As a small business owner, you should check your competitors regularly. Not to spy on them, but to do competitive research. Competitor analysis lets you know the strengths and weaknesses of your competition and helps you learn about industry trends.
However, it’s not enough to check your competitors’ social media accounts and subscribe to their email list. You need to have a solid strategy for effective monitoring and research.
Below, we’ll help you learn more about competitive research, its importance, and how you can do it effectively for your small business on a budget. Read on.
What is competitive research and why is it important?
Competitive research is evaluating the strengths and weaknesses of your current and potential competitors so that you can identify any future opportunities or threats.
When doing competitive research, you can consider the marketing strategies used by the competition, plant facilities, financial data, number of employees, etc. By performing competitive analysis, you can understand how your products or services perform in the industry and what you can do to improve them.
Here are the main benefits you can get by doing a detailed competitive research:
It helps you understand the market better
A well-done competitive research can help you learn about current industry trends that you may have missed. The ability to study or identify current industry trends is critical to business growth as it helps you improve your business’s value proposition.
It allows you to improve your marketing
Customers are always looking for the best products or services that will improve their life. If your customers have left you for your competitors, chances are you’re not doing something right. Competitive research can help you know what your competitors are doing to improve your marketing.
It helps you identify market gaps
Competitive marketing analysis is about identifying market opportunities and threats. After the analysis, you can identify an underserved market that you can start focusing on.
It helps you plan well for the future
You may not take immediate action after competitor analysis, but you can use the data to improve your future practices. For example, you can improve your marketing or change your pricing strategies to gain a competitive advantage.
Six steps to effective competitive research at low cost
Here is a brief step-by-step guide to doing an effective competitive search:
1. Understand your competitors
First, you’ll need to know the types of companies you’re competing with to make more accurate data comparisons.
In the business world, there are two main types of competitors: direct and indirect. Direct competitors are companies that offer exactly the products and services you offer. Indirect competitors offer products that are different from yours, but they substitute what you offer.
When doing competitive research, you should only focus on direct competitors. If possible, you should write all competitors by name.
Note: If the list is long, you can reduce the number to focus on 7-10 competitors. The companies on your list should be:
- Competitors sell products / services directly to yours
- Competitors with business premises similar to yours
- Competitors with a marketing share equal to yours
- Competitors new to the market but more experienced than you
2. Create a spreadsheet
You should keep your data organized to reduce errors. For this reason, you should have a spreadsheet in which you will compare and contrast the following aspects of your competitors:
- The price range of the products or services
- Social media engagement of competitors
- Marketing tactics, including the content used to generate leads
- Terms of keywords your competition ranks for.
3. Analyze the engagement of your competitors
The best way to learn about your competitors ‘engagement is to check how users respond to your competitors’ posts. Check the average number of likes, comments and shares on posts to find out if:
- Some comments attract more likes and comments than others
- The comments are negative, positive or a mix of the two
- Readers are more responsive on some social media platforms than others
- People tweet more topics than others
Be sure to document observations on your records / spreadsheet.
4. Observe the marketing tactics of competitors
From engagement, you should now check out the content promotion strategies your competitors are using. Some of the things to look out for include:
- Types of content they are producing
- The keywords used on the content
- The connections
During the analysis, you should note the keywords or any other content marketing strategy that your competitors are using but you are not. You should also note the social media platforms your competitors use the most to promote their content and feedback.
5. Find out how your competitors market their wares
Marketing remains top secret for many companies, and you may not explore all of the company’s marketing tactics by solely checking their social media accounts. You can take on the role of prospect to deepen your competitor’s business by doing the following:
- Subscribe to your competitors’ emails
- Buy a product
- Buy the products online and leave the cart
- Subscribe to their blogs
As you perform the above activities, be sure to document the company’s responses to cart abandonment, blog subscriptions, social media followers, etc.
6. Conduct a SWOT analysis
The last step is to conduct a SWOT analysis for your company and competitors. A SWOT analysis examines a company’s strengths, weaknesses, opportunities and threats.
Strengths and weaknesses change over time, but are easy to control.
Examples include the company:
- Number of employees
- Market share
- Partnership, etc.
Threats and opportunities are external and not easy to control. Examples include the economy, market size, regulation, and so on. You can aim to do a SWOT analysis for your business and your competitors every year so that you can assess the current ranking of your business relative to your competitors.
Free or cheap competitive search tools
Aside from the effective but rudimentary methods discussed so far, using sophisticated tools designed for competitive research will only help you save time, money and energy.
The challenge is to get the vital data you need without having to be burdened with the expensive subscriptions required by the most comprehensive tools.
To that end, here is a short list of various free or relatively inexpensive search tools that we recommend trying.
While most of the free versions provide valuable data and insights, they invariably get better by updating the paid versions.
- Ubersuggest – A fantastic, completely free tool that will help you decode your competitors’ SEO, content marketing and social media marketing strategies. Giving you a domain overview, best SEO pages, keyword suggestions, content ideas, backlink data, and more!
- Similar Web – Easily one of the best and most used competitor research tools on the market. SimilarWeb shows you your competitors’ traffic, traffic sources, engagement, inbound and outbound referral sites, best organic keywords, highest paid keywords, audience interests, and more!
- Spyfu – This comprehensive search tool lets you find your competitors’ most profitable keywords and ads for organic and paid search. It even provides Google Ads buying advice to help you outrun the competition!
- Moat – Another great free tool is essentially a digital ad search engine. It shows you the creativity and advertising campaigns of the contest.
- What runs And Built with are tools that allow you to find out on which technologies, plug-ins and platforms your competitors use their website.
- Ahrefs – At first, Ahrefs was primarily a paid backlink analyzer tool. And while backlink analytics continues to be Ahrefs’ biggest selling point, they have evolved to become a complete SEO toolkit. To use their feature-rich toolkit, you’ll need a subscription, but they still have a full set of free SEO tools here.
- Rank signals – Speaking of backlinks, with this free backlink checker and site link explorer tool, you can discover your competitors’ best links, evaluate the quality and value of their links, and more! This will help you come up with a powerful link building strategy for your business.
There are many other competitive analysis tools available that we haven’t mentioned, but this is a good place to start.
Improve your marketing with competitive research
The bottom line is that knowing your business’s performance and positioning among your competitors is critical so that you can plan your future well. Follow our guide above and seek professional help when needed.
Are you ready to undertake competitive research for your business? We’d love to help you! Contact us for advice and quick help.