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Understanding how to conduct a competitor analysis is a requirement for any company that wants to maintain an edge in the marketplace. No matter what your business is — an auto dealership, insurance company, healthcare system, telco, or home services business — it faces competition. And by analyzing your competitors, you’ll be better positioned to make more informed decisions, improve your offerings, anticipate market trends, and develop effective strategies to stand out to your target audiences.
In this post, we offer a step-by-step guide on how to conduct a competitive analysis. We look at where you can gather information about competitors, and how and why you should continually monitor and improve your competitor analysis process. First, let’s cover some fundamentals, including four types of competitors you will likely want to analyze.
A competitive analysis is a strategic process that your business can use to identify and evaluate your rivals to understand their strengths, weaknesses, strategies, and market position. The process involves gathering information about competitors’ products, pricing, marketing tactics, customer feedback, and more.
When you conduct a competitor analysis, you seek to uncover opportunities and threats, benchmark performance, and identify areas for differentiation. Effective competitor analysis can help you develop a more effective business plan proactively.
When you know how to conduct a competitor analysis, you can form a clearer picture of your market and make more informed decisions that deliver better business outcomes. But who are your competitors? You may face more competition than you think.
Companies that know how to conduct competitive analysis understand that the complete competitive landscape includes the following four types of competitors.
These are businesses that are similar to yours, and thus, the ones that you likely worry about the most. They offer the same types of products or services as you, and they compete directly for the same target audiences. They likely have a presence in the same geographical areas as you, too.
Indirect competitors are businesses with similar offerings to your business that could potentially replace your products or services, but which target a different audience or market segment. Peet’s Coffee and Dunkin’ are examples of indirect competitors. Although they both sell coffee and pastries, they target audiences at different price points.
Replacement competitors offer a different product or service that could replace or substitute what you offer to your target audiences. Consider YouTube and Comcast. YouTube is a streaming service and Comcast is a cable TV provider, but YouTube offers live TV programming including local news and can replace a cable service like Comcast. (This is already happening. A recent survey of 1,000 adults showed that just 46% paid for a cable or satellite TV service compared with 76% who paid for streaming services.)
These are businesses that offer products or services that are complementary to the products and services you provide. Potentially, they could collaborate with your business to create a mutually beneficial relationship. An example would be a travel agency and an insurance firm. The insurer could provide travel coverage to the agency’s clients.
There are many ways to gather information about these four types of competitors. Some of these methods are easy to execute, others less so, depending on the resources you have available. (Keep in mind that technology can be a valuable ally in helping you collect and analyze competitor information.)
One of the most obvious sources of competitor information is market research. You may be able to purchase market research on your industry segment from market research firms, industry analysts or consultants like Gartner, McKinsey, Dun & Bradstreet or Statista.
If no market research reports exist, or if those documents don’t provide enough relevant detail, you can conduct your own market research using tools such as customer surveys, focus groups, and even customer feedback or reviews to begin building a picture of the competitive landscape.
You can also access free information from readily available industry reports and profiles. These materials are compiled by trade and professional associations, government agencies, like the U.S. Bureau of Economic Analysis or Bureau of Labor Statistics, as well as economic development groups and business publications like Forbes and Fortune.
Social media provides plenty of free information on your competitors, but it’s not always easy to gather. Competitor information may be spread across various social media platforms.
Social listening and social media management tools can help you monitor your competitors’ social media profiles to gain insights into their social media tactics and customer sentiment. If you have the resources in-house or only need to track a few competitors, you can also set up your own metrics to measure brand awareness.
Another easy — and free — source of competitor information is from companies’ web presence. Analysis of your competitors’ websites offers valuable insight into your rivals’ products and services, pricing, promotions, overall marketing strategy, and even their company culture.
Now we get into the secret sauce: Pulling insight from the conversations that your customer service agents, contact center teams, and sales executives conduct with your customers every day and including it in your competitive analysis.
Competitor insight is often mentioned and typically passed along anecdotally by whoever had the conversation with the customer. For example, “Customer A told me that Competitor B is offering a discount to new customers.”
What if you could easily capture data like that at scale from every customer conversation? With artificial intelligence (AI) tools, you can do that and more.
Invoca’s Signal AI Studio, as an example, allows users to create AI models to become experts on your business and those of your competitors. Using the right keywords, the AI can unearth trends and competitor sentiment in phone data that can be used to refocus marketing campaigns, devise new product offerings, and make strategic business decisions.
If you want a comprehensive understanding of your company’s competitive landscape, you’ll want to conduct a Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis.
Here’s a quick look at the four components of a SWOT analysis:
Strengths include your business’s unique selling proposition, brand reputation, human capital, solid financial performance, loyal customer base, or proprietary technology.
Weaknesses include poor financial performance, inadequate marketing strategies, outdated technology, limited resources, or the lack of skilled employees.
Market opportunities include shifts in consumer trends, the emergence of new technologies, the opening of new markets, or changes in regulatory policies.
Market threats range from increased competition and changing market conditions to economic downturns, or events like supply chain disruptions.
You’ve learned how to conduct a competitor analysis using the resources outlined above and you’ve also completed a SWOT analysis. What comes next?
It’s time to put all that insight to good use by developing strategies aimed at creating a competitive advantage for your business. Here are some ideas to help you.
If you have collaborative competitors, explore ways to work with them. Partnering with other businesses in complementary industries or with complementary products can help you gain access to new markets, customers, technologies, or resources. This can differentiate you from your direct competitors and create a competitive advantage for your business.
A SWOT analysis or other research methods can reveal potential weaknesses in your competitors. Once you’ve identified their Achilles heel, you can develop strategies to target those weaknesses and gain a competitive advantage.
Your analysis of competitive data might reveal an opportunity to penetrate niche markets. If the data shows that your product or service can be tailored to the needs of a specific market, it might give you an edge over your competitors.
Say, for example, that you run a residential snow removal business. Your competitive data shows that large commercial properties in your market are having trouble finding contractors to remove snow from their parking lots this winter. It’s time to scale up!
Competitive data can help you develop more effective marketing strategies, such as targeted advertising or content marketing, to build brand awareness and establish a competitive advantage.
By using conversation intelligence software like Invoca, you can take insights from phone conversations to optimize marketing campaigns and reach your target audience more effectively based on the true voice of the customer (VoC).
Competitive data can also help you differentiate your business by offering unique features, better quality, and superior customer service, or by creating a unique brand identity. For example, if your competitive analysis reveals gaps in a direct competitor’s product offerings, you can amplify your offerings to better meet the needs of your target audiences.
Competitors and markets change, and new competitors emerge, so your competitive analysis process can’t be static. Consistent monitoring of your approach and data will improve the value of your overall analysis. You should:
You should set a quarterly or annual schedule for reviewing your analysis. However, you must also make a point of updating your approach whenever you become aware of major changes in your industry or competitive landscape, such as a competitor going out of business or expanding through a merger.
Keep abreast of resources that can expand or further inform your research. Over 5 million new businesses are started in the U.S. every year, which means your universe of potential competitors is always expanding.
Competitive intelligence tools can help you keep your competitive analysis up to date by tracking competitors’ marketing strategies, social media activity, and search engine rankings and gathering data from these sources.
Tools powered by AI can collect data quickly and, through natural language processing, crunch the data to provide relevant and timely insights.
Lastly, use the data insights you’ve gathered to analyze your competitors’ strengths and weaknesses and identify areas where you can improve your own business.
Here’s where AI really steps up to make execution easy. Invoca’s conversation intelligence platform uses AI to analyze phone conversations at scale so that users can uncover topics, trends, and issues to optimize digital marketing campaigns, improve the customer experience, and convert more prospects to sales.
We’ve discussed some of the benefits you can derive from knowing how to conduct a competitive analysis. If you still need convincing that the process is worthwhile, here are more positive outcomes to consider.
A competitive analysis helps you gauge your position in relation to your competitors. It identifies areas where you can improve your products or services, gain a competitive advantage over rivals, and develop a larger market share.
A competitor analysis can help you get your arms around the latest market trends and reveal new areas of opportunity, such as niche or new markets.
By gaining a clearer understanding of exactly where you and your competitors are positioned in the marketplace, you can more confidently lean into what makes your business different and more valuable to your target audiences.
An analysis of your competitors’ products and services can help you conceive new ideas, boost product development, and identify areas for improvement in your own offerings.
Invoca can simplify how to conduct a competitor analysis by unlocking deep competitor insights from a source you may not have considered: everyday phone conversations.
It’s easy to train Invoca Signal AI Studio to capture specific insights about your competition from customer calls. Provide the keywords, and the AI does the rest. Invoca captures 100% of calls and creates a huge digital record that can be sorted and searched in real time using Invoca’s machine learning and natural language processing tools.
Competitor insights can be used across your organization. For instance, Invoca’s AI-powered conversation intelligence can help your marketing team create more targeted and optimized digital ad campaigns. In fact, digital marketing statistics show that nearly 100% of marketers believe AI will have a positive impact on their organizations moving forward. (We are already making that happen for many leading businesses!)
The data from phone conversations can also help you improve the performance of your contact center teams so that they provide a superior customer experience. In addition, conversation intelligence can give your research and development team insights into consumer preferences so they can develop innovative new products and services.
Knowing how to conduct a competitive analysis can unlock many insights and open doors for your business. It doesn’t just give you a leg up on the opposition; it creates the opportunity to drive your business toward higher growth.
To learn more about how you can use Invoca to conduct a competitive analysis that provides deep and relevant insights, read the following posts:
You can also book a demo to discover the many ways that our AI-driven technology can help your business gain an edge over your competition.
