Finding your competitive advantage: Build a competitive analysis

Your clients are your number one focus, and rightly so–after all, they’re the reason you started your business. But if you aren’t also keeping an eye on your competitors, you may be missing out on some huge business opportunities. Use the tips in this post to make sure you aren’t losing clients to the business down the street.

This post will cover how to set up your analysis. Next time we'll dive deeper into how to analyze your results. 

What is a competitive analysis?

A competitive analysis identifies your competitors and evaluates their abilities, strategies and objectives. An analysis can be as targeted as looking at a particular website feature, or broadened to competitors’ overall strategies.

Competitive analyses are helpful anytime you’re designing anything, whether it’s a new web page or a new class. Even if you’re updating something you already have, an analysis can tell you what in the market may have changed.

Use competitive analyses to understand their client and business goals. This understanding gives you insight into how to improve your own business.

What are the benefits of a competitive analsysis?

Knowledge about your competition.
When a prospective client asks why your services are better than a competitor’s, you’ll be able to answer knowledgeably. Knowing how your competitors operate helps you distinguish what makes your business unique.

Insight into your own business.
Understanding how the competition does business gives you insight into how to make improvements to your own operations. Does the business down the street have a more informative website? Maybe it’s time to invest in improvements to your own.

Opportunities for advantage.
Competitive analyses aren’t just about finding opportunities to improve your business–they also uncover areas where you shine. Does your studio offer a much better client experience than any nearby competitors? Make sure you’re emphasizing that in your marketing.

Increased Funding.
If you're looking for funding from an investor, you can bet they'll be interested in learning about the health and performance of your competitors. 

How do you create a competitive analsysis?

A comprehensive competitive analysis can take a lot of time, but it’s worth the ROI. The steps below walk you through how to get started.

1. Determine the competitors you will be looking at for your analysis

There are two types of competitors you’ll want to consider when doing a competitive analsysis. Direct competitors are other businesses that operate within the same market space as you. Indirect competitors are more abstractly related to your business–they may not offer exactly the same product or service as you do, but the client experience is similar. As an example, consider fast food chains. McDonald’s and Burger King are direct competitors because they both primarily sell burgers. Pizza Hut can be considered an indirect competitor to both because they are still selling fast food, but not burgers.

It depends on the scope of the analysis you are doing, but typically choosing three direct competitors and one indirect competitor will give you the information you need.

2. Determine what you need to know.

There’s a lot of information available, so before you start diving into your analysis determine what you actually want to know. For each of your chosen competitors, consider questions like:

• What services and/or products do they offer?
• How much are they charging for services?
• How are they perceived in the marketplace?
• What kind of marketing and advertising do they use?
• What social media channels do they use?
• What information is on their website?
• How convenient is it to sign up for a service?
  

Asking these questions and more will give you the information you need to begin comparing your competitors’ businesses to your own.

3. Gather information 

Now that you’ve decided what information you want, it’s time to start collecting and organizing it. An Excel spreadsheet or Google Sheet is an excellent way to organize your data. List your competitors across the top row, and your questions on the left column, and fill in the blanks. The first company included in the spreadsheet should be yours.  

4. Analyze your results

Organizing the data in a spreadsheet streamlines comparisons and makes it easier to spot common elements and gaps. As you look at your data, consider the following questions. 

• What are the common elements between businesses?
• What are elements that stand out for each business?
• Which elements might you consider emulating in your own business?
• Which elements do your competitors do well that you can improve upon in your own business?
• Which elements do your competitors not do well?

Dive deeper into these questions, what they mean, and how to use them in part 2 of this post, Understanding your competitive analysis.

What kind of things do you learn from a competitive analysis?

Find out why customers buy.
Why do you customers purchase your service? When might they prefer to go with a competing service? Gaining a better understanding of your customers and how they think is the key to figuring out what your competitive advantage is.

Find ways to save money and increase revenue.
Do you competitors sell services or products similar to yours? How much are they charging for them? You may find that you are charging too much–or too little–for a service. Slight price adjustments could have a huge effect on your bottom line.

Identify your competitors’ strategic advantages, as well as your own.
Sometimes you may not recognize one of your strengths because it’s only a strength relative to a competitor. If your business does something well that your competitors struggle with, make sure your existing and prospective know that. If your competitor executes a process better than you do, invest in improvement.

Conducting your Analysis: Pro Tips from Pike13

• Some competitive analyses are broad, and some are highly targeted. The depth of your analysis should depend on context. For example, if you are considering one element of your business, like class check-in, it’s better to look at only the check-in process across several businesses, rather than doing a comprehensive analysis of each company.
  
  
• Don’t minimize the importance of indirect competitors. You may surprise yourself by identifying an advantage you didn’t even know you had, and that’s your opportunity to use it.
  
  
• Is a competitor’s website not giving you the information you need? It’s time for some undercover work. Sign up for a class at their business and get the inside scoop on their client experience.
  
  
• Remember that other businesses are looking at you, too. You may find that competitors begin to copy something that you do well. That’s why it’s important to constantly pay attention to changes in the market and regularly conduct competitive analyses.
  
  

Follow these steps, and you'll be beating the competition in no time! 

Become even more of an expert in competitive analysis by downloading Pike13's ebook, Creating Your Competitive Analsysis. Inside you'll find more ideas of what do look for in an analysis, plus bonus tips like building a SWOT analysis and a competitive positioning table. Use this guide to become an expert in your marketplace and set your business up for success. Download Now >>

Featured Photo Credit: Jonathan Blackburn