Any entrepreneur or business owner knows there’s value in competitive research, but if you’re starting your own business and are time-strapped, seeing what your top competitors are up to can be left to you when the time and resources are available.
Not only can research of the competitive landscape be done by just about any small business, but it should also be performed even if you haven’t started generating revenue. The competitive intelligence gained from this exercise can expedite your growth, help you learn existing best practices, and identify new opportunities that can take you in unexpected and rewarding directions.
This guide to conducting research will provide you with some essential strategies, practices, and competitive analysis tools to help you gain an edge, whether you’re already running your own small business or are planning to launch one.
What is a competitive analysis?
A competitive analysis is just that: It is research that evaluates the strengths and weaknesses of your competitors, their products and services, their position in the market, and the effectiveness of their marketing tactics.
Gaining these insights not only provides you with a competitive advantage, but you’ll also learn valuable insights into industry trends and standards that can be converted into stronger practices for your company.
While it may seem difficult or time-consuming to conduct competitive research, there are basic and creative ways to go about it that will yield promising results, no matter how new you are to the practice or how much you have on your small business plate.
Why is it important to research your competitors?
Your main competition may be doing things the right way, in which case you can learn from them and make improvements. Or they may be doing things the wrong way, in which case you can learn from them and do them the correct way. Either way, taking a closer look at your main competitors can offer many benefits.
Properly conducted competitive research can help you understand your market and:
- Identify your new product’s unique value proposition. This will help you understand what makes your product different from competitors.
- Evaluate what your competitor is doing right. This information is critical for staying relevant and ensuring your product and marketing campaigns perform to or outperform industry standards.
- Let you know where your competitors are falling short. This helps you identify areas of opportunities in the marketplace and test new, unique marketing strategies others haven’t thought of.
- Learn what’s missing in a competitor’s product. You can use this knowledge to consider how you might add features to your own product to meet those needs.
- Determine new price strategies. This is especially important if a competitor offers essentially the same product for less money.
- Provide you with a benchmark to measure your growth. Success isn’t just measured in profit. Expanding your target audience, reaching new markets, etc., are ways to gauge success.
Let’s say you are a business growth consultant. Competitive research might reveal that others offering this service also provide executive coaching, helping C-suite types overcome roadblocks to creative solutions to business problems. Good idea. You decide to explore this avenue for your own services.
You also note that most business-growth consultants concentrate on their own credentials. You also have a wide network of professional contacts to draw on for projects, ranging from consumer research experts to facilitators for training sessions. You see these strategic partnerships as a key differentiating factor.
How to Conduct a Small Business Competitive Analysis
While there are many ways to conduct a small business competitive analysis, what follows are some of the most important steps.
1. Figure out your competition
You can’t do a competitive analysis if you don’t know who your competitors are. A good place to start is to conduct a web search for a product or service category, which you can narrow down to a geographic location, depending on your business size.
In determining your main competition, consider direct and indirect competitors. For example, if you’re a wedding photographer, you’d compete directly with other wedding photographers, using your portfolio and pricing structure for an advantage. Indirect competition might include wedding planners, who often have preferred suppliers they use, including photographers.
2. Analyze your competitor’s products or services
At the core of competition are the products and services a business offers. Analyze your competitors as far as quality, pricing, and discounts. Are they on a high or low side of the price spectrum? Who are the customers for what they sell? What marketing strategies work and don’t work for them? What kind of market share do they command? Can you figure out who their suppliers are? Do they sell related lines of goods or services you haven’t considered yet? These are some of the questions you might ask yourself.
3. Run a competitor sales analysis
To better understand a competitor’s sales tactics, look at their annual reports if they are publicly traded. If they are private, a bit more ingenuity may be needed.
You can start by interviewing new customers who’ve come to you instead of your competitors. Some questions you’d like answered about competitor sales tactics in an ideal world include:
- What is their sales process, and which channels do they sell through?
- Why do they attract or lose customers, and what stops or promotes their buying?
- Is the company expanding, and what kind of sales volumes do they have?
- Are partner-selling programs part of what they offer?
- Are products and services regularly discounted?
- Do they have multiple locations, and what kind of advantage does that give them?
Other areas where you can find information about a competitor without using competitor analysis tools include visiting their website to look up specific product features or service offerings and feedback on their social media channels.
4. Study your competitor’s pricing and perks
One of the most important things is to check your competitor’s pricing for products and services similar to yours. Can you beat their prices? This is something you should play up in your marketing, advertising, promotions, and sales calls. If you’re going to charge more for what you’re selling, you need to make a strong business case for customers about why you’re worth the extra cost. Superior workmanship might be one good reason.
You should also keep track of relevant industry trends, issues, and news that might affect your business and pricing. It’s also a good idea to check which perks your competitors offer. If they’re offering major referral discounts or a 14-day free trial, these might be tactics to consider.
5. Offer competitive shipping costs
Shipping costs are often a cause of abandoned carts on an e-commerce site. Free shipping can be an attractive perk to customers but may be hard to offer if you are a small business with razor-thin margins. It’s also worth exploring multiple shipping options. For example, USPS offers competitive rates for specific mail classes and sizes, while a service like ShipStation promises to streamline and automate fulfillment processes, saving you time and money.
6. Study your competitor’s marketing and social media channels
Since social media is an increasingly important marketing tool, take note of which social media platforms competitors use, how they use them, and what kind of engagement they get. If they’re on LinkedIn and you’re not, maybe you should adopt the channel. Or if they’ve neglected Twitter, that’s an opportunity you should take advantage of.
What type of content are they producing, and how many likes/shares/repins is it getting? How many fans/followers do they have, and how active are they? Can you discern if they have a content marketing strategy and how it links together with its different communication methods? Do they post regularly, and do they offer original content? Do they answer customer queries and complaints quickly? What do they do well that you can copy and improve on or do poorly that you can exploit? Do whatever you can to understand your competitor’s social media strategy.
7. Analyze your competitor’s website and online presence
If your competitor has a website, you should analyze it for content and user experience. See if it’s easy to navigate and if its type of content is engaging, helping to lead visitors down the sales funnel. Do they present information about themselves clearly and effectively?
If they offer a blog, articles, whitepapers, case studies, or other frequently updated content, ask yourself what topics they’re covering and why. Is the content optimized for mobile, and is it used to maximum effect on the site, social media, and email marketing campaigns? Do the online efforts dovetail with what the company is doing in nondigital advertising, marketing, and sales promotions?
You can also use search engine optimization (SEO) tools, such as keyword research, to gauge the strength of a competitor’s web presence, including their strongest-performing product and service pages and the quality of their backlinks.
8. Check online reviews
Track down as many customer reviews of your competitors as possible, whether they are social media reviews, Google reviews, from consumer-review sites, or comments on the company site’s blog posts and articles. See what they’re doing well and make a note of the customer service problems they’re having so that you can do better. Also, check any competitor mentions made with the Better Business Bureau (BBB).
9. Conduct a SWOT analysis
Think about doing a Strength, Weakness, Opportunity, and Threat (SWOT) analysis, outlining the strengths, weaknesses, opportunities, and threats related to your business and your competitor’s — helping you develop a full awareness of the factors involved in making business decisions. It’ll not only give you insight into how your business is doing today but how it will fare down the road.
In a SWOT analysis, strengths and weaknesses are considered internal factors and under your control, determining how your business is now. Opportunities and threats are considered external factors, determining what may happen to your business if such and such occurs. To make a SWOT analysis, you need to gather a team from your business that can include a wider range of people than just executives and managers for a guided brainstorming session, later filling in any gaps you find in the four lists of items.
Competitive Research Tools
To perform competitive research, you also have access to tools, including search engine optimization (SEO) tools and templates, that let you:
- Measure the strength of a competitor’s web and social media presence
- Judge how their content strategy is performing
- Assess the effectiveness of their email campaigns and blogging efforts
- See the quantity and quality of their backlinks
- And much more
With its all-in-one marketing toolkit, SEMrush offers various powerful solutions for competitive research and other digital marketing challenges. Its tools and metrics allow you to thoroughly analyze a competitor’s website traffic, including its most popular pages, products, and services; assess content and social media engagement; provide insights into paid and organic traffic; and assess market trends and benchmarks.
After a free trial, freelancers, startups, and in-house marketers can sign up for the $99.95 pro monthly plan. Small and midsize businesses might take the guru plan for $199.95 per month, with many added features. The business plan for agencies, e-commerce projects, and extensive web presence is $399.95 per month.
With BuzzSumo metrics, you can plug in your competitor’s domain to see which of their content performs best, including infographics, where it’s been shared, and total social shares. You can also employ this tool to discover other websites producing content in your work category. Competitive analysis tools are divided among content research, content discovery, identifying influencers, online tracking, and API automation. Monthly price packages, with 30-day trials, include pro ($99), plus ($179), and large ($299). Enterprise packages are also available for $499 a month and up.
This useful tool automatically captures all emails sent from a website to its mailing list, allowing you to compare newsletters and screenshots to see how your competition is marketing its product and services, including the copy they’re using. With this competitive intelligence, you can up your own e-blast and newsletter game.
Owletter has an easy-to-use dashboard and is aimed at “agencies, retailers, and marketers who want to get a competitive edge or be inspired to make better emails.” After a free 14-day trial, monthly plans include starter ($19), pro ($39), and unlimited ($79).
Learn how to beat the competition
To stay competitive, you need to know your main competitors and learn from their strengths and weaknesses so that you can grow a strong business yourself. Taken together, all the information presented above can seem overwhelming. The key is to plan your competitive analysis one step at a time. Success will lead to success, and soon, your competitive knowledge will make you the one that others watch.
To launch and grow a strong business, you should also take advantage of the solutions and tools that ZenBusiness offers. Small businesses can leverage this important partnership to turn their business dreams into reality, drawing on invaluable services and advice. Whether you’re deciding what kind of business entity to form, trying to set up your web presence, or seeking to navigate legal compliance requirements, we have your back — and we’ll help make you very competitive indeed.
Small Business Competitor Research FAQs
- Why is it important to research your competitors?
Competitive research is essential because it’s the fastest way to grow your business, learn from the best practices of competitors, and see what new opportunities are available to you. Whether you’re assessing the strength of a competitor’s web presence or evaluating what their customers have to say about them, competitive research helps you stay focused on what your business needs to survive and thrive.
- What are the three types of competitors?
There are three types of competitors, specifically:
- Direct competitors: A direct competitor is someone who offers the same product or service you offer. Think Netflix and Hulu.
- Indirect competitors: An indirect competitor works in the same industry as you but offers a different-enough product or service where they can serve as a substitute for what you offer. Continuing with the Netflix example, an indirect competitor would be a TV channel like the Food Network.
- Replacement competitors: A replacement competitor works in a different industry but can replace your product or service. A replacement competitor for Netflix could be Regal Cinemas.
- How do you do market research?
It’s easy. Just see what your top competitors are doing right and wrong and learn from both. See how they connect to new customers and how customers respond to their approach. Competitive analysis is one component of target market research, which is the process of seeing how viable your new products and services will be among its intended demographics. It involves doing primary and secondary research on your offerings.
Primary research is first-hand data about your target market. Secondary research is the data from public, commercial, and internal resources that tell you about important market trends, relevant statistics, industry data, and sales information, helping you understand your market in a broader context. Choose the method that makes the most sense for your business, and proceed from there.