on the things that make your business different from your competitors. You can focus on the customers that your business is meant to attract and provide better value to those customers. You will improve the value of what you have to offer by knowing where and how you fit into your niche alongside your competitors.  Competitor analysis improves your business and your brand by giving you insight into what everyone else in your niche is doing so that you can see where you can make improvements that will give your business an advantage over your competitors.