How to Conduct a Competitive Analysis
Let’s face it. For businesses to attract customers, they need to communicate a strong value proposition, something that differentiates them from the competition. So, how do you determine what truly sets your business apart from others?
A competitive analysis is a great way to get started. Through an in-depth competitive analysis, you can identify what your top competitors are saying and selling, so that you can be sure to position yourself uniquely in the marketplace. In this guide, we will explain how to conduct a thorough competitive analysis, and how you can discover the unique value you bring to your clients and customers.
Step 1: Identify Your Competitors
Identifying your competitors seems pretty straightforward. However, oftentimes what we perceive as a competitor isn’t actually a true competitor.
Start by thinking about your ideal customer. How old are they? Where do they live? What types of jobs do they hold? What are their interests and hobbies?
When you know exactly who you want to attract to your business, you can then start to look at where those target customers are currently shopping.
Here is an example scenario:
Say you are a family-owned flower shop with strong ties to the community and a positive reputation. Your ideal customer is someone who lives locally, cares about shopping small, and wants a unique and intimate shopping experience.
Is your true competitor a franchise floral shop with multiple locations across the US that offers unoriginal products?
Your ideal customers will not be looking for that business as it does not align with their values. Instead, the locally-owned flower shop on the other side of town is likely to be your competitor as their business aligns with your ideal customers’ values.
Here are a couple of questions to get you started when selecting your top competitors:
- Would my ideal customer shop here?
- Are they showing up before me when I search for my business on Google?
- Do they offer similar services/products as me?
- Are they located near my business or in the same areas as my target customers?
- Is their website professional, well-designed, and easy to navigate?
- Are people even going to this business or buying their services/products?
- If my business didn’t exist, would my customers go here?
Once you’ve narrowed down 2-3 true competitors, it’s time to start digging into what their business has to offer and how they are getting in front of customers.
Step 2: Assess Your Competitors’ Websites
Regardless of the industry, a company’s online presence can significantly affect how successful it is and one of the most important elements of an online presence is a website.
At OTM, the first thing we often look at when taking on a new client is their website to learn about the company, what they offer, and how they are positioning themselves and their services to customers.
When looking at a competitor’s website, we want to look at their brand messaging, services/products, website design, and user experience.
When anyone lands on your website you want them to know immediately who you are.
So, when looking at a competitor’s website, pay attention to how they are positioning themselves. Here are some questions to guide your analysis:
- What is the promise they’re making to the customer?
- What is the problem they are trying to solve for the customer?
- Are they addressing a customer problem?
- What solutions do they provide to make the customer’s life easier?
- What are their value propositions?
- Do they have a mission statement?
- Do they have an about page?
Services and Products
Next, look at your customer’s services and/or products. This is where you consider your own business offerings, and make notes about what is similar or different between your business and theirs. Ultimately, ask yourself, how is my business different?
Here is an example of this at play with one of our clients:
Based out of Denver, Colorado, Karrikins Group has helped hundreds of the world’s most senior leaders and teams create the alignment necessary to close the gap between ideas and execution through the combined disciplines of consulting, facilitation, and coaching. Passionate about creating transformative teams, Karrikins Group reached out to OTM for help positioning their newest resource for leaders and teams, the Alignment Institute, featuring their cohort-based Aligned Leader Program, and team-based Align for Action Program.
We knew that by focusing on the Karrikins Group differentiators, particularly their comprehensive intellectual property, experience, and proven results, we would be able to help them stand out from other leadership and consultancy-based programs.
Overall Design and User Experience
In the past, a website was a simple landing page designed to communicate information about a business, place, or product. Now, a website is an experience.
According to Statisticbrain.com, eight seconds is the average person’s attention span and only 28 percent of words are read on an average web page.
What does this mean for businesses? It means a website needs to be engaging, easy to navigate, and fast to load for a user to stay on the page.
So, when looking at your competitor’s website here are some guiding questions to assess their website’s experience:
- How long does it take to load (Google recommended page load time is under two seconds)?
- Is the website designed well (high-resolution photos/videos, consistent colors, easy-to-read font, etc.)?
- Does the website have calls to action (schedule online, call us today, find out more, etc.)?
- Is the website easy to navigate?
- Do you enjoy spending time on the website?
At this point, you should have a separate document for cataloging your competitors and your findings. Take notes about anything that stands out to you as important or interesting from their website. Looking at a competitor’s website is a great way to spark inspiration for your own website. Have fun with it!
Step 3: Evaluate Your Competitors’ Digital Presence
Now that we know who your competition is and what they offer, we need to see how strong their digital presence is. There are a few key digital marketing strategies to pay attention to: website traffic volume, search engine presence, and paid advertising efforts.
To see how much website traffic your competition is getting you will need to leverage a third-party tool. At Old Town Media, we like to use Spyfu but other tools like SEMrush and AHREFs are also great options.
Once you’ve plugged your competitor’s website into one of these tools, you can see how many website visitors they are getting each month and annually. With this information, you can compare the data to your own website and see if you are ahead of the competition or if there is room for improvement.
Website data is important for most businesses but less important for others. For example, if you run a local car wash and most customers find you by searching on Google maps, your customers may never visit your website. So, always keep in mind your target audience when evaluating these metrics.
SEO or Search Engine Optimization is the process of increasing the quantity and quality of search engine traffic to a website or web page. SEO focuses on organic traffic as opposed to paid or direct traffic.
Here are some things to look at when considering a competitor’s SEO:
- How much of their traffic is organic?
- What keywords they are ranking for in the top 10?
- What are the top organic pages on their website?
- How many backlinks does the competitor have?
If your competitor is ranking #1 for the keyword, “Denver donut shop” and you are ranking on the second page of Google for the same keyword, improving your SEO will be a top priority in order to stay competitive.
In Spyfu, you can easily compare your business to a competitor using their Competitors tool to get a clear picture of how your SEO measures up.
Once you have an understanding of what your competitors are ranking for you can tease out opportunities for your business to fill in the gaps.
Finally, in a world ruled by digital ads, we can’t do a competitive analysis without getting an idea of how much your competitors are spending on digital paid advertising.
Let’s look at another example using Spyfu’s PPC Research Tool:
The graph above shows the paid ads information for a local car dealership. This particular dealership is paying for 50 keywords and has an estimated monthly ad budget of $1.3k.
If you were going to compete with this company for the same keywords, your ad budget would need to be higher or more strategic to show up higher in the search results.
If you have a small budget for paid advertising, you will need to look into other ways to market your business and might put more effort into SEO to rank for organic keywords instead.
Whether or not you plan to run paid ads, it is still important to look at what the competition is spending its money on. Why? Because it is an easy way to see what your competitors care about and where they are investing their money.
Step 4: Identify Your Competitors’ Existing Marketing Efforts
For this next step, we will look into what our competitors are doing to promote their business to their target market, AKA marketing.
Some examples of marketing tactics include social media, paid advertising, public relations, SEO, email marketing, and direct mail. For the purpose of this guide, we are going to look at three marketing strategies: social media, Google Ads, and local listings.
Social Media Platforms
Social media is a powerful tool that should not be overlooked during your competitive analysis. In fact, Sprout Social found that 55% of consumers learn about new brands on social media.
We like to cover the basics: Facebook, Instagram, LinkedIn, and YouTube but don’t discount other platforms like Twitter, Nextdoor, TikTok, and Pinterest. Consider the audience your business is trying to target and base your decision on where your audience is likely to spend time. If you aren’t sure, check out Sprout Social’s social media demographic research for 2022.
Here are some questions you should ask while looking at your competitor’s social media profiles:
- How many followers do they have?
- Are they posting regularly?
- Is their audience engaging with their content?
- Are their images designed or branded?
- Does it look like they have a strategy in place?
- Are they posting the same amount of times per month?
- Is there a consistent theme in their posts (employment, featured products, culture, etc.)?
- Are they replying to audience comments/questions?
How to Find Your Competitors’ Paid Ads
While you are looking at your competitors’ social media profiles, it’s always a good idea to check to see if they have a social media advertising strategy. Luckily, there are a few platforms that allow you to not only see if a customer is running paid ads but see exactly what the ads look like.
There are two ways to view your competitor’s Facebook Ads. One way is to visit the Facebook Ads Library where you can choose a location and an ad category and search for your competitors.
The other way to view your competitor’s ads is through the Page Transparency feature on their Facebook page.
From your competition’s Facebook page, go to the sidebar, find Page Transparency, and click See All.
After clicking See All, you can find who owns the business, when it was created, and if the business is running paid ads.
Because Facebook owns Instagram, you can see what ads your competition is running on Instagram through the Facebook Ad Library.
Once you’ve found your competitor, you will need to filter the view to only show Instagram ads. Click the Filters button on the top right and filter by Platform.
In order to see your competitor’s LinkedIn Ads, head over to their LinkedIn profile, and from the main menu, click Posts. From there, you will see options to view different post types, and select Ads.
Is my competitor running Google Ads? This is something you will want to look into during your competitor analysis.
Of course, we can never know for certain how much a competitor is spending or what specific keywords they are targeting, but we can leverage tools to get estimates and ideas about what to expect from our competition.
There are two tools we like to use to get insights into our competitor’s paid advertising: Semrush and Spyfu. For this example, we will look at Spyfu’s data.
In Spyfu, under the PPC tab in the main menu at the top of the page, you can view a competitor’s PPC overview, compare them to yourself or other competitors, and view their ad history.
Below is an example of Target (who we all know is running paid advertising):
We can see that Target is spending $1.54 million on advertising each month.
However, it looks like Amazon is spending a lot more on paid advertising with an estimated 7.25 million paid keywords.
We can also look at what keywords are the most successful for Target.
As you can see, Target is paying for the keyword “BestBuy”. Why? Because every time someone searches for Best Buy on Google, Target wants their ads to show up first to steal Best Buy customers. Clever, right?
Once you’ve established your competitor’s paid advertising strategy, let’s assess how they are showing up on Google Maps and other online local listing directories.
What is a local listing?
A local listing can be defined as an online directory that provides information about businesses and services within a specific geographic area. Local listings typically include basic business information such as the business name, address, phone number, and hours of operation. Many also include customer reviews and ratings, photos, and other relevant information that can help potential customers learn more about the business.
Some popular local listing directories include Google My Business, Yelp, Bing Places, Nextdoor, and Yellowbook.
Here are some questions to ask when evaluating your competitor’s local listings:
- Do they have any reviews?
- What is their overall ranking?
- Do they have adequate information on their listing (hours, contact, website, bio, services)?
- Are they responding to reviews?
- Are they adding pictures reguarly?
- If they have Google My Business, are they posting regularly?
At OTM, we use a listing management tool to manage our client’s local listings and reputation management, all in one platform.
Our tool makes it easy to distribute business data automatically to the most authoritative directories (80+ for the US, 40+ for other countries) and even ensures it is voice search ready, with automatic distribution of the information to Amazon Alexa, Apple, Bing, and Google.
If you are interested in learning more about our listing management tool and how it might help your business, we’d be happy to chat!
Give us a shout
Miles, our CEO and Visionary also heads up all new business at OTM. Whether you’re interested in learning about our process, or want to learn about our full range of creative services, you can fill out our interest form and Miles will be in touch to schedule a 30-minute call.
Step 5: Identify Opportunities for Your Business to Stand Out From the Competition
Now that you have identified your competition, evaluated their brand and voice, and compiled information about their marketing strategies, it’s time to boil down areas to improve upon.
It’s not always easy to stand out from the crowd, but it is possible.
If you’re like most business owners, you’re always looking for ways to improve your bottom line. And one of the best ways to do that is to find new and innovative ways to market your products or services.
One of the most effective marketing tools available today is the value proposition. A value proposition is a statement that tells potential customers what they can expect to gain from doing business with you.
Now that you know what your competitors’ value propositions are you can start to position yourself against them in conjunction with having a strong understanding of what your target audience wants/needs.
Your value proposition should be unique from your competitors and answer a need of your audience.
Here are a few ways you can make your stand out:
1. Offer something unique that your competition doesn’t.
This could be a product, service, or feature that makes your business different from the rest. If you can’t think of anything off the top of your head, try asking your customers what they would like to see that your competition doesn’t offer.
2. Have a strong brand identity.
Your brand should be more than just a logo – it should represent the core values of your business. Your branding should be consistent across all channels, from your website to your social media accounts to the way you answer the phone.
3. Be known for something.
Do you want to be known as the business with the best customer service? The most innovative products? The quickest turnaround time? Figure out what you want to be known for, and make sure all of your marketing efforts support that.
4. Be the first to market with something new.
If you can be the first business in your industry to offer something new, you’ll automatically stand out from the rest. This could be a new product, a new service, or a new way of doing business.
5. Be different.
This could mean anything from having a quirky sense of humor to being edgy and provocative. Whatever you do, make sure it’s something that sets you apart from everyone else in your industry.
Differentiating your business is essential if you want to be successful. By taking the time to figure out what makes you unique, you can develop marketing campaigns and strategies that will make your business shine.
We hope this guide has helped kickstart your competitive analysis and inspired opportunities for your business to stand out from the crowd. If you have any questions about marketing strategy or are looking for an agency to partner with to help your business grow demand and expand into new markets, reach out to us, we’d love to hear from you.
Founded in 2007, OTM is an award-winning creative agency with a flair for business. Our team is made up of strategists, enthusiasts, and visionaries who are propelled each and every day by the idea of helping our clients grow. With headquarters in Fort Collins, Colorado, our team hails from around the entire United States and works with businesses that span the globe.