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Competitive Analysis: What Is It & How To Do It (Step By Step)

Let’s talk about how to do a competitive analysis that will reveal opportunities that you can use to increase your revenue.
This is what we will cover:
  1. Why you need to do a competitive analysis
  2. How to research your competitors
  3. What is a competitor matrix and why you should create one
  4. How to create a competitor matrix (including a competitive analysis template)
  5. Real-life example competitive analysis example (for iimagine)
Now, let’s get into it.

Why you need to do a competitive analysis

It’s critical for you to know exactly how you compare to your competitors.
If you don’t thoroughly research your competitors it will be impossible for you to differentiate yourself from them, it will be impossible to create and execute an effective marketing strategy and you will likely make a lot of other strategic errors. Or, to put it in simple terms, you will fail. 
And if you’re trying to get funding from investors, nothing will make you look like a bigger idiot than doing an investor presentation where the investor knows more about your competitors than you do. 

How to research your competitors

You obviously need to get information about your competitors but you also need to make sure that you stay up to date with everything that your competitors are doing and what their customers and followers are saying about them so you need to do some initial work to set it up then you need to update it an ongoing process.
This is how to do it:
  • Make a list of your competitors and make sure you have included all of them. If you have a lot of them, just include the top 10.
  • Review every relevant piece of content on their website
  • Review their roadmap if they have one. It’s common for software companies to literally list everything they plan to do over the next twelve months. 
  • Sign up to their email newsletter or join whatever email lists they offer
  • Follow them on the social channels they use
  • If possible, try to become a customer so you can test their product or service and customer experience and you’ll be alerted anytime they communicate with their customers.
  •  When you look at reviews, don’t just look at the ratings, read the reviews to find out what people like and don’t like. This is some of the most valuable free information you can get. Your potential customers are literally telling you what they want and don’t want.
  • Set up an alert on Google News. It will send you an alert every time they’re mentioned in the media or when they send out a press release.
  • Go to conferences and events for your industry
  • Review industry research
  • If your competitor is a publicly traded company then you get can a mountain of useful information by reading their filings and listening to their quarterly conference calls.  
  • Join social media groups and old schools forums about your niche. This is a great way to see what other people are saying about what they really need, how various products compare with each other, and where the industry is going in the future. 
  • Survey your competitors’ customers
  • Ask your competitor. Many of them will happily answer a lot – maybe not all – but a lot of your questions. If this strategy feels weird, pretend to be a potential customer.

What is a competitor matrix and why you should create one

The most effective way to do your competitor research is to create a competitor matrix in a spreadsheet.
You’ll be able to use this comparison matrix in multiple ways:
Internal analysis
You need to know how you compare with your competitors.
One unexpected move by your competitors could literally threaten your entire business or it could create a massive opportunity.
Most of the time, you’ll just be making small tweaks in response to your competitors’ moves over time.
Investor presentations
The easiest way for a potential investor to understand how you compare to your competitors is to review a competitor matrix.
This is also going to be useful for potential co-founders, business partners, advisers, or freelancers that you need to work for you.
I’m sure you must have noticed that the first thing that any of these people want to know is how you are different from competitor X.
If you know that a feature-by-feature comparison will make you look much better than your competitors then it might make sense to put it on your website and use it in all of your marketing materials.
This could be particularly useful if you’re the new kid on the block and you’re up against an established player.
Think about how many times you’ve been in this scenario as a customer.
For example, I’ve decided that I need to buy something.
The first product that comes to mind is brand X and, in my mind, I’m thinking – I will almost definitely buy brand X, but before I make a final decision, I will do some quick research to see if, by chance, there’s a better option.
If I stumble across your brand, the only thing I am thinking is – well, how does it compare to brand X?
If you make it difficult for me to compare your product to brand X I will just buy brand X.
On other hand, if I quickly notice these magic words “See how we compare to brand X” then I will click on those words in anticipation of seeing a table with a feature-by-feature comparison.
And, if you convince me that your product is better than brand X then I will buy your product.
On the flip side, if you are brand X and you do some competitor research and discover a new competitor that’s offering a better product then you should obviously not use a feature-by-feature comparison table in your marketing.  
In order to get all of this right, you need to do competitor research (and complete a competitive analysis) so that you can develop a unique selling proposition. People need to be clear about why they should buy from you and not your competitor.

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How to create a competitor matrix (including a competitive analysis template)

This is an example. The first thing you will need to do is to create a simple feature comparison.
List the competitor products that you want to compare across the top.
Then, on the left side of the matrix, list the features.
Then just go ahead and put a “yes” or “no” in each box. 
The competitor matrix for internal use should also include some other important information.
Simply using checkboxes or a yes/no answer seems a little theoretical or academic.
In reality, you will find that features are not so simple to compare. Sometimes, your competitors will offer a feature that you don’t offer but you don’t care about it because, as far as you’re concerned, your customers don’t care about it. 
You can also compare review ratings.
This is critical if you’re offering a physical product that has several direct competitors.
If you’re in this category, the reviews have an enormous impact on the buying decisions of your customers.
On the other hand, if you’re offering some kind of consulting service then reviews may or may not matter because it’s very difficult to compare one customer experience with another.
For example, if your product is a tent then your potential customers will want to compare the features, pricing, and reviews of your tent with tents from your competitors.
On the other hand, if you’re offering interim CFO services, it’s almost impossible to compare the CFO requirements of one business with another and it’s almost impossible to compare how one CFO would handle a given situation compared to another CFO. 
So use your judgment to figure out how important reviews are in your business and include them or don’t include them in your competitor matrix.
If you want to use some tools, check out this article from Similar Web about competitive intelligence tools.

Real-life example competitive analysis example (for IIMAGINE)

Okay, now for the real-life example. This is the competitor comparison matrix that compares IIMAGINE to Linkedin. 
Now, some of you offer more than one product or service and that means that you have different competitors for each product. This is the case for IIMAGINE.
It includes a social network, an Idea management platform, and a mechanism for helping businesses increase revenue by partnering up with other businesses and cross-promoting their products and services to each other customers and followers for free. 
So, if I want to compare my entire business with a competitor then I would compare it to a company like Linkedin.
If I just wanted to focus on marketing then I would compare it to Facebook or Google and that would require a separate competitor comparison matrix. 
The important point I’m trying to make is that, if you offer more than one product or service, it will get very confusing and complicated very quickly if you try to squeeze it all into one matrix so, if you’re in this situation, create a separate matrix for each product or service. 
So, for example, if I was trying to raise money for IIMAGINE and told a potential investor that IIMAGINE is a platform for entrepreneurs and includes a social network, one of the most obvious questions will be – how is IIMAGINE different from Linkedin?
This comparison matrix clearly shows that IIMAGINE offers an advanced idea management platform and a platform for funding and managing teams. But, let’s just focus on the social network.
Linkedin builds your network based on who you might know e.g. somebody you worked with in a previous job or went to school with – who cares?? IIMAGINE allows you to decide who you need right now (e.g. a co-founder or partners for cross-promotion) and it will match you with people that want the same thing.

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  • Adam Radly

    Founder of IIMAGINE. More than $100M raised. TEDx Talk about passion > 1 Million views. Founder of World Reconciliation Day with Nelson Mandela. Founder of One Direct Democracy.