When we hear the term "competitive intelligence" we may instinctively think of Michael Douglas in "Wall Street" or some kind of secretive, malicious, and possibly expensive undertaking. In reality, nothing could be further from the truth. Analyzing your competition is a prerequisite for any small business, and the benefits of undergoing even the most basic amount of research can be numerous.
For example, based on the research you collect your firm can:
- Identify and emulate "best practices" to boost profitability and efficiency.
- Avoid mistakes and common pitfalls that plague your competitors.
- Differentiate yourselves in the marketplace. After all, if a competitor is serving a similar niche audience, you and your team may be compelled to alter your strategy and focus on other under-served markets.
Therefore, we suggest you start by simply asking the following questions:
What does your competitor do? Answer this question first from your gut. Don't refer to their website or any promotional items, but instead simply call it as you see it. This will provide a window into their brand strategy and how they're perceived in the marketplace. Then provide additional context, like products, pricing, and location.
What is your competitor good at? What is it bad at? What makes them different? Again, this will initially be an intuitive response, but it can be complemented with greater detail by searching the web, reading customer reviews, noting the extent to which they're growing or contracting, hiring trends, their level of social media sophistication, etc. You can also engage in the easiest and simplest form of competitive analysis possible: shop there yourself.
What are actual customers saying about your competitor? This information can be easily gathered on sites like Yelp and, to a lesser extent, Facebook and Twitter, although the latter two networks occasionally filter out the bad stuff.
Once your firm has amassed research gleaned from analyzing your competition, the next question is obvious: what should you do with it? Here are some ideas:
Fill a void. If a recurring theme on Yelp is how a specific dealership engages in pushy sales tactics, make sure to highlight the "low-pressure" atmosphere at your establishment. Post photos and testimonials of satisfied customers attesting to this laid-back vibe. Consider pitches and promotions like a "No Hassle Guarantee."
Introduce new products or re-imagine existing ones. If a competitor is making a killing on a specific product with minimal competition, perhaps you can eat into their audience. Similarly, if the competitor's product is doing well but could be improved upon, devote more resources towards product development and beat them at their own game. (Look to what Steve Jobs famously did when, upon trying to operate a poorly-designed mp3 player, decided Apple should build a better one).
Alter pricing structures. Can you undersell competitors? Can you offer similar or superior products at a higher mark-up?
Address your branding and messaging. Do your competitors have a better approach to branding? If so, understand what makes it so successful and emulate it. Conversely, are your competitors leaving out critical demographic groups? Let's say you're a solar power company, for example. You notice your competitors are all vying for the "low-hanging fruit," in this case, residential homes. Has anyone tried to market to, say, environmentally-conscious young professionals instead?
The beauty of conducting competitive intelligence in the digital age is that small businesses can easily access a wealth of powerful data. As a result, your competitive intelligence efforts can be conducted relatively cheaply and without having to hire outside help.