One of the most important, though sometimes elusive, aspects of running a successful business is knowing everything you can about your competition — their branding and marketing tactics, how they compensate employees, how they manage their businesses. There’s a lot more to it than simply developing a competitive analysis that reveals who your competition is and what they’re up to. Knowing your competition should be an ongoing, evolving experience, one that can practically put you right next to that proverbial fly on the wall — watching, listening, and absorbing.
But you don’t have to sneak around with a hidden tape recorder to gather intelligence on your competition. If you look hard enough, you can find just what you need without breaking the law or crossing any ethical lines. Read on to learn what you need to know and how to get it.
1. Assess Your Competitors’ Corporate Culture
Every business, whether it’s big or small, has a corporate culture. Understanding that culture can help you understand how to compete against it.
Look first at a competitor’s website, which is a good place to learn about the company’s senior management, see whether they do any pro bono or charity work, find photos of company employees and events, and pick up any number of corporate characteristics. You can also attend professional meetings and conferences where you’re likely to bump into your competitors. Try to listen more than you talk; you’ll learn more that way. Listen especially to the way your competitors talk about their colleagues and employees.
Getting a good read on a company’s culture can take time and patience. Once you’ve got a firm idea of a company’s “personality,” decide if there’s something you can learn and, if appropriate, incorporate into your own business.
2. Determine Who Your Competition Is
Sure, this sounds easy, but you’ll have to go beyond the obvious to get a really useful answer to this question.
Take into account not only those companies that provide the same products and services as yours does, but also those providing services that fulfill the same or similar customer needs. Let’s say you own a gym, but there’s a yoga studio right down the street. Both offer the same utility to customers: getting into shape and feeling good. But it’s not the same service, so it’s easy to assume that you’re not competing for the same customers. Taking a big-picture view of your competitors can make your job more complicated, but it’s essential to understanding your target market.
3. Conduct an Inventory
It is always important to know what products and services your competitors offer, both now and in the future.
You don’t need to steal corporate secrets to do this; you just need to pay attention. Listening carefully to what people are saying at networking events, for example, is a surprisingly good means of gathering intelligence. Reading about your competition in the media — including social sites like Twitter and various blogs — often yields interesting and useful product trend insights.
It’s also critical to differentiate your firm from others by offering products and services that will appeal to people in ways that your competition cannot. These are the corporate characteristics that make your business unique. Yet, in addition to assessing what separates you from the pack, you should also identify similarities. Your prospects may like certain things about your competition, and if you can offer them the same — or even better — products or services, you might win them over.
4. Look Who’s Talking
For a small business, reputation is everything. That’s why it’s just as important to keep tabs on a competitor’s reputation as it is to monitor and protect your own.
As you conduct your competitive analysis, keep a file on what you’re hearing about the competition. This should include not only what others are saying — on the news, in newspapers, online — but also what your competitors are saying to and about each other.
If a competitor’s CEO is scheduled to speak, for example, try to attend the event, and pay attention to how other attendees respond. You can glean some important information by listening both to critics and to those who have only good things to say. Be careful, though: You never want to be caught bad-mouthing the competition, and you can always learn more by listening than by talking.
Play the Customer
One of the best ways to get acquainted with your competition is to become a customer — or pretend to be one.
Putting yourself in the shoes of a customer is always a good exercise in market research. Scour your competitors’ Web pages (not just the home page), and study all their digital and print advertising. Read everything you can get your hands on, including blogs and articles. If possible, become a mystery shopper so that you can sample a competitor’s wares and services. Pay attention to what you like — and what’s not working.
5. Assess the Benefits
It’s important to understand your competitors’ products and services, but your analysis won’t be complete if you don’t know how they treat their employees. Are employees considered their most valued assets? What kind of vacation policies do your competitors offer? What about health insurance and wellness programs?
You might determine that one competitor is better than others at retaining employees. Your job is to find out why. Does one company offer yoga on the premises? Do any of them encourage their employees to volunteer on company time? What about free coffee and juice? Some companies go to great lengths to create homelike environments that encourage collaboration and increased productivity. Is this something you’re willing to do?
6. Is the Price Right?
Knowing why your competitors charge what they do should be as important as keeping track of what prices they charge.
In today’s economic climate, it is essential that you keep your prices in line with what people are willing to pay. Even long-standing customers can surprise you by suddenly balking at your prices. If they’re under economic pressure, you could very well feel it, too.
You can obtain pricing information easily by going to your competitors’ websites and by making a few phone calls. But be sure you understand exactly what they’re selling for the price, including any value-added services.
7. Track Your Competitors’ Social Media Presence
It’s very essential for small and big businesses to maintain a social media presence.
Gauging your competitors’ social media goes beyond knowing whether they have a Facebook page, a Twitter account, or a library of YouTube videos. What’s nice about conducting social media research is that it’s there for the taking — open to the public and available 24/7.
To maintain your sanity, however, impose some structure on your research. For instance, don’t try to follow all of your competitors; pick a few favorites, and then get to work. Of course, obtaining specific ROI numbers on your competitors’ social media activities won’t be possible, but you can pick up good information in consumer and business press about how your competitors might benefit from their use of social media.
One free tool to help you do this is Social Mention, which offers real-time social media search and analysis. You can set up social media alerts (much like Google Alerts) and obtain metrics. Just remember that those numbers aren’t static; people are fickle, and the popularity of any product, service, or person will change by the second.
Sometimes pricing information is proprietary, and you’ll have to obtain it through specialized business directories. You can probably find these at your local library, which is still a good (and free!) resource for researching competitors. Stay attuned not just to price levels, but also to whether your competitors are changing their pricing structures or methods.
8. Determine Your Competitors’ Market Share
Knowing where you stand in the market is a critical part of running your business, and determining the market share of your competitors will help put your own position into perspective. But that’s only part of the picture.
The other part involves understanding how customers perceive a company’s market share position. The larger your perceived market share happens to be, the greater chance you will have of growing your business.
Determining your competitors’ market share won’t necessary yield precise figures like sales and revenue. You can, however, take several steps to stay as informed as possible, such as reading the results of various industry surveys; attending conferences and trade shows; networking with customers, as well as trade association and industry contacts; looking out for your competitors’ advertising and promotional campaigns; and generally keeping a watchful eye out for any activity that might impact your bottom line.