Sleep with one eye open. No, not really, but in an industry that’s so customer centric, this article sheds light on the importance of competitor analysis, how to conduct it and why you should continually track other contenders in your space. Businesses ‘in the know’ are able to predict their competitor’s future moves, enhancing their own game and propelling them to be faster, better and stronger organisations. Everyone approaches competition differently, but knowing your field will help you to understand your customers better too. You’ll understand what they’re picking between and the choices that they face.
What is competitive analysis?
Competitive analysis doesn’t just mean ‘Google it’, although it’s not a bad place to start. Delving more deeply though, you’ll want to closely analyse your competitor’s websites, understand their brand storytelling, then demonstrate the areas in which you’re superior, as well as those you need to improve. This gathering of information pertaining to your competitors is known as ‘Competitive Research’.
Why is it beneficial to conduct a competitor analysis?
Understanding your competition is one of the best ways to get to grips with your market. On social media, you’ll spot trends quickly, but more generally we’ve never had as much insight into the goings on within other businesses. You’ll have a better gauge on your industry if you can see what others are doing. Keep in mind: the reason you’re spending all this time researching your competition is so you can better your business practices and out-do them next time.
Steps for conducting a competitive analysis
1. Know your intention
Having a clear goal before conducting competitive analysis is crucial to its efficacy. Your intention will implement a structure for your research and define more specific areas of interest such as price point and social presence. Understand the decisions your analysis could affect before completing your investigation.
2. Make a list
You’ll probably find brands similar to your own on Google or Amazon. Start by searching for your own business name as well as products you sell and what you’re known for. There, you should (hopefully!) find yourselves, alongside some shifty characters who are other contenders in the sector. You’ll want to create a spreadsheet to record your findings, including the company’s name, location, their USP, product lists and specific areas in which they excel or fall short. Competitors should be categorised as follows:
- Primary Competition: direct competitors are other businesses with similar products and revenue goals.
- Secondary Competition: indirect competitors will sell similar products but have different revenue goals. They’ll often sell cheaper or dearer versions of your product.They can have quite a different audience, but because of the shared product sector, they’re still your competition.
- Tertiary Competition: these competitors are more loosely related to your business, but can be useful to ecommerce merchants looking to expand their product range. In some instances, these competitors can make great partners for the future.
3. Examine their website
This step involves sussing out your competitor’s online shopping experience to assess how they’re performing and the way they interact with their audience. Some noteworthy areas include:
- Product photography and details in descriptions.
- How they communicate calls to action throughout their website to potential customers.
- How actively are they collecting email contacts?
- Are you able to easily click through and navigate to their social media channels? (More on social media in point 6)
- Is their site optimised for mobile devices?
- Do they have an app?
- How extensive is their customer service? (Multi-channel support should include live chat, email, social, phone etc.)
- Do they have a blog? Are they posting relevant and up to date industry news?
- How successfully are they upselling and cross selling?
- Are they using scarcity tactics where you’re not?
- How are they approaching the abandoned cart crisis?
These are just a few valuable insights that will help to position your business in a competitive market and assess areas you can work on.
One of the best ways to distinguish yourself amongst the competition is price checking - also one of the best ways to set your initial prices. You’ll discover what your target market is prepared to pay, though you shouldn’t feel pressured to undercut - it’s not always in your best interest to be the cheapest brand in a competitive sector. Keep an eye on your margins and know your value when determining what’s profitable for your business.
This sits hand in hand with price checking when you’re conducting a competitive analysis, and is a great way to collect information as to how your competitors are handling shipping. We’re well aware of shipping cost influence and the pivotal role this plays when consumers choose between two brands. It can feel pretty intimidating when a lot of the key contenders in your field are in a position to offer convincing shipping options.
Nevertheless, whilst free shipping in particular is known for being a powerful driver of sales, this definitely isn’t the only answer when strategising post-competitive analysis. If you’re not in a position to offer deal-closing delivery offers initially, consider some other options that will set you apart from competitors, such as a hand written thank you note, a small free gift or a loyalty card that invites a lifetime relationship with your customer. Remember that businesses offering free delivery will also expect to see their return rates soar, so it’s definitely not a quick fix. It’s become a tricky component in the ecommerce space, but note that it’s not always about pricing. Businesses who offer flexible delivery options and straightforward tracking methods can be extremely inviting for potential customers.
6. Read their reviews
This is an obvious one, but customer testimonials will easily be one of your best insights into competitors. If you spot a similar product that’s been reviewed extensively on a competitor’s site, you’ll know there’s a demand and others will be interested in yours. We know that product reviews, social media channels and community forums have become a hub of activity, in which customers discuss everything from the product, to its packaging, to the delivery experience! It’s an amazing space to pick up areas in which your business can capitalise. For example, when a customer writes: ‘I’m in love with the product, but I had difficulty integrating it, and it took customer service a week to get back to me!”, you’ll know how to respond: with a red-hot customer service team who guarantee a reply within 24 hours, who have all the knowledge for customers in need!
7. Social Media
It’s one of the quickest ways to establish if there’s a market for your product or service - just check their following and how engaged their audience is. If it’s all looking a bit sparse, this could be an indication that the market is weak, but could equally demonstrate that there’s a space for a more innovative brand to enter the market. Your competition’s social media platforms are a breeding ground for competitive research, and it’s one of the most significant insights that you’ll get into other contenders. Look at all social platforms including Facebook, Twitter, Instagram, Pinterest, LinkedIn and Snapchat. If they’re missing any, this could be an opportunity for your business to step in. Ask yourself the following questions when browsing through their social platforms:
- How are they communicating with their audience?
- How frequently are they posting and when?
- Who are their followers?
- How varied is their content: product launches and promotions, BTS (behind the scenes), collaborations, shoppable posts, user-generated content, giveaways etc.
- What are they doing to increase engagement/their following?
- Are they working with influencers?
- What is their TOV (tone of voice)?
Competitive analysis of social media channels is imperative since social has became such an integral part of running a successful business. If your competition is flying high on social media, you’ll definitely need to come up with a stellar strategy or consider new ways to engage with your market.
Some final tips
Subscribe to their newsletter and blog
If you want to be really cunning, you’ll subscribe to their newsletter and follow their blog to get a better understanding of their communication and the content they’re producing as well as its frequency.
Follow them on social media
Following their social media accounts means you’ll automatically be exposed to a lot of their content and interactions, plus checking in on the competition and keeping an eye on the market will become a healthy part of your everyday activity.
Buy one of their products
Buying something from them is one of the best ways to get a full customer experience with one of your competitors. By doing so, you can closely analyse the shopping experience, post-transaction communication, the delivery, packaging, product itself and supplementary marketing tactics such as emails and push notifications for reviews that follow.
Test their marketing and customer retention efforts
Abandon your cart on their website, not to be a nuisance, but to see if they have an automated email strategy in place to remind you to fulfil your purchase.
Monitor their PR coverage
Check their PR, read through coverage, and note the kinds of writers and publications who have picked up on your competitors and what they’re saying.
Set Google keyword alerts
Set alerts by adding specific keywords to your Google Alerts and thus receiving email updates when something relevant is mentioned.
Are they hiring?
Check to see if they’re hiring. Are they looking for someone in a specific department? This shows a clear direction into your competitor’s areas of interest and growth.
Check relevant business details
Check the details including when the business began, the date they registered their domain, contact information etc. all of which is available on WHOis.net.
Ready to get going? For even more tips to propel your ecommerce store and stay on top of the competition, get in touch with Elkfox today. We’re experts in optimising online shopping, improving UX and maximising conversion results.