How to Perform Competitor Analysis
Competitor analysis is an important element of corporate strategy. Unfortunately, the majority of companies or firms do not perform this kind of analysis as systematically as it is necessary. Consequently, conventional environmental scanning puts many such establishments at risk of hazardous competitive blindspots owing to their lacking in healthy competitor analysis (CA). Knowledge of how to carry out this analysis properly will help you devise strategies to seize market share from your competitors.
This article discusses 1) who are your competitors and should you analyze all of them?, 2) steps in competitor analysis, and 3) website competitor analysis.
WHO ARE YOUR COMPETITORS AND SHOULD YOU ANALYZE ALL OF THEM?
First, you should be able to differentiate between your direct and indirect competitors. A direct competitor is any business or firm that is trying to sell a product that is a substitute for or alike to your business’s or firm’s product in the same geographic area. Indirect competitors are those businesses or firms marketing substitute or dissimilar products when compared to your product or service. McDonald’s and Burger King are examples of direct competitors. An example of indirect competitors would be an eyeglass manufacturer competing with the manufacturer of contact lenses.
It is worth noting that even if a business has similar goods and distribution channels, they will not be a direct competitor for you at present if they are functioning in different market segments from yours. Having said that, it is essential that you monitor that firm’s business activities just in case they have a plan to enter your market segment, just like you may plan to enter theirs.
In some situations, you may have to analyze all your competitors, while in others, you don’t. For example in concentrated markets (where it is quite easy to name all the competitors), you’ll have only a handful of rivals. If such is the case for your good or service, you should carry out a competitor analysis for each competitor. Examples of concentrated markets are the automobile industry and steel industry.
If your market has many competitors (fragmented markets), it may not be practical to analyze all of them. In that case, it makes sense to follow the old 80/20 rule. In such markets, it is most likely that 80 percent of the entire market revenue is contributed by just 20 percent of the competition. Thus, it is this 20 percent that you would have to concentrate your market analyses on.
Strategy 101 – Session 4: Competitive Analysis
STEPS IN COMPETITOR ANALYSIS
Identify your competition
The first and most obvious step is to determine who your competition is (direct and indirect) and whether to analyze some or all of the competition, based on the information provided above.
Create criteria for comparison
Criteria can be formed from the main success factors in your industry and/or factors that are applicable for your business or particular assignment. Some examples of critical success factors that can form the basis for comparison are effective marketing, efficient manufacturing, strong distribution network, and brand reputation.
Collect competitive data
Select the top companies for each area you wish to compare. These companies can be your domestic or foreign direct competitors or even companies from some other industry. The companies from another industry can be latent competitors who might forwards- or backwards-enter into your market, parallel competitors with substitute or replacement products or services, or out-of-industry businesses which you do not compete with but who are still top in some areas of comparison just like Wal-mart excels in logistics. You can collect information from such sources as press articles, annual reports, advertising, trade associations, reference books and other employees.
Analyze competitive data
See how each company measures up for each factor based on the competitive data you have gathered.
Establish what your competitive position is
Compare the performance of your competitors to yours based on the criteria you fixed in the first step and the data you gathered accordingly. You can use an apples-to-apples format to determine the degree of gap between your company and the best company (ies) for specific criteria or benchmarks. Don’t hesitate to estimate results, as precise measures are by a large disproportionately hard to get and frequently do not contribute considerable value to the study.
Come up with programs or strategies to soar above the competition
Think up actions and programs to satisfy or beat the competition on the basis of a plan created to better those areas that seem to have potential for compliment. You can choose from different approaches ranging from just trying harder to imitating the best-in-class, surpassing the competition with technology or innovation from outside the industry or modifying industry rules.
Execute those programs or strategies
Implement the strategies or programs you have decided on by fixing specific improvement goals and deadlines and by coming up with a monitoring process to evaluate and revise the analysis over time. This would also become the foundation for revision, monitoring and recalibration of measurements for benchmarking studies that are carried out in the future.
WEBSITE COMPETITOR ANALYSIS
Before you get started with performing a website competitor analysis, you need to be sure about the keywords you’re targeting. This is very important. Having said that, it is possible that you would discover plenty of new and money-generating keywords in your competitive analysis. Business competitors have already been discussed. With respect to SEO, your key competitors should be those with top Google rankings (appearing on the first or second page) for your top keywords.
To record your analysis, you can use a spreadsheet with the names of the competitors listed horizontally and different measures of comparison listed vertically down the side. If you want, you can pen an accompanying document to provide a narrative for the analysis. This may be beneficial provided the documents are brief, and you concentrate only on the key points. Otherwise, there would just be too much to read.
Some suggested areas of comparison with respect to your competitors’ websites:
- Top ranking keywords
- Search volume for keywords
- SERP position for groups of ranking keywords
- How many location-specific keywords are there
- How many long-tail and short-tail keywords are there
- Position of ads on search engines for the top-ranking keywords
- SEO structure
If you feel that your competitors and you have the same kind and quality of content and add and update content with the same degree of frequency as you, the area in which they have an edge over you may be SEO structure. So, when carrying out a competitive analysis on the kind of content your competitors are producing, it would be helpful to also have a look at the SEO architecture of that content. Analyze how your competitors are utilizing their keywords and whether they are incorporating these keywords in the page title, H1 tags, internal links, URL architecture and/or image alt text. Also check keyword density (how many times a specific keyword appears on a single page).
Don’t just analyze the content’s SEO structure, but also the kinds of keywords your competitors are making use of. In doing so, in addition to searching for keywords with higher search volumes, also look for those with lower search volumes. These kinds of keywords are usually long-tail keywords and therefore more specific. Knowing what your competitors’ keywords are will also help you come up with additional keywords that your business can start targeting.
Traffic and backlink analysis
Compare the reach, traffic volume and popularity of your rivals’ websites. With respect to backlink analysis, check for things such as anchor text and the number and source of your competitor’s backlinks. Such an analysis could trigger backlink ideas for your business. If your analysis reveals any popular sites (which you were not aware of) from which your competitors are getting backlinks, you can consider contacting the webmaster of such well-liked sites to find out if you too can get backlinks from them.
Studying the content your competitors are bringing out will help you find out the kind of changes you can make to outperform your competitors. One thing you can do is find out the kind(s) of content your competitors are concentrating on. Some of the different types of content are blog posts, e-books, whitepapers, podcasts, visual content, feature articles, case studies, webinars, FAQs, news, buyer guides, slides/power points, press releases and videos. After this, you can find out about the quality of that content and how it compares to your content. Also check out the topics they often discuss and the frequency with which they update existing content or bring out new content whether for their web pages or blogs or some other form of content. Is there anything that they’re doing differently from you? For example, if your competitors are blogging more often than you, that could be one of the reasons why they’re getting more traffic. When increasing blog frequency, make sure you don’t compromise on quality.
Other content associated criteria for competitor analysis include language and grammar, headings, images, navigation, videos, text to HTML ratio of content, whether there are promotional offers, and number of ads on the website.
Social media aspects
It is becoming increasingly essential for companies to have a social media presence. Social media sites enable companies to communicate with fans and users. In addition, you can share your content on these sites. With respect to competitive analysis, you need to find out how your competitors are utilizing social media and incorporating it into their marketing. Do your competitors have a presence on Facebook, Twitter, Google+, LinkedIn, YouTube or Pinterest? In addition, you need to check out aspects such as the kind of information they are posting, whether they have followers, and if yes, the number. If your competitors have a considerable number of followers, find out what it is about their social media activity that is leading to this, and try to learn from it.
Search engines such as Google attach considerable importance to websites with rich user experience. If your competitors’ websites contain aspects of usability that influence their search ranking positively or negatively, usability may be a smart benchmark for your site to enhance it. You can specifically consider these elements of usability – page load time, URL structure, user-friendly navigation, typography, cross-browser compatibility, call-to-action features, custom 404 pages, on-site trust elements and broken links.
Some Tools that Help
Keyword Spy is a fantastic tool to know which pages or websites are ranking for your selected keywords or phrases. To get this information, you just have to go to the Organic Competitors tab. There you will get the list of the top 10 sites ranking for a phrase or keyword. If you take or upgrade to a paid account, you’ll get a complete list of competitors. With the help of this tool, you can also know all the keywords for which those individual websites are getting high rankings. Armed with this knowledge, you can consider using these keywords in your SEO strategy if relevant.
Open Site Explorer
With this Moz tool, you can compare a maximum of 5 websites for relevant metrics. With a free account, you are permitted three searches daily. More searches call for a Moz account to log in and access the tool. Some of the key metrics that you can get with this tool are: domain authority, page authority, total links, how many domains (separate websites) link to you straight from their websites, and social media metrics such as Facebook likes, Facebook shares and Google +1 which have a positive correlation with rankings. Another useful information available is: just discovered links, anchor text frequently used on a page or site, and top pages on a specific domain.
Note that page and domain authority will be relative. The authority of your website is a factor that should help you decide whether or not to compete against a specific site. For example, if your website’s domain authority is 30, you would probably desire to compete with sites having an authority below 30 or at least near to 30.
Alexa is a great tool for traffic estimations. These estimations along with bounce rate provide a reasonable indicator of how a particular website compares in popularity to others. You can get a Country and Global based website rank in addition to demographics data around a website.
SEO Tools for Excel
This Excel add-on can help you determine what it is that distinguishes one webpage from those that rank the best. It easily assembles a diversity of elements for a swift comparison. To find out information around a specific keyword phrase, you must first look for the phrase in Google to see which are the top 10 results. Add the URLs to compare the off and on page factors for each. In addition, for a comprehensive data analysis, a number of data points can be brought into Excel with the help of this add-on.
This free website analyzer enables you to see the things you are doing right and wrong with respect to social media and SEO. One example of a social media report is the Page Per Shares Network graph that gives you a list of the most popular of your website URLs and the number of shares for them on Google Plus, Facebook, LinkedIn, Twitter and Pinterest. You can read more about this tool here.
This tool gives you access to some wonderful free social media reports. Two of these reports are discussed here:
- Facebook Competitive Analysis Report – This report provides a first level look at your Facebook presence with respect to engagement and content. It enables you to perform a competitive study of 10 Facebook pages, including yours having below 250,000 likes for the last two weeks. Top Content Breakdown and Engagement Comparison are just some of the highlights that can be drawn from the report.
- Twitter Follower Report – This report gives you a general idea of a Twitter account you enter including location and distribution of followers. It can carry out an audience comparison for your brands vs. the industry. It will also reveal to you the most influential followers for the account you specified with their Klout score and most talked about topics.
Keep in mind that a competitor analysis is never a one-time thing. On the contrary, it is an ongoing process. New players can appear anytime; your rivals could change quickly, or the economy could go up or down at any time. Depending on the particular market you are functioning in, the frequency of analysis required could be once in two months or once every year.