This week, we’ve focused on the overarching concept of situation analysis, which is a method used to clarify the current standing of your business. Today, we get into the fun stuff by looking into competitor analysis. As the term indicates, this analysis consists of profiling your rivals to learn more about their operations. Think of it as playing the part of an ecommerce James Bond.
Why should you conduct a reconnaissance mission on your counterparts? Take a look at the following reasons:
- To build an idea of where your business stands in the marketplace
- To better understand past, present, and future strategies of competitors
- To provide firm grounding in your strategy to beat the competition
- To help determine who to directly compete with (pick your battles—you can’t win ‘em all)
- To show potential funding sources how you're differentiated from the competition in your online business plan.
While brushing up on this topic, I quickly realized that there is minimal information regarding competitive intelligence for smaller businesses, particularly those primarily operating online. Thus, we’ll build our own model. Check out some of the following ideas to get started:
- Determine who your primary competitors are. Who am I most often compared with? Who do my customers reference when talking to me? What online stores offer the same products? Who appears in similar search results? Competitor identification is the absolute first step in your analysis, so ample time should be spent here. Once you narrow down the field, your analysis can truly begin.
- Study the business basics of your narrowed list. What line of products do they offer? What is their price point? What discounts are they using? What does their web design/branding look like? What messages are they communicating? By completing this step, you’ll have a better understanding of major differences and how your business falls into the mix.
- Learn more about the competition’s SEO strategy. Where does my site appear in comparison to my primary competition for various keywords? Are my competitors running pay-per-click campaigns? What do those say in comparison to my ads? What specific tactics are they using? Check out this tool for a quick glimpse. You can also use Google’s Webmaster Tools to learn more about specific keywords—all vital information in readjusting your strategy.
- Identify competitor strengths and weaknesses. What are the best aspects about their online store? The worst? What can I do to leverage these weaknesses and address their strengths? Make a list of five things you like and don’t like about each competitor and use it to build your plan of attack.
- Consider how your competition will respond to your actions. What will happen if I make a pricing change? How will they react if I run a major promotion? How will their strategy change if I mix up my PPC methods? Using all of the information gathered in your intelligence efforts can help gauge potential reactions in the future.
The goal of this analysis is to provide a living library of what your customers experience upon visiting other sites. Additionally, this specific exercise allows you to fully understand where your business ranks in the playing field. Now, take this information and start building a strategy to make your online success soar above the rest.
Any other thoughts? Feel free to share below—we're always happy to continue the conversation!