You can keep an eye on your competitors both offline and online. Today we will focus on the online side. The virtual world offers many ways to see what work your competitors are doing, and perhaps to learn from their mistakes. Competitor analysis is something you should not neglect. Quite the opposite. Do it regularly.
What competitor analysis is and why it is useful
Competition is a process in which several businesses meet in the market, all interested in the same customer. If you are serious about your business, it is important to know your competitors. That means all your main competitors. Their strengths. And also their weaknesses, which will help you find a gap in the market that you can fill.
Competitor analysis can reveal your competitive advantage and so strengthen your position in the market. By watching your rivals, you will also be better prepared to react quickly to their changes. After all, they want your customers too. So do not underestimate your rivals, and keep an eye on them.
How to start the analysis?
Write down a plan at the start: what information about your competitors you are interested in and where you will look for it. Make this really clear for yourself. Going through your competitors will take a lot of time, and nothing is more demotivating than realising halfway through that it would actually be good to track this as well, and that too, and so on.
A simple competitor analysis template
The easiest way to keep your plan clear is a table. Put one competitor in each row and one question in each column. Use the same table every time you repeat the analysis, so you can compare the results over time.
- Basic facts: name, website, main products or services, target group
- Offer and price: price level, discounts, delivery and payment options
- Communication: channels they use, how often they post, tone of voice
- Website: ease of use, speed, quality of product pages
- Strengths and weaknesses: what they do better than you and where they fall short
- Notes and ideas: what you could test in your own business
Add a column with the date of each check. A competitor that cut prices last month may have a different strategy than one that has always been cheap.
What to watch at your competitors
There are many activities, processes and tools you can watch at your competitors. It is up to you to decide what matters to you. Whether you are a smaller company that does not want to grow its turnover enormously and just wants to keep its current position in the market, or you are a company aiming for the top positions in the market.
Believe me, large companies do not just watch their competitors, they literally spy on them and do not miss anything their competitors do. There are many spying tools that will find out which plugins and programs your rival uses. So think about how deeply you need to know your competitors.
Also decide whether you are interested in their sales side or their marketing side. Do you want to know their turnover and so their market share, or are you interested in how they promote themselves and communicate with their potential and existing customers? And what about their sales process: how pleasant is it to buy from your competitors, and what benefits do they offer their customers?
What you might be interested in
- What style your competitors use to communicate with their target group: formal or informal address, what vocabulary they use
- How often they communicate and what about: social media posts, blogs, videos, newsletters and so on. Also watch the posts with the most shares, as they show you what your target audience enjoys
- Where you compete and where you differ: your competitors may not be your competitors across the board
- Are they really rivals, or could you work together?
- Do your competitors invest in paid advertising?
- What payment and delivery options and what convenience their online shop offers: goods staying saved in the basket, the option to send a wish list to a partner, saving favourite items and similar handy features that might also be useful for you
- In general, focus on the website, how clear and easy to use it is
- Do they offer extra services? Which ones?
- SWOT analysis of competitors : you can try creating this analysis, which will reveal your rivals’ strengths and weaknesses, their opportunities and threats
Where to watch your competitors
- Websites
- Social media
- Newsletters: sign up to their emails
- Buy from them: all the way, or up to the order confirmation step
- Influencers: an increasingly popular form of advertising that can sell out your stock down to the last item
- Organic search: try typing the keywords you would like to appear for into Google or Seznam, and find out which competitor ranks in the top unpaid positions
- Paid ads: see the previous point and watch the top positions in the search results marked with the word “ad” („reklama“)
Website competitor analysis step by step
Your competitors’ websites often tell you more than anything else, because that is where they try to turn visitors into customers. You can go through them in a few steps.
- Map the structure: look at the main menu and the categories. It shows which products or services they consider the most important.
- Study the content: read their blog, guides and product descriptions. Note which topics they cover in depth and which they skip. The gaps are your opportunity.
- Estimate their traffic: competitor traffic analysis tells you roughly how many visitors a site gets and where they come from, for example social media, paid ads or links from other sites. You cannot see their exact numbers, so treat any figure as an estimate and compare trends rather than single values.
- Check who links to them: competitor backlink analysis shows which other websites link to your rival. Links from industry magazines, partners or local directories bring visitors and trust. If a site links to several of your competitors but not to you, it may be worth contacting.
- Test the buying process: count the steps from the product page to the order and note anything that slows you down.
For example, if a rival with a similar offer gets far more visitors, look at where they come from. If most arrive through links from one popular industry website, you know where to focus your own effort.
Free or tailor-made analysis?
You can find out many things yourself for free. Expect it to take a lot of your time. But you will save a lot of money. If you have some spare money, an advertising agency can also prepare a competitor analysis for you. Either way, you should definitely keep an eye on your competitors.
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What competitor analysis tools can and cannot do
Competitor analysis tools save you time. Some estimate website traffic, others list backlinks, track social media activity or archive the ads your rivals run. Many offer a free version with limited data, while full access is usually paid by a monthly subscription. If your budget is small, for example a few hundred dollars a year, start with free versions and pay only for the one tool you use most.
Keep their limits in mind. Tools work with estimates, and two tools can show very different numbers for the same website. They also cannot tell you how satisfied your competitors’ customers are or how profitable they are. Common mistakes include:
- paying for several tools before you know which data you need
- treating estimated figures as exact facts
- collecting data without writing down what you will change
- watching only the biggest rival and ignoring smaller, fast growing ones
Discover your competitive advantage during the analysis
- Unique product/service
- Quality
- Price
- Tradition
- Fast delivery option
- Gifts, discounts, loyalty programmes, longer warranties
- Packaging
- Ecology
- …
Porter’s model of competitor analysis
Professor Michael Eugene Porter of Harvard Business School created the five forces model. It is one of the basic and most important tools for analysing the competitive environment. With this model, you can estimate your strength. To do so, you need to focus on these five forces:
- Existing competitors : whoever can ensure the lowest costs, high quality and interesting extra services has a big competitive advantage
- New competitors: becoming a newcomer in the market is not easy, but you always have to expect that a new rival may appear
- Customer influence: the smaller your target group, the more pressure it can put on price or quality; or your product may be so standardised that customers can easily switch to another supplier
- Supplier influence: business needs resources, whether labour, materials or other supplies; if one of these resources falls or disappears, it can be devastating for your business
- Substitute products: products from another industry that can replace other products; they are different but serve the same purpose, which can be a big threat to a business (for example, for taxi drivers, a substitute product is a private car, a bicycle…)
Just because your competitors do something does not mean they do it well. So take everything with a pinch of salt, use common sense and, above all, hard data. For some things, you can use A/B testing. Your view may be completely different from the view of your target group.
Once you have gathered all the data and insights, you need to process and use them. Make changes in your business where they are needed. Be careful not to copy. If a customer of your rival comes to have a look at your business and you have copied, you will not stand a chance with them. Make a habit of watching your competitors regularly. Get inspired, compete and look out for new opportunities. Always with respect for your rivals.
Doing business online: have you heard about conversion rate and tracking your customers’ behaviour?
Frequently asked questions about competitor analysis
What is a competitor analysis template?
It is a table or document that lists your competitors and the same set of questions for each of them, such as prices, communication channels and strengths. It keeps the analysis consistent. You can reuse it every time and easily compare how your rivals change over time.
Which competitor analysis tools do you need?
It depends on what you want to find out. For a small business, a spreadsheet, your own observations and the free versions of a traffic or backlink tool are often enough. Pay for a tool only when you know you will use its data regularly.
Can you see a competitor’s exact website traffic?
No, only the website owner has exact figures. Competitor traffic analysis tools give estimates based on various data sources. Use them to compare trends and traffic sources rather than to rely on precise numbers.
What is competitor backlink analysis?
It is a review of the websites that link to your competitors. It shows where their visitors and reputation come from. You can use it to find websites, partners or media that might link to you as well.
