How to conduct a competitive analysis? -Practical Guide

In an ever-evolving business landscape, the saying "keep your friends close, and your competitors closer" holds a key insight. The saying is not exactly like this, but a thorough examination of your competitors allows your business to understand your market more profoundly, strategically defining your strengths and weaknesses. This understanding then aids in the execution of critical business tactics such as pricing, marketing, and distribution. A well-conducted competitor analysis can help you identify gaps to fill in the market while honing your unique selling point.

Together with Ruben Portz, founder of TractionPad and entrepreneur-in-residence at LSE, we've assembled an actionable guide to assist entrepreneurs in carrying out effective competitor analysis. We urge you to undertake this exercise posthaste if you haven't already. Regular check-ins on your competition are crucial even if you've done this before - fresh insights are always valuable.

Identify your competitors

Identifying your competitors is the first step. You likely have some notion of who your direct competitors are, but it's also essential to take note of indirect competitors and burgeoning businesses. Of the myriad companies to consider, prioritize those with high profiles, structured teams, and well-funded or profitable operations.

The practical chart by Michelle Picoto below can help organize your thoughts in identifying competitors:

Decode the messaging

Once you've pinpointed your competitors, the next step is to decode their messaging strategies. This examination will reveal the voice of their brand and the positioning of their products. By deconstructing their product positioning, you can gain a clearer picture of potential opportunities.

• Step 1: Construct a table listing competitors, their value propositions, and key benefits.
• Step 2: Analyze competitors' value propositions and benefits to identify common themes.
• Step 3: Develop a messaging comparison matrix, listing key messages and indicating which competitor uses each one.
• Step 4: Review the matrix to identify frequently used messages and tally the count of competitors using each message.
• Step 5: Based on these patterns, identify opportunities to differentiate your messaging or highlight unique benefits.

Leverage customer feedback

There's no substitute for customer feedback when it comes to honest insights into your competitors' weaknesses. Customer reviews offer a treasure trove of information about potential opportunities for your business. What do the customers say about the product, what do they wish to have, what are they frustrated about, and why do they decide to move on to another one? Having a closer look at those will sharpen your unique selling point.

• Step 1: Collect relevant customer reviews for competitors from common review platforms such as G2 and Capterra, focusing on both positive and negative feedback.
• Step 2: Access AI language model, such as ChatGPT, and write a prompt for analysis based on these reviews.
• Step 3: Input the reviews into ChatGPT, refine the prompts as needed, and use the model's responses to identify key themes and understand customer sentiments.
• Step 4: Analyze and document the pros and cons identified, considering their frequency and impact. Organize findings in a structured format for future reference.
• Bonus: Check Louis Grenier's data analysis system, called The F*cking Fast Buyer Insights [F2BI] System to turn customer data into clear insights on Google Sheets.?

Reverse engineer competitor's web traffic & social accounts

Understanding how competitors draw traffic to their websites can provide a valuable glimpse into their growth strategies. Assembling this information in a table format can highlight patterns and reveal potential areas of opportunity for your business. For instance, if your competitors are predominantly using YouTube, it might mean that your potential customers are doing their research on YouTube and they are receptive to the content created on the platform.

• Step 1: Use SimilarWeb to record traffic data for each competitor, including total visits, bounce rate, pages per visit, average visit duration, and channel distribution.
• Step 2: Use Moz Domain Analysis or a similar SEO tool to analyze competitors' organic traffic efforts, capturing estimated search traffic, domain authority, and keyword rankings. Google's keyword planner tool may also be used.
• Step 3: Evaluate social media engagement by examining followers, post frequency, and average engagement on platforms like Meta, Twitter, LinkedIn, and TikTok.
• Step 4: Explore competitors' advertising efforts using tools like SEMrush, Meta Ads Library, LinkedIn, and TikTok Ads.
• Step 5: Use Google search to identify competitors' partnerships.
• Step 6: Utilise SimilarWeb, Moz Domain Analysis, and SEMrush to identify competitors' top pages. Google search can be used to find gated content.
• Step 7: Use Screaming Frog to scrape the competitor's website and visualize site architecture for further analysis.

Deconstruct a competitor's advertising strategy

A thorough examination of a competitor's advertising strategy can reveal what the company currently prioritizes and the areas where they are testing new approaches.

• Step 1: Select a competitor in your industry with a presence on Meta, Google, and LinkedIn for analysis.
• Step 2: Visit the Meta, Google, and LinkedIn ad libraries to find your competitor's ads.
• Step 3: Create a "swipe file" to document and store compelling ad examples from your competitor using tools like Airtable or Notion.
• Step 4: Evaluate your competitor's landing pages by clicking on ads in the ad libraries to understand their conversion messaging and strategies.
• Step 5: Identify patterns in your competitor's ads to understand their company priorities, such as recurring themes, campaigns, or promotions.
• Step 6: Observe where, how often, and for how long your competitor advertises to glean insights into their profitability and high-performing ad creatives.
• Step 7: Compile your findings and insights into a comprehensive report, summarising your competitor's audience targeting, messaging, positioning, website flow, priorities, and estimated profitability.

Additional topics:

• Check the pricing strategy; what do they charge, how much do they charge, and how do they charge
• Analyse LinkedIn company pages for team structures and hiring insights
• Unveil competitor tech stack with BuiltWith
• Analyse competitor sales, delivery, and customer success processes

In conclusion, conducting a thorough competitor analysis is a vital strategic process for any business. By understanding your competition, you can refine your unique selling points, identify gaps in the market, and fine-tune your business strategies. Whether it's deciphering messaging, leveraging customer feedback, reverse-engineering web traffic, or deconstructing advertising strategies, this comprehensive guide offers valuable tactics to stay ahead in your industry. Your competitors can be your greatest teachers; learn from them to ensure your business thrives.

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