How to Conduct Competitive Analysis That Gives You a Real Advantage

If you‘re not keeping a close eye on your competition, you‘re missing out on valuable intelligence that could help your business grow. But competitive analysis is about more than just checking out your rival‘s website now and then. To gain a true edge, you need to go deep – analyzing their strategies, tactics, strengths, and weaknesses to find opportunities to outmaneuver them.

In this comprehensive guide, we‘ll walk you through a proven process for conducting competitive analysis the right way, share some advanced tips, and reveal how leading brands have used it to fuel their success. Ready to level up your competitive intelligence and give your business an advantage? Let‘s dive in.

Why Competitive Analysis is a Game-Changer

First, let‘s define what we mean by competitive analysis. Simply put, it‘s the process of researching and analyzing your competitors to understand their products, sales strategies, marketing tactics, and overall strengths and weaknesses compared to your own.

Many companies do competitive analysis on a surface level, but far fewer put in the work to make it a real difference-maker. Consider these powerful statistics:

  • Organizations that don‘t analyze their competition are 2x more likely to have lower than average profitability (Crayon)
  • 59% of businesses say competitive analysis is crucial to their effectiveness, but less than half actually do it consistently (Crayon)
  • 94% of businesses have avoided a bad decision by doing competitive analysis (Semrush)
  • Competitive analysis can help you uncover threats to guard against and opportunities to seize, like underserved segments or unmet customer needs

So while it takes effort, this isn‘t just busywork – it‘s the key to finding your competitive advantage and capitalizing on it. As management guru Peter Drucker said, the aim of competitor analysis is "to understand your competitor as well as you understand yourself."

The Competitive Analysis Process: Your Step-by-Step Guide

Ready to get started? Follow these steps to conduct competitive analysis that yields real strategic value for your business:

Step 1: Determine Your Top Competitors

Start by getting clear on exactly who you‘re competing with. You likely already have a general sense, but it‘s worth validating that list and prioritizing your top 5-10 competitors to focus your analysis.

When identifying competitors, think beyond just companies that offer an identical product to yours. Depending on your industry, you may have several types of competitors:

  • Direct competitors offer the same product or service to the same audience. For example, Pepsi and Coca-Cola.
  • Indirect competitors offer a different product or service that meets the same need as yours. For example, while not direct competitors, Netflix and Spotify compete for consumers‘ entertainment time and dollars.
  • Replacement (substitute) competitors offer a product that could replace yours under certain circumstances. For example, tap water is a substitute competitor for bottled water brands.

Brainstorm the major players in each competitor type and do some searching to find others. Talk to your sales teams about who they most often come up against. Check industry reports and lists of top companies.

Useful tools for identifying competitors:

  • Google searches for "[your category] companies"
  • Industry association member directories
  • Customer reviews/comparisons mentioning alternatives
  • Social media analysis of conversations about your business/product

Step 2: Analyze Competitors‘ Positioning & Offerings

Once you have your competitor list, start learning everything you can about their business – starting with their positioning, products, and prices.

Some key things to examine for each competitor:

  • How do they summarize their business and unique value proposition?
  • What products/services do they offer and how are they positioned? (features, benefits, pricing tiers)
  • What are their pricing and discount strategies?
  • How frequently do they release new offerings?
  • What do customers see as the pros and cons of their offerings?
  • Are their products/services aimed at the value, mid-market, or premium tier?

Collect and organize this intel in a spreadsheet you can share with colleagues. Some ways to gather this info:

  • Scour their website, product pages, and pricing pages
  • Get a demo or free trial to experience their product firsthand
  • Read customer reviews on their site, app stores, and 3rd party review sites
  • Talk to your sales reps about how your offerings compare
  • Purchase a competitor‘s product if possible for a full analysis
  • Use tools like SimilarWeb, SEMrush or Owler for traffic and company info

Fill out a comparison matrix that plots each competitor against your own products on dimensions like:

  • Functionality
  • Integrations
  • User experience
  • Price
  • Support
  • Target customers

Step 3: Research Competitors‘ Sales Tactics and Performance

Knowing how your competitors are selling and how they stack up sales-wise can uncover areas for you to emulate or differentiate.

Questions to research:

  • What sales channels and tactics do they use? (website, demos, trials, inside vs outside sales, partnerships, etc.)
  • How big is their sales organization? Is it growing?
  • Do they tend to take a consultative/solution selling approach or a more transactional one?
  • What sales enablement content and tools do they arm their reps with?
  • What vertical markets and segments are they focused on?
  • How long is their typical sales cycle?
  • What is their customer churn rate?
  • What‘s their average deal size and revenue per customer?
  • How do their win rates and sales quotas compare to yours?

Some ways to find this intel:

  • Talk to your own sales reps about what they encounter from this competitor
  • Search for job postings/employee profiles that reveal their sales tactics
  • Read their sales collateral like presentations, battle cards, case studies
  • Analyze their customer list for signs of their target segments
  • Check their quarterly/annual reports if they are public for revenue numbers

A great framework is to analyze their sales performance using the SiriusDecisions Demand Waterfall model:

  • How many inquiries are they generating?
  • How many of those convert to true sales qualified leads?
  • What‘s their ratio of qualified leads to closed deals?
  • How does their conversion rate compare at each stage?

Piecing together this picture of their sales engine can spark ideas for how you optimize your own sales processes and targeting to compete.

Step 4: Dissect Competitors‘ Marketing Strategies

Next, turn your competitive lens on their marketing approaches and results to find new ways to reach and persuade your shared audience.

Areas to evaluate for each competitor:

  • What is their brand identity and personality? How strong is their brand awareness?
  • What are their core messages and value propositions they focus on?
  • Which marketing channels are they active in and how? (content, SEO, social media, ads, PR, events, partnerships, etc.)
  • How regularly do they publish new content and what types/topics?
  • What is their SEO strategy, top keywords, and ranking vs yours?
  • How engaged is their social media following on each channel? What‘s their posting cadence and content mix?
  • Where are they running ads and what kind? How much are they spending?
  • Do they run any major events, webinars, or conferences?
  • What marketing technology stack and automation do they seem to use? (based on their forms, emails, etc.)

Sources to investigate their marketing:

  • Follow their blog, social media, email list, and ads
  • View their ad creative, offers, and landing pages
  • Check their backlink profile for PR/partner sites
  • Use tools like BuzzSumo, Ahrefs, and Moz to see their content performance and rankings
  • Attend or get content from their events/webinars
  • Analyze their marketing based on HubSpot‘s inbound methodology

Look for opportunities where they are dropping the ball or where you could outperform them. Compile data on their estimated marketing spend, traffic, and inbound links compared to your own to spot gaps.

Step 5: Examine Competitors‘ Customer Experience & Reviews

The customer experience a competitor provides can be a major differentiator. Analyze how they treat customers across their entire lifecycle to highlight your strengths and shore up weaknesses.

Aspects of the customer experience to assess:

  • How easy and helpful is their pre-sale experience? (website, content, demos/trials)
  • What is their onboarding and training process for new customers?
  • How responsive is their customer service across channels?
  • What self-service support options do they provide? (knowledge base, forums, chatbot)
  • How customized is their solution and service to each client?
  • What educational content and events do they offer customers?
  • How do they engage customers for upsells/cross-sells?
  • What loyalty or advocacy program do they offer?

To understand their customer experience, try to go through as much of it as you can. Or find out from their customers:

  • Read reviews, testimonials, and case studies
  • Look at support forum posts and social media comments
  • Talk to your sales team about what they‘ve heard
  • Ask your current customers about their experience with competitors
  • Check third party sites like G2Crowd, TrustPilot, or Consumer Reports

Quantify their customer experience with metrics like:

  • Customer satisfaction (CSAT) score
  • Net promoter score (NPS)
  • Customer effort score
  • First contact resolution rate
  • Average resolution time

Compare these to your own metrics and satisfaction levels. Also look at the language customers use to describe their experience – what do they praise or complain about?

Step 6: Perform a SWOT Analysis on Each Competitor

Take all the intel you‘ve gathered and boil it down into a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis to crystallize your competitive position.

Create a SWOT matrix for each major competitor:

SWOT Description Implications
Strength What internal advantages do they have? (team, product, brand) How does this give them an edge over you?
Weakness What are their vulnerabilities or deficits? How could you exploit this or position against it?
Opportunity What external trends play to their strengths? How might they grow or improve their position?
Threat What external forces put them at risk? How could you maneuver to make this threat a reality?

Filling out a detailed SWOT not only organizes your research, but pushes you to interpret the "so what" and devise strategies in response.

Also plot out how you stack up to them in a SWOT – where are your advantages or disadvantages? This reveals areas to lean into your unique strengths or make needed improvements.

Don‘t just do this once. Regularly update your competitive SWOTs to adjust your strategy as the landscape shifts. Assign colleagues to keep an eye on certain competitors.

Competitive Analysis Pro Tips & Examples

Those six steps will put you well on your way to analyzing your competition like a pro. But here are a few advanced tips to take it even further:

Interview your competitors‘ customers. Nothing beats hearing straight from the source about why they chose a competitor and how they feel about them now. Offer an incentive for customers to chat.

Attend a competitor‘s conference. Immerse yourself in their ecosystem for a few days. Go to sessions, talk to their team and partners, take a demo to get the full download.

Follow a competitor‘s sales process. Go through their complete funnel as if you were a prospect to see their tactics. Take notes on what‘s effective or lacking.

Run a competitive usability test. Have real customers complete tasks on your website/product and a competitor‘s. Observe where they get stuck or what they like better.

Create a scorecard for each competitor. Give them a rating (1-5) on key factors. Monitor how those grades change over time as an early warning system. See template.

Designate a competitive analysis lead. While everyone should contribute intel, make competitive analysis one person‘s responsibility to oversee. Have them deliver a state of the competition report quarterly.

To see what good competitive analysis looks like in practice, check out these examples:

Drift vs Intercom: Conversational marketing platform Drift has a whole competitive intelligence team. They create detailed battlecards on competitors like Intercom. Each card includes an overview, product comparison, objection handling, and land mines to avoid – arming their sales reps to win.

Unbounce vs LeadPages: Landing page builder Unbounce has been in a fierce battle with rival LeadPages for years. Unbounce‘s quarterly competitive analyses of LeadPages‘ pricing, product, and positioning have shaped their strategies. For example, when LeadPages shifted to a freemium model, Unbounce responded.

Gong vs Chorus vs ExecVision: These three conversational intelligence platform are in a red hot competitive space. Each has a laser focus on the the others‘ every move. Their SWOT analyses of their competitors‘ products, pricing, and market fit guide their rapid-fire moves – it‘s like a chess match!

Competitive Analysis is Your Secret Weapon

We‘ve covered a lot of ground in this master guide to competitive analysis. You now have a proven process to follow to investigate your competitors and inform your strategies.

But here‘s the key – competitive analysis isn‘t a one-and-done exercise. The best companies build it into their operating rhythm as an ongoing discipline.

As Andy Grove, the legendary CEO of Intel once said:

"Only the paranoid survive. So you have to constantly be looking over your shoulder figuring out who‘s creating something new that‘s going to take away your advantage."

That‘s the kind of competitive thinking you need to cultivate in your business. Because no matter how successful you become, there‘s always someone gunning for you.

And by conducting continuous competitive analysis, you position your business to not only survive those threats, but thrive and capture new ground. It‘s your secret weapon for finding and keeping an edge that your competitors won‘t see coming until it‘s too late.

So start putting your competitive analysis process into action. And make it a consistent habit. Your future business success depends on it.