As a small business owner, you should regularly check out your competitors. Not to spy on them, but to do competitive research. Competitor analysis allows you to know your competitors’ strengths and weaknesses and helps you learn the industry trends.
However, it’s not just enough to check on your competitors’ social media accounts and subscribe to their email list. You need to have a solid strategy for effective monitoring and research.
Below, we will help you know more about competitive research, its importance, and how you can effectively do it for your small business on a budget. Read on.
What is competitive research and why is it important?
Competitive research is the assessment of both strengths and weaknesses of your current and potential competitors so that you can identify any future opportunities or threats.
When doing competitor research, you can consider the marketing strategies that the competitor uses, the plant facilities, financials, number of employees, etc. By doing the competitor analysis, you can realize how your products or services perform in the industry and what you can do to improve them.
Here are the main benefits that you can get by doing detailed competitive research:
Benefit no. 1: Helps you better understand the market
Well-done competitive research can help you know the current industry trends that you may have missed. The ability to study or identify the current industry trends is vital for business growth, as it helps you improve your business’s value proposition.
Benefit no. 2: Allows you to improve your marketing
Customers are always looking for the best products or services that will make their lives better. If your clients have been leaving you for your competitors, the chances are high that you are not doing something right. Competitive research can help you know what your competitors are doing right to improve your marketing.
Benefit no. 3: Helps you to identify market gaps
Competitive analysis in marketing is all about identifying the market’s opportunities and threats. After the analysis, you can identify an underserved market that you can start to focus on.
Benefit no. 4: Helps you to plan well for the future
You may not take immediate actions after the competitor analysis, but you can use the data to improve your future practices. For instance, you can improve your marketing or change your pricing strategies to gain a competitive advantage.
Six Steps to Doing Effective Competitive Research Inexpensively
Here is a short, step-by-step guide on doing effective competitive research:
Step no. 1: Understand your competitors
First, you will need to know the types of businesses you are competing with to make the most accurate data comparisons.
In business, there are two main types of competitors: direct and indirect. Direct competitors are the businesses offering the exact products and services that you offer. Indirect competitors offer different products to yours, but they are substitutes to what you offer.
When doing competitive research, you should only focus on the direct competitors. If possible, you should write all the competitors by name.
Note: if the list is long, you can reduce the number to focus on seven to 10 competitors. Your list should be comprised of companies that:
• Sell the direct products/services to yours
• Have similar business premises to yours
• Have an equal marketing share to yours
• Are new to the market but who are more experienced than you
Step no. 2: Create a spreadsheet
You should keep your data organized to reduce errors. For this reason, you should have a spreadsheet where you will compare and contrast the following aspects from your competitors:
• The price range of the products or services
• The social media engagement of the competitors
• Marketing tactics, including the content used for generating the leads
• Keyword terms your competition are ranking for
Step no. 3: Analyze your competitors’ engagement
The best way to know your competitors’ engagement is to check how the users respond to your competitors’ posts. Check the average number of likes, comments, and shares on the posts to know if:
• Some comments attract more likes and comments than others
• The comments are negative, positive, or a mix of the two
• Readers respond more on some social media platforms than others
• People tweet more topics than others
Be sure to document the observations to your records/spreadsheet.
Step no. 4: Observe the competitors’ marketing tactics
From the engagement, you should now check the content promotion strategies that your competitors use. Some of the things to pay more attention to include:
• Types of content they’re producing
• Keywords used
As you analyze, you should write down the keywords or any other content marketing strategies that your competitors are using but you are not. You should also note the social media platforms that your competitors use most to promote their content and feedback.
Step no. 5: Know how your competitors market their goods
Marketing remains top-secret to many firms, and you may not explore all the marketing tactics of the firm by solely checking their social media accounts. You can assume the role of a potential customer to dive deeper into the competing business by doing the following:
• Subscribe to your competitor’s emails
• Purchase a product
• Shop for products online and abandon the cart
• Subscribe to their blogs
As you do the above activities, be sure to document the company’s responses to cart abandonment, to your blogs subscriptions, social media following, etc.
Step no. 6: Conduct a SWOT analysis
The last step is to conduct a SWOT analysis for your business and the competitors. A SWOT analysis examines the strengths, weaknesses, opportunities, and threats of a business.
Examples include the company’s:
• Number of employees
• Market share
• Partnerships, etc.
Threats and opportunities are external and not easy to control. Examples include the economy, market size, regulation, and so on. You can aim to do a SWOT analysis for your business and competitors every year so that you can weigh the current positioning of your business against your competitors.
A final word on competitive research
Aside from the effective yet rudimentary methods discussed until now, using sophisticated tools designed for competitive research will only help save you time, money, and energy. The challenge is to get the vital data needed without having to get saddled with expensive subscriptions that most comprehensive tools require.
There are many free or relatively inexpensive research tools that we recommend trying out, such as Ubersuggest, SimilarWeb, Spyfu, Moat and more. While most of the free versions provide valuable data and insights, they invariably get better by upgrading to their paid versions.
The bottom line is that it’s vital that you know the performance and positioning of your business amongst your competitors so that you can plan well for your future. Follow our guide above and seek professional help when need be.
Nachum Langsner is the Co-Founder & CMO of LocalBizGuru, a full-service digital marketing agency based in Cleveland, OH. He has over 10+ years of experience in the SEO industry and is a frequent presenter and instructor of digital marketing and SEO seminars for entrepreneurs and small business owners in the Greater Cleveland area for organizations such as COSE, Jumpstart, the Better Business Bureau, Score and the Ohio SBDC at CSU.