What are common pitfalls to avoid when doing a competitive analysis?

Focusing only on the bottom line and customers/products is a significant weakness and threat. Companies can have the best product in the world, but if they don't have a management team that feels valued and is compensated demonstrably, then that is a significant weakness and threat because those are poachable employees. Not considering involuntary attrition as a threat. Not considering people returning to work after a break as an opportunity. Re-evaluating salary ranges frequently, having compelling salary ranges and other employee benefits and opportunities, as a strength.

Just as focusing on the wrong competitors is a mistake, so can focusing on too many. I always recommend clients start with just 2 or 3 of their key competitors or key innovators in the market. Think about who you're losing to customer to? Think of key features your customers want that you do not have but somebody else does. A strong dive into a handful of your key competitors is going to give you clear, targetable insights on how you can improve your product, hone your messaging, and win more clients.

Remember that people in your organization may not see a particular competitor as a threat, until it’s too late. Keep lower tier competitors in your peer set and keep an eye on them. You will need a long runway to continue to outpace them.

It usually with pitfall 0 - not knowing what your company really does and value proposition will lead to finding wrong names to compare your company against

Insufficient competitor selection can hinder a competitive analysis. To avoid this, consider the various types of competitors: Direct competitors: Businesses offering similar products or services. Analyze their strategies and positioning to identify differentiation opportunities. Indirect competitors: Companies providing alternative solutions fulfilling the same customer needs. Understand their strengths and weaknesses for insights into market shifts. Potential disruptors: Emerging companies that could change market dynamics. Monitor them proactively. Focus on understanding competitor types to help gain a comprehensive understanding of the competitive landscape, enabling informed strategic decisions and better positioning for success.

Keep in mind that competitors’ public storytelling (via PR, industry presentations, investor discussions, and even financial disclosures) are for their benefit, not yours. Assess the views and information critically instead of relying on them as ground truth, and if they seem to be defying the laws of gravity, there’s likely something amiss. As an extreme example: while on the strategy team for a telco equipment manufacturer several years ago, we were continually perplexed by the remarkable performance (financial, market share) of a leading competitor. Every quarter, without fail, they were up while the rest of the industry was down. It finally made sense a few years later… when their exec team was kicked out for cooking the books.

Pairing is a starting point but we need to decide based on customer knowledge via interviews and surveys what is the job that customers want to have done and see two decision points: approach the problem like your competitor or decide a different approach.

One prevalent pitfall in competitive strategy is the temptation to mimic competitors' strategies or features. While learning from competitors is essential, merely imitating them is insufficient for long-term success. To thrive in a competitive landscape, businesses must differentiate themselves by offering unique and valuable propositions to customers. Using competitors' information as a benchmark rather than a blueprint allows for valuable insights without sacrificing originality. By prioritizing differentiation and building on your unique strengths, your business can carve out a niche in the market, fostering customer loyalty and long-term growth.

Competitive differentiation is about applying your strengths to your competitor’s weaknesses. By playing to your strengths, you can develop them even more and establish the point of differentiation. By becoming more differentiated at what we do best, your product/service can stand out among the crowded market full of competitors. While competing in business, your customer may hire your company for a specific job to be done while your customer may hire another company (could be your direct or indirect competitor) for another job to be done. The real question remains whether your company and its executives have a true picture of why customers choose your company or its product/service over competitors.

There’s a big difference between copying and tracking competitors. Copying might seem easy, but it often leads to a price war with little long-term gain. Tracking, however, is about gathering insights to spot opportunities and threats. It’s not about mimicking, but understanding strategic shifts and their potential market impact. By monitoring promotions, launches, and pricing in real time, you can anticipate trends, adapt strategies, and discover market gaps. Tracking keeps you proactive, carving out your own competitive edge.

Sometimes we assume that our competitors got it right and that the market share they may have defined is the finite one we need to play in. We spend so much time analyzing their strategy to refine our own. The flaw with that exercise is two-fold (1) neglecting our own competitive advantage and (2) understanding our customer pain points to reshape the market opportunity. I say the best approach is to cancel out your competitors from your analysis and tune in to really understanding your customer needs to refine your solution offering. You might be surprised at the untapped market definition that gets shaped with this exercise. It's always a winning proposition when you walk in your customers shoes first.

Customers tend to decide with their money whether your product/service adds value to their business or whether a competitor’s product/service does. ? Do you really have fact-based knowledge of why you win against or lose to competitors? ? What set of activities do you perform on a frequent basis to seek inputs from your customer about your company, your product, your staff, and how you stack up against your top competitors? Uncovering your strengths is like a truth-seeking mission where you are being vocally critical about your company’s strengths and weaknesses compared to alternatives. One of the many ways companies uncover their strengths and areas of growth is through the voice of the customer.

Talking to your customers is of course one source of information to inform your competitive analysis, but don't forget to listen to them as well. Sentiment analysis can be incredibly helpful here. Using artificial intelligence to pull out commonly heard words and phrases across customer service calls, emails, and social media can give you important insights into what matters most to your customers (and potentially those of your competitors' customers) and what to analyze about your competitors.

The primary aim of competitive analysis is to deliver superior value to customers compared to competitors. However, it's easy to become preoccupied with competitors and overlook your customers' needs, wants, and expectations. Assuming you know what customers desire or projecting your preferences onto them may lead to missed opportunities for product, service, or marketing improvements. To avoid this pitfall, incorporate customer feedback into your competitive analysis. Use customer interviews, surveys, reviews, or social media to gather and analyze customer data, ensuring your business remains customer-centric and responsive to their evolving needs.

Agree. It’s not about what competitors are doing- but how are they solving customer problems differently - that should be the crux of competitive analysis. How are you uniquely positioned to better approach the same problems, does your solution fit the needs of other customers better ? These can be some good questions to think through when looking at other players in the space.

Competitive analysis should be viewed as a dynamic, ongoing process rather than a one-time activity. With competitors continually improving, innovating, and entering new markets, it's crucial to stay updated on their activities and adapt accordingly. Additionally, market conditions and customer needs evolve over time. Adapting to these changes is essential for maintaining relevance and competitiveness. To ensure your competitive analysis remains current, integrate it into your routine and organizational culture. By treating competitive analysis as an ongoing process, you'll be better equipped to respond to market shifts, maintain a customer focused approach, and continually refine your business strategy for long-term success.

A close cousin of competitive intelligence is wargaming, in which intel is applied and augmented by running through scenarios, with different team members playing the part of various industry participants - competitors, partners, stakeholders, and yes competitors. It’s a great way to both apply and augment competitive intel. You can learn a lot. But it requires the broad knowledge and perspectives from across an organization to wargame effectively and have the takeaways stick and translate to resolutions and action.

A cross-functional perspective across field sales, marketing, product, engineering, and C suite is critical for a well rounded analysis. Different functions bring different unique and diverse perspectives on you company/product differentiates against the competitors. Field sales brings the voice of the customer, customer preferences, selection criteria, and how you they compare you Vs competition. Product brings insights around product differentiators and downstream impact of competitive product announcements. Marketing brings perspective on what messaging is resonating with customers compared to the competition. C Suite has the strategic perspective on where the puck is going and what types of moves competitors are likely to make.