In today’s highly competitive marketplace, entrepreneurs face extreme pressure to outperform the competition. Everything from the products you sell to the prices you charge to how much you spend on office supplies is shaped — in one way or another — by how your competitors are doing these things. A business that falls out of touch with the competition is not in business for very long.
Here’s how to perform some basic competitive analysis on the other companies in your sector:
Use Their Products or Services
The best competitive analysis is not sitting pre-packaged in a newspaper or trade journal. If you want true, detailed, first-hand knowledge of how your competitors operate, you need to experience it for yourself. One way of doing this is to actually use their products or services. What they’re all about might seem obvious from afar, but often times, you’ll be surprised what stands out during close observation. Maybe, upon using their product, it really is better than yours in some significant way.
Or, maybe not. But the companies who are dead serious about understanding their competitors inside and out don’t rely on guesses from the store aisle or website. They dig in and uncover the truth.
Go Through Their Sales Funnel
In addition to using your competitor’s products, you should go through and closely study their sales funnel. Every successful business has a system for attracting, educating, selling and following up with customers. Whether it’s via direct mail, Internet marketing or the telephone, this is the infrastructure that actually turns their prospects into buyers. How do you know if your sales funnel is performing at max capacity if you don’t compare it to the competition?
Don’t hand-wave this away because you assume everyone in your industry sells the same way. Tiny, near-microscopic differences in strategy and conversion rates can almost single-handedly put one company ahead of another. If you cannot analyze your competitor’s sales funnel yourself, assign a qualified person at the company to make a dedicated project of it.
Study Their Finances
In his book The Great Game of Business, Jack Stack says it’s foolish for any company not to own a share of stock in their publicly-traded competitors. This alone entitles you to detailed financial information about the company each and every year. But what if you and your competitors aren’t public companies? The basic idea is the same: any financial data you can get your hands on is worth having. You want to know as much as possible about what their costs are, who their suppliers are and how you stack up in comparison.
If there is a trade journal or research study about your industry, now is the time to subscribe — and digest what it contains.
Ask Your Customers
Still another way to get the inside edge on your competitors is by asking your customers for help. This need not be especially difficult or complex. Simply ask your customers (in the form of a survey or follow-up call) if there’s anything a competitor does (or sells) that they wish you did. Now, the idea isn’t that you’ll necessarily turn on a dime and honor every request that comes in.
There may be perfectly valid and logical reasons for not doing something a competitor does. But if throngs of people repeatedly cite the same thing, it is at least worth knowing and thinking about. Whether you make the change or not, hiding from the issue is never a solution to the problem.