You’ve probably heard the old adage, “Keep your friends close and your enemies closer.” While competitive businesses aren’t your enemies, per se, they do compete with you for your customers. It’s easy to get so wrapped up in your own business that you forget to look at what’s going on in the rest of the business world.
No matter how unique your product or service is you have competitors that are vying for your business. These competitors are offering your current and potential customers substitutes or alternatives to your own products. How do you beat them for your customer’s attention? Competitive analysis is the answer.
What is Competitive Analysis?
Competitive analysis is the process of learning about your competitor’s marketing effort, products and services and customer experience. This valuable information helps you identify what your competitors do well, which areas are inferior to your own offerings and opportunities to capitalize on to promote your business. It also helps you identify threats to your own products and services so you can adjust your business strategy accordingly.
Create a Point of Comparison
You’ll never know how you stack up against your competition until you know what your competition is doing. There are several methods for doing this. Secret shopping is one of the most common methods used. It gives you valuable insight into the customer experience. The goal is to identify your competitors’ strengths and weaknesses. Why should you be interested in their strengths? If your competition does something well, you should do it, too. This is how various industries and sectors develop best practices. Of course, their weaknesses will help you identify where you can ramp up your own efforts to reach out to those customers.
One of the biggest benefits to knowing what your competitors are doing is that it can help you create an effective differentiation strategy. Homogenization is a common thing in business today; it’s often difficult to remember which brand does this or that because they all look the same. You don’t want that to happen to your brand. You need to offer something unique, and if you can’t do that – you can’t always reinvent the wheel, after all – do what your competitors do, but much better.
Ways to Set Yourself Apart
You don’t always have to compete with your competitors at the product or service level. You can also get a leg up on the competition in other ways such as price and promotion. If you can’t beat your competitor’s product quality, for example, you should try beating them on price instead by minimizing your expenditures to pass those savings on to your customers and improve your own profit margins. Another way to set yourself apart is by leveraging the strength of your employees. Offer a customer service experience that simply cannot be found anywhere else. Personal attention goes a long way in finding and keeping loyal customers.
Keep an eye on your competitors and evaluate their businesses regularly. This will give you a benchmark as to where you stand in the industry. More importantly, it will provide you with a guide for improving your own business to help you stand out from all the rest.