For most small business owners, the number one goal is Profitability. Without that, the lights don't stay on, the employees don't get paid, and operations will cease to exist (regardless of good intentions or a meaningful mission statement). Unless you're running a charity and depending on the kindness of strangers, the focus must remain on the bottom line.
A few weeks ago, we shared a post on ways you can improve your profit margins. (Take a few minutes to read it if you missed it.) But today, we're talking about a different action you should take to protect your small business.
Let's talk about Competitive Analysis.
Competitive analysis is the process of researching, assessing, and evaluating your competitor's weaknesses and strengths. It provides invaluable data and insight into what they're doing well or not-so-well.
In the same way you (should) analyze your own systems and processes to identify shortcomings and areas for improvement, the same technique can be used to gain a competitive edge over your competition. And when you know what they're up to and what you're up against, you have the upper hand.
It sounds simple in theory, but understand that the process itself can be time-consuming and even a little complicated. We know the day-to-day demands can be, well, frankly, demanding. And more often than not, it's more important to put the fires out in your own backyard rather than worrying about what's going on up the street. However, regular competitive analysis should be a priority if you want long-term success. The threat of competitors is a slow burn, but one that can still consume you all the same if you aren't ready for it.
1. Identify your Competitors
Start by making a list of every competitor you already know. After that, take it one step further and Google your business name. The search engine will happily supply a list of similar businesses you may or may not know about. Add them to the list.
2. Identify your Indirect Competitors
While they may offer services or products that differ from yours, they may still target the same market. For example, if you own a pet supply store, an indirect competitor could be a dog grooming business. Adding these to your analysis will provide more thorough insights into your market.
3. Review their Products or Services
Depending on the industry or type of business, you might find all you need online, or you may need to make discreet, in-person visits.
4. Check out their Website
If you take the time to dig, there's a lot to be uncovered. In addition to reviewing prices and product descriptions, their website can offer insights if they push any particular product or service (often featured on the home page). Do they have any upcoming events? Do they have links to media interviews? Check out their About Us or Mission Statement sections. Does anything stand out? How easy is it to navigate?
5. Review their Customer Satisfaction
Check out their reviews on Google or Yelp for unfiltered feedback on why their customers love them and, more importantly, why they don't. Look for trends. Do they complain or praise their customer service? Are they satisfied with the quality? What about prices or shipping speeds?
6. Check out their Social Media
What platforms are they utilizing to connect with their customers? Do they offer tutorial videos on YouTube? Do they run contests and promotions on Facebook? Do they use influencers on Instagram? What kind of language are they using? How many followers do they have? Are they responding to comments or complaints?
7. How are they Advertising?
Have you noticed their ads in local newspapers or radio stations? How about bus stop benches or billboards? Do they have an email list? (If so, definitely sign up!) What about ads on social media? (You know how it goes, once you search for something online, the magical compu-cookies will start showing you ads for that exact thing in mere minutes.)
8. Employ a Third-Party Analysis
Sites like SimilarWeb, Ubersuggest, Google Trends, or SpyFu check relevant keywords in your niche, analyze website traffic sources and where your competitors are being mentioned, provide SEO-based tips and strategies, and much more. The best part is that a lot of them are completely free.
With your data in hand and more knowledge about the competition than you know what to do with, here comes the fun part. (Though that might be subjective.) All the time spent collecting is pointless if you don't sit down and actually analyze what you've uncovered and then use it as a measuring stick to see how you stack up. Here are some things you should be looking out for:
Regular competitive analysis may seem daunting, but it's a strategy that will help you build long-term success. You might feel comfortable with your position in your market now - you may even be your industry's Top Dog or Big Kahuna. But the only guarantees in life are death and taxes, and it's never wise to simply rest on your laurels. Rod Laver of Adidas says it best: "The time your game is most vulnerable is when you're ahead. Never let up."