Consulting Advice on 6 Aspects to Competitive Analysis

Your vision is to analyze your competitors.

You want to be the best, and most innovative in your field, and to be in business for the long haul. Ideally, you would be regularly performing competitor benchmarking and analysis.

The dilemma in this article is something that can put a wrench in that vision, something that you may not realize; a possible lack of competitor evaluation. Did you know that according to the Bureau of Labor Statistics between 2016 and 2017, 20 percent of small businesses are known to fail within the first year? Let’s say you are out of that window, but did you know the second year, 30 percent fail and by the end of the fifth year, 50 percent fail and by the end of the 10th year, it’s about 70 percent failure. These are very rough figures, they don’t take into account specific industries, and some businesses close due to retirement, or other logical reasons, however, it puts things in perspective. Seeing these types of numbers should make you think about whether you are doing everything you can to avoid this pitfall.

What are the most common reasons small businesses fail?

1. Financial issues. This could be a lack of funds, a mismatch in setting a proper price, or unexpected manufacturing costs.
2. The business lacks a clear vision. Without a clear roadmap, you end up doing number 3 on this list and spending time and resources you may not have.
3. Offering too many and too much. You should have a target customer, something you do better than everyone else. If you’re just okay at a little of this and a little of that, no one will find enough value.
4. Management lacking the necessary skillset. It’s common for the owner to be the only senior executive and often, they were able to create the product, but they may not have the time or skillset for managing the employees.
5. Lack of business planning. Opportunities and threats may have been missed, or nonexistent competitor analysis.
6. Marketing mistakes. The budget has to be realistic, the reach understood, and an accurate lead to customer conversion ratio.

One piece of the solution to small business failure is evaluating your competitors.

For the purpose of this article, competitor analysis and evaluation will be the focus.

You have a stand-out product and growing sales, so why would you need to worry about what your competitors are up to?

If you’re not paying attention to what your sales leads and prospects are encountering when they evaluate you against your competition, you are setting yourself up to be pushed out at some point. This may be through disruptive technology, significant innovation, a new spin on your service, better service, or a much lower price than you charge to name just a few. A favorite case study on this topic is Nokia. There were lots of contributing factors, but essentially, due to a mix of disruptive technology and some ignoring of this, they once were at the top and quickly fell. Another favorite is Kodak, which essentially failed to recognize and respond to disruption by the competition.

How do you get started evaluating competitors?

1. Determine who your competitors are.

You may Google search, search social media channels, ask your customer service team for the most commonly mentioned, ask vendors, or find this information from your customer interviews when you ask about how they found you and who they considered. Make sure that you take into account those who may not be direct competition, but have the possibility to ‘come out of nowhere.’ An example would be a cell phone company moving into medical hearing devices. This is out of the realm of what they have done in the past, but they produce in-ear speakers, and this example article of Apple producing earphones that can be used as hearing aids has the potential to significantly disrupt the hearing aid industry. So be on the lookout for the Apples. As for a total count, target at least 5, but a max of 10 is sufficient.

2. Sign up or buy it.

Having done these analyses’ across several industries, regardless of which you are in, the next step is to set up accounts with each where applicable and either make a purchase or sign up for the subscription to get the full experience. If they ship you a product, you can evaluate everything from their ads, description of their products, down to the packaging and ship speed. Decide what type of customer you will be and approach the setup from the shoes of that customer type. This is important if you will be interacting with their sales or support teams so that you are consistent. Try out their chat offerings, email, and phone. Look at their turnaround times and policies.

3. Start a chart or form of some sort to start collecting screenshots and notes.

Use this to collect info for detailed reference. Make sure to date the insights you collect and note the highlight so when you go back, it’s easy to when and what was important. This will help you remember when to update it as well. Ideally, you would be able to complete this project quarterly, but even if you did it once or twice a year, you are better off than most. As you continue to build on your findings over time, it’s useful to keep revision history as well, so don’t overwrite new findings.

4. Look at everything in every stage, from awareness to consideration to purchase and beyond.

Look at welcome emails, onboarding, their social channels, the types of things they post, their sales tactics, their products and services, their pricing plans, how they handle billing, their website, the options for supporting the customer, to contract stipulations and anything else you can think of. Spend some time brainstorming with your teams on the areas to review and make sure you do it for all reviewed so that you have consistent data comparison.

5. Assemble a one-pager.

Once you have all of this data, it can be manual to compile it. I recommend summarizing into a one-pager where you can highlight the top insights by function or department gained and share with the appropriate areas of the business. Make sure you call out their key competitive advantage. What is the one thing that makes them stand out? You may find your competitors are offering services that you aren’t or they have new things in the pipeline that could put you out of business. You may find that they have more efficient ways to package goods, an easier-to-follow pricing structure, or ideas for better product descriptions.

6. SWOT and next steps.

You could then begin to look at your offerings and perform a SWOT, strength, weakness, opportunity, and threat analysis to start prioritizing where changes may need to be made to keep your business relevant. The highest priority opportunity, weak areas, and threats need the most attention to keep winning business over your competitors. Utilize the strengths you have in your marketing efforts to ensure you are highlighting why you are the choice the customer should stick with.

Give it a try and start an account with your competitors and brainstorm all the aspects you could gain insights into.

Learn more about how I can help.

Written by Nicole Hullihen, August 1st, 2021

References recommended to learn more about reasons small business fails and monitoring competitors.

https://www.forbes.com/sites/ellevate/2019/10/24/eight-common-reasons-small-businesses-fail/?sh=2dc4d9534fbb

https://www.fundera.com/blog/what-percentage-of-small-businesses-fail?irclickid=R1q2lnSTSxyLRh%3AyY4X8ZS%3AyUkBUebV9w22BTQ0&utm_campaign=Skimbit%20Ltd._10078&utm_source=Impact&utm_content=Online%20Tracking%20Link&utm_medium=affiliate&irgwc=1?campaign=10078&source=Fundera_Impact

https://www.investopedia.com/articles/personal-finance/120815/4-most-common-reasons-small-business-fails.asp

https://www.shopify.com/blog/competitive-analysis