It’s one of the first things I learned in business: analyse the surrounding environment and competitors and from there, work out what your opportunities are.
As you may already know, competitor analyses are useful as benchmarks, but we really shouldn’t rely solely on them, especially when developing a business and brand. Your desire to simply outdo the competition shouldn’t drive your strategy. As business leaders, our aim is to be proactive in our strategy creation, not reactive; and to be customer-focused, and not competitor-focused. There is one major problem with having such a tight focus on competitors.
The #1 problem with having a competitor-focus is: getting held back
I remember running a 100m race back at my Grade 2 athletics carnival. An eager little sprinter back then, I knew I had the chance to take out that first place ribbon. Despite kicking off to a fantastic start and leading in first place for the first 90 or so metres, I suddenly realised I couldn’t glimpse another runner. Curiously, I turned my head to see how much I was leading by, when my friend Bethan swiftly darted past for the next 10m, unexpectedly winning first-place.
As business leaders, we can’t afford to make the mistake I did in the running race. We can’t fix our gazes behind us or to the side to see where our competitors are, what they’re doing or how they’re going with the race. If we do, we lose momentum, we slow down, we can get overconfident, and then end up discouraged as they leave us in the dust. ‘This sounds easy,’ you might scoff, ‘of course I wouldn’t get too fixated on what other people are doing,’ yet unfortunately we see dozens of businesses of various sizes falling into the habit of hyper-focusing on competitor strategies.
Do you relate?
Let’s say you own a hairdressing salon and you hear that your main competitor is offering a ‘deluxe’ new experience. Google reviews reveal that the billing system of your main competitor is slow though, and repeatedly leads to confused staff and time delays of over 10 minutes. You conduct an informal competitor analysis and decide to combine the opportunity to improve your business, with their weakness.
Inspired, you create campaigns around how quick – yet luxurious – your salon is. You invest in an efficient point-of-sale system to ensure billing is seamless. You also decide to improve your first-class feel through offering extra treats, hot towels and a complementary hair product during treatment; all of which is ordered within days.
Two weeks later, you hear that your main competitor has now implemented a brand-new point-of-sale system, other efficiencies, hot towels, complementary offerings and sweet treats. New Google reviews prove that they are delivering an amazing experience for clients now. You’re competing on similar ground; overwhelmed, you decide to push more advertising and tell staff to emphasise how quick everything is becoming.
A few days later, you get feedback from a loyal customer saying they don’t feel like they should be paying ‘luxury’ prices for how quick your service is becoming, with less attentive staff. Your updated first-class branding hasn’t been effectively communicated; although they appreciate the hot towels. They don’t return, opting to try out your main competitor instead. Disappointed, you realise that although your competitor analysis provided a guide, you probably shouldn’t have based your new strategy off it alone.
So how should I analyse my competitors?
Competitor analyses are effective for bench-marking and gaining broad awareness of what your market is drawn towards. They are great to do as you’re setting up a brand, new business, launching a new product/service or if you want to simply revisit how you’re tracking in the market place to make improvements to your strategy.
Analyse your competitors by asking some key questions.
Given that a goal of ours as business people is offer the market something that’s more competitive than other brands, while meeting customer needs; we should be asking questions like:
- What do our target markets desire?
- If I was my target market, what would I prefer about my competitor’s brand, branding, service and offering than my own business’?
- How can we best serve the market needs and exceed their expectations throughout their customer journey /experience with our brand?
- Are we providing something that will offer more value in the long-run?
- Does our offering align with our value proposition? Even if they may not see it written down, would our customers know what our value proposition is through their experience with our brand?
If you remember one thing
While competitor analyses reveal ‘easy wins’ to overcome competitor offerings, it remains insufficient to base your marketing and business strategies on what you notice and know about competitors. Business and marketing strategies are usually composed of a myriad of major aspects, such as: a revenue model, a human resources strategy, operational processes and procedures to align with your value proposition, goals and objectives, and your messaging strategy – to name but a few. The most overwhelming part facing strategy leaders and teams is often that these elements (and all the other ones!) must be integrated tightly and strategically for them to work. (Hey, don’t worry, my team can work with you if you’re in need of a hand!) Whatever industry you work in, you’re running a race, but whether you’re first or not; just keep on sprinting and improving your technique as you go. Know where those other runners are; but just don’t let them hold you back, don’t overly fix your gaze on them, and you might just take out the first-place ribbon.
What are some of your thoughts for basing strategies from what competitors are doing?
Has basing a strategy off a competitor’s action ever worked for you?