Building a business without knowing your competition is like playing darts blindfolded. You decrease your chances of reaching your target by quite a lot. Ninety percent of Fortune 500 companies do competitive research. And seven out of ten say doing it earlier would have improved the success of their campaigns.
Spending resources on a competitive analysis will save you money. It will tell you where you should focus your marketing efforts to be cost effective. Sure, you could send dozens of darts in the air hoping one will hit the target. But if you remove the blindfold, you’re more likely to hit the target, even with one single dart.
So here’s how to do it right.
Step 1: The List
Take a pen and a piece of paper, and start writing down the names of all the competitors you can think of. That includes companies that are “kind of” doing the same thing as you.
Once you’re done, go to your favorite search engine, and type the keywords you would use to find your own company. So if your company is Tesla, you could search for “electric car company” or “where to buy an electric vehicle.” Look at the results on the first 3 pages, and add to your list any company name that isn’t on it yet.
Then use the same method and search for the keywords you would use to answer the motivation of your buyers. So if you’re Tesla, those words could be “cars that don’t use gas,” or “cars that don’t pollute” or even “cars of the future.” Your goal here is to find indirect competitors. These are companies that provide an alternative solution to your buyer’s problem. Add them to your list.
When you have a list of at least 10 direct and indirect competitors, it’s time to start your research.
Step 2: The Data
Build a spreadsheet where each column is a piece of data you want to collect for each of your competitors. Here are the data points you want to include.
Use internet searches and your own knowledge to find company information about each competitor. That includes date of establishment, number of employees, location, funding rounds, number of users claimed. reported revenue for the last two years and YoY revenue growth. These may seem unimportant, but you could find a pattern in the data that you didn’t know about. For example, you may notice that the most successful competitors are all headquartered in the same area. Or that companies above a certain size tend to have lower YoY growth.
In this section, you want to add three columns: tone of voice, brand colors and word cloud.
Look at your competitors’ websites and general online presence. How does their content make you feel? Is it entertaining or serious? Does it feel trustworthy, peaceful, informative? Choose two to three adjectives to qualify the general tone of voice of their brand.
Then focus on the visual aspect of their website: what are the two colors you see the most? Colors can be very precise, such as a color hex #, or broad, such as “dark blue.” Here again, the goal is to find patterns if there are any.
Finally, take the homepage on their website, or a product page that has a lot of text and copy it. Then paste it into a word cloud tool like this one to create a list of the keywords used on the page. This will tell you what words your competitors use to describe their products. Download the word clouds and upload them to your favorite cloud storage platform. Then link each word cloud to its respective competitor on your spreadsheet.
Product & Features
This section is the most technical. Start by adding a column with a link to the competitor’s product page, and another with a short description of the product.
Then you want to build a product feature matrix. Start by finding the top features that describe your product best. If you’re Tesla, those features could include zero-emission, speed, design, range and safety. Choose up to five features and create a column for each of them. Then rank your competitors on a scale from 1 to 5 for each of the features. For instance, Nissan Leaf would score a 5 on the zero-emission feature, but a 1 on design and 2 on range.
Once you’re done filling in the feature matrix, find your top 2 features. The top 2 features are the ones where your product tends to score much higher than your competitors’. In the case of Tesla, the top 2 features could be range and safety. If you can’t find this pattern, you may have a bigger problem. Either you need to change your list of features, or you need to update your product to provide differentiating features.
You can then use these two features to create a bubble chart. Use feature 1 (range) as the X-axis, feature 2 (safety) as the Y-axis, and revenue for the size of the bubble.
Create a section for each of the following marketing fields: social media, content, PR/Advertising and Events.
In the social media section, track the number of followers your competitors have on each network. Then add columns for the number of posts each competitor shares per week on each network. This exercise will also help determine your own social media strategy. If a competitor has many followers and posts on a specific network, it means your target is there, and you should be too. Which social media platform to choose will depend on your industry.
In the content section, track the number of posts your competitors share on their blogs each week. Add two more columns where you determine whether they have video (link to video) and long-form content such as white papers (yes/no). Here again, this can help inform your own strategy later.
In the PR section, you want to track whether the press mentions your competitors. Create a column with a yes/no answer. Press coverage, especially deep-dive articles, could be a sign that a competitor spends a lot of money on PR. Add another column next to that with a link to the best article you can find about each competitor. It is a good way to keep specific publications and journalists in mind. If they wrote about your competitor, they may want to write about you, too. Finally, add a third column determining whether competitors spend money on ads. Are you seeing ads on social media and website banners about your competitors? Add a yes/no answer.
Last but not least, you want to track whether competitors are going to events. Scheme through social media posts and look for the ones announcing event participation. Find one? Then add a “yes” in this column.
Step 3: The Analysis
Congratulations! You’ve done the hardest part. Now that you have all this data in one place, look for patterns. That’s where using “conditional formatting” in your spreadsheet can be very useful. For instance, use color grading for the product feature score. This will highlight areas where your product outshines your competitors’. For the yes/no columns, add a grey or red background when the answer is no and a green one when the answer is yes. The areas where your competitors have a lot of “No’s” will look obvious.
This work can be tedious, but you’ll get invaluable information from it. If you don’t have time to do it, hire an analyst on the Gravitr platform to do it for you. We’ll use the same template as above and will deliver all the data in a week. The information you’ll receive from this research could change the course of your strategy. It could be the difference between wasting precious marketing dollars and outshining competitors. Don’t skip it. Let us help.