Know Thy Enemy: Dissecting Your Market Using 6-Step Competitive Analysis

1.  Build your “competitors” list

First, name the competition. Include existing and emerging competitors and organize them into three categories:

1. Direct competitors. These are similar products or services that satisfy the same need with very similar offerings. Coke and Pepsi are good examples. Both are cola drinks that satisfy thirst. In the SaaS world, think of the CRM products offered by Salesforce and Oracle. Both are software products that manage data to achieve stronger relationships with customers and drive sales.
2. Indirect competitors. These are different products or services that satisfy the same need. Coke and Perrier re thirst-quenching carbonated beverages, but they aren’t both cola drinks. Salesforce and HubSpot CRM are indirect competitors. HubSpot is primarily a marketing automation platform that added a free CRM (and continued to build it out). They both satisfy the need for organized customer data and customer connectedness, but HubSpot achieves connectedness through marketing automation complemented by lightweight CRM functionality.
3. Substitutes. These are products that satisfy a broader need in a different way. For example: Coke versus an ice cream bar. The broader goal is to have a treat. That could be done with a sugary drink or a dessert. Google Sheets would be an indirect competitor to Salesforce. Both keep you organized and help you understand your customer base, but they do so in very different ways.

Businesses can have anywhere from five to hundreds of competitors; it varies by industry. As long as you list competitors that come up regularly in sales calls, you’ve got the baseline covered.

2. Pinpoint key purchase attributes for your product

Learn which product attributes your target market values most.

Is it ease-of-use? Price to value ratio? Quality of service? Design? How do customers assess or measure these qualities?

Sales and Customer Success should have great insights around these attributes. Ask them what common deal breakers are for customers and what frequently-asked questions are from prospective customers. You should walk away with a clear set of attributes – at least seven – to cross check each of your competitors on in step three.

3. Organize the attributes based on importance

Some attributes far outweigh the benefits of others. Pricing, for example, is an age-old deal breaker for many buyers. Similarly, consumers shopping for software solutions often value ease-of-use more than nice-to-have features like concierge services or a mobile app.

Revisit past win/loss analyses and customer interviews to see which attributes your audience values most. Then, rank each attribute accordingly.

4. Rate every competitor on those attributes

Go through every competitor and rate them. This stage takes the most time, as it involves research and interviewing members of your team. If you have the resources to do so, structured, formal market research is incredibly valuable at this stage. You can also gain competitive information from:

• Brochures and case studies. Sales collateral can reveal everything from a competitor’s positioning to pricing to benefits and brand attributes. Case studies identify what customers like most about their products.
• Advertising. Ads can reveal segmentation techniques and competitors’ desired brand identities, shown through language, color scheme, image selection, etc.
• Your sales and customer success teams. Force them to rate each product attribute as a strength or weakness for each competitor. Remind them to put themselves in the mind of the prospect and to be as undefensive as possible.
• Lost customer interviews. Find out if any current customers used to work with competitors and reach out for insights.

5. Scan your analysis for holes

Now find the inconsistencies. Are there any competitor attributes that people disagree on (i.e. some think it’s a strength while others think it’s a weakness)? Are there any attributes you missed in the beginning that came up frequently in your research?

If so, circle back on them.

Then, note the real gaps in the market–the areas where competitors fall short of you and/or what the market wants. These gaps are key for developing and packaging your insights, which happens in step six.

6. Package your insights

Now, make these competitor insights accessible to your team and prospective customers. This means creating internal and public-facing marketing materials that compare your offerings with those of competitors.

Battle cards are a great example of internal collateral created to help the sales team close. Each battle card should include:

• A re-positioning statement: A one-line summary for each competitor that de-emphasizes its strengths and simplifies its product offering.
• Customer stories: Case studies of customers that decided not to work with the competitor and why.
• Key benefits & features: An honest list of the competitor’s strengths and weaknesses so your sales team can talk around them on calls.
• Tips for objection handling: Provide talking points around key benefits and features that diminish a competitor’s perceived strengths and accentuate yours.

Complementing public-facing collateral like sales brochures, infographics, and sales decks with insights from competitive analysis is also powerful. Juxtapose the shortcomings of a competitor’s products to the strengths of yours as a simple way of gaining favor in the eyes of prospects.

Keep your enemies close

Never turn your back on what competitors are doing.

Like you, they are constantly innovating, and there’s a lot to learn from their failures and successes. To ensure all marketing assets and sales pitches are up-to-date, conduct competitive analysis regularly: monthly at most or biannually at minimum.

Also, remember two things:

1. The better you get at gathering, processing, and communicating results of competitive analysis, the more willing sales will be to help execute competitive analysis in the future. Not only will it equip the sales team with valuable tools for objection handling; it’ll inform the product roadmap to ensure the business evolves successfully with market needs. Competitive analysis can inform why you are losing out to key competitors and shed light on how to win them in the future.
2. The first round of competitive analysis is by far the hardest. Do some heavy lifting up-front and you’ll be well on your way to a powerful, ongoing market feedback loop fueled by competitive intelligence.