Would it not be great to be a little mouse strolling through the offices of your competitors, learning about their secrets for success? No, this is not an article to encourage industrial espionage. The goal is to demonstrate how effective a competitor analysis is and how to use the insights to boost your business. A competitor analysis should not be a one-time effort but a continuous process to help stay on top of the market and discover opportunities.
A quick definition of competitive analysis
A competitive analysis involves defining, listing, analyzing, and evaluating competitors' strategies, methods, behaviors, products, and customers in a limited market. The aim is to apply the insights to identify the company’s competitive advantages and integrate them into the business strategy.
Customer insights as the holy grail
Creating buyer personas for yourself is one step. But apart from that, analyzing your competitor's business strategy, pricing structure, distribution channels, staffing, and R&D, understanding their customer base by creating competitor personas is extremely important to achieve a competitive advantage. And this will be the primary focus of this article.
Your closest competitors operate in the same industry or region and market similar products and services. At first glance, their customer segments are also similar to yours. Unfortunately, it is not as trivial as it seems. Take the iPhone and the Samsung Galaxy, for example. Both are well-known brands with a relatively similar concept, but users' attitude to the other product is usually very radical. Who doesn't know the extensive discussions between Apple and Android users? That is why it is essential to focus on customers' attitudes, needs, and emotions when analyzing the competition. Classic arguments favoring one product may not work for the competition's customers. Instead, focus on the missing or poorly implemented features by the competition.
Creating competitor personas clarifies who they are, how they became customers, and why they remain loyal to the brand. Collecting solid competitor research data is the biggest challenge of creating profound competitor personas. The same thing that applies to your own personas, namely that they should be 100% data-driven, also applies to building your competitors' personas, but more on that later.
Competitor personas will provide the vehicle to structure and bundle the insights to make them tangible. A comparison between own and competitor personas will uncover the areas for improvement.
Pre-screen the market
Analyzing every competitor is overwhelming. Find the most important ones for your business. Pre-screen the market by collecting general information such as company size, locations, number of employees, and history. Look at the strategic concepts such as investments and market shares.
With insights about product strategies, planned articles, and suppliers, you will quickly define who the closest competitors are. This basic information is available on mediums such as:
- Federal Statistical Office and portals such as Statista
- Industry associations and directories
- Company databases such as Crunchbase
- Websites of competitor companies
- Federal Ministry for Economic Affairs and Energy
- Trade magazines of the respective industry
- Trade fairs
Whereas these data sources are helpful for quantitative analysis, we will now highlight the advantages of competitor personas and how qualitative data sources help to create them.
Following is a list of benefits of running a competitive analysis with personas:
- Understand the power of brand personalities
- Forecast market potential and trends
- Uncover market entrance barriers
- Learn from competitor mistakes
- Competitor pricing structure
- Competitor customer targeting and communication
- Competitor customer acquisition
- Competitor customer retention
- Improve overall business strategy
Let us have a closer look at them now!
Understand the power of brand personalities
Usually, the most successful companies have a strong brand personality. If someone is interested in a particular product, they will research those companies first with a strong brand personality, meaning those they have heard about before.
For instance, if you plan to purchase a better fridge, you will instantly think about brands such as Miele or Sub Zero. One could argue that it is because of the market domination and because they have been around for a long time, but is this only partially true. Apart from good quality, their success is because they created a distinct brand personality, reflected throughout every marketing and sales endeavor. Identifying the different brand personalities is a way to add a qualitative measurement when creating the market overview. You will see that successful brands and their customers' personalities match perfectly.
You can compare your brand personality to those with the most influential personality and create guidance on how your own could be enhanced.
Forecast market potential and trends
By social listening, you identify competitors that increasingly receive more attention and, through topic modeling and sentiment analysis, understand the reasons behind them. They may have created a strong brand personality, or a new product feature creates more interest and demand. Accordingly, consider including these features in your offerings or highlighting them in future marketing campaigns.
Uncover market entrance barriers
At the same time, by listening to the competitors' customers, you will identify market entrance barriers that could be challenging for your business. Suppose you realize that every customer is exceptionally loyal and appreciates your competitors' features and pricing. You know it is a hard nut to crack and will require a compelling and convincing marketing campaign or an offer they can't refuse, such as the same or better quality at a much lower price.
Learn from competitors' mistakes
Understand why your competitors’ customers are unhappy with the current solution and use it to your advantage. Highlight why your product is better than theirs and why problems like they currently experience will not be an issue when using yours.
By monitoring your competitors closely, you identify moments of weakness. If one of your competitors just received a significant shitstorm for being environmentally abusive it is the moment for a campaign highlighting how your products are sustainable.
Competitor pricing structure
To compete with other players, your company might decide that lowering the prices is an excellent way to win over new customers. Before making this decision, evaluate your competitors' clients' price sensitivity. You might realize that price is less important than quality or service to them, and reducing the prices has the opposite effect. The customers could think that your product could be of better quality and distance themselves from your offerings.
Competitor customer targeting and communication
For every marketing department, the biggest challenge is to find the proper communication and targeting channels, whether PPC campaigns or content marketing. Not all platforms have the same relevance for a company. If the competition’s customers deal intensively with the contributions, it is logical that many potential buyers exist on the corresponding platform. By closely monitoring the communication between your competitors and their clients, you can identify the best-performing campaigns, strategies, and postings, saving you time and money and helping create a customer-centric communication strategy.
However, caution is advised, as it may well be that the respective marketing teams are doing a poor job. This, in turn, means that your company can quickly attract attention with better marketing and communication and thus increase sales.
It also helps to define how companies are using the different channels. It is crucial to understand whether the focus is more on directing potential customers to landing pages to generate leads or to build and expand brand awareness by publishing visual content. This offers the opportunity to react asynchronously to the current focus. If the company is more focused on building brand personality, it may be time for an aggressive marketing campaign with lucrative short-term offers.
Competitors’ customer acquisition
Closely related to the section above is how your competitor acquires their customers. Of course, parts of this will be a black box since you don’t have access to their Google Analytics or CRM system, but listening to their clients certainly will provide hints. Be sure that if you sell a relatively common product or service, thousands, if not more, people on the web, share their story of how and where they purchased the product, how they use it, and what they think about it. Posts like the following contain valuable information.
It tells you where the company advertised the product, that there are actual buyers, and how crucial the free shipping was for the decision-making process, alongside missing features.
Competitors’ customer retention
Existing customers are the best customers because they are likely to spend more on your products and keep your customer retention rate high. With each additional year, their loyalty rises, increasing their lifetime value. In addition, they act as multipliers as they recommend your products to others. For potential prospects, positive customer reviews are of enormous importance. Let us assume you gather comments like:
I considered changing from product A to product B but just before I pilled the trigger, company A reached out to me via email, giving me a loyalty discount and access to additional features like X that helped me to manage Y better! I decided to cancel service X because they increased their prices at the same time!
You will understand the competitors’ communication method, their offers, and what effect it has on the customers. Conversely, if you read comments like:
I decided to cancel service X because they increased the prices and at the same time did not deliver on the promised feature X! Does anybody know an alternative?
They demonstrate the opportunity to highlight your fair pricing and the introduction of new features that are entirely free of charge.
Improve overall business strategy
It should be clear that running a competitor analysis affects the entire business. Marketing can not promote market-requested features if the product development team can’t integrate them. Sales teams can not promote a 24H client support if the customer care team does not have the resources to do so. Therefore, providing these insights to all departments is important, and aligning changes accordingly. The created personas will guide in setting priorities and define the needed changes within each department.
Summary: Competitor personas as a vehicle for insights
No matter what you analyze, making the insights tangible is essential for their adoption. Using the competitor personas as the vehicle is ideal since they transport the insights in human form. Whether insights about pricing, targeting, communication, acquisition, or retention are reflected in the persona features such as Go tos, needs, pain points, and emotions shall guide every department on the upcoming journey.
Manual vs. automated creation of competitor personas
There are different approaches to creating personas. For internal personas, organizations create extensive surveys to understand their clients and spend hundreds of staff hours manually creating them. Creating competitor personas is even more complicated because one only has to rely on external data sources. Creating these personas based on assumptions can be tempting,
but please don’t.
The good news is, Mnemonic can automate the entire process. With cutting-edge deep learning technology, it acts as a web listening tool and analyzes all relevant information about your competitors from research papers, blogs, review pages, and social media. It automatically builds up profiles of competitors' clients, uncovering everything you need to know to create a competitive advantage for your business.