How to do a competitive analysis in 5 easy steps
How to do a competitive analysis in 5 easy steps
In this article, we suggest how to do a competitive analysis in 5 easy steps. Start collecting the basics and then drilling down as follows:
1. Company Overview
It’s important to track your competitors’ established date, their fundraising rounds and their employee numbers to enable you to benchmark your own growth. Use this data to set yearly business goals and projections. You can find a company details on Linkedin, Crunchbase, AngelList and Owler. Although when it comes to Owler take what they present with a large pinch of salt.
If you struggle to find a company’s revenues online, then use a formula like this one developed by Jason Lemkin of SaaSfor. Count the number of employees at your competitors’ company. Linkedin is suitable for this rather than standing outside their offices with a clipboard. Yes, we have done this, but a little more subtlety. Then multiply by £115,000 if well-funded. £160,000 if modestly funded. And that’s the competitors’ ballpark revenues.
You can, of course, compare this with your companies performance and those companies which publish their revenue. You may also need to play with the model a little depending on the competitor’s specific circumstances and industry. It just gives you a range, but the more work you put into the initial figures, the better the results.
2. Investors and M&A
Mergers and acquisition are one of the best to enter a new market and also, at the same time, get rid of a competitor. Research your competitor’s M&A history to understand what direction it is moving in. Investors tend to put their money into a business that does not directly compete with another investment. Makes sense really. Why invest in Apple when you are the major shareholder in Samsung? So, if you understand who is investing in your competitors you will have a great story to offer another investor who has yet to dip a toe into the water in your industry They missed the chance to invest in a competitor, so now they can work with you.
3. Market Share
It is difficult to find market share information within unlisted organisations. Best way to do this is to analyse a customer questionnaire and ask them which products they use. Get the opinion of your competitors, former and current employees. Look at business press articles and gather data from analyst reports. A bit of good old reading and analysis will help you build a picture.
4 Organisational Strength and Weakness
- What makes your competitor unique?
- Is the CEO an influencer?
- How do their culture and internal systems impact their bottom line?
Look at Glassdoor to get a picture of what really is going on behind closed doors. YOu have to look for patterns of course as you may just be reading the thoughts of a bitter ex-employee. The patterns will flow through. A great culture is tough to beat, especially if a. you are doing is just copying for the sake of it. You have to own the culture and really mean it.
5 Who are their customers?
You will not find a complete customer list — well, at least not legally! But you can gain an excellent picture of who your competitor’s customers are. Look at press releases, reviews of their service, testimonials, social media feeds and most importantly, Linkedin. Whom are they connected with? Who else is connected to them in the company? Build a picture and never assume anything.
I always remember giving a client a piece of news that shocked them and eventually nearly killed the company. They sold specialist equipment for aircraft. Their key competitor who was struggling had unbeknown to them, signed a deal with BAE Systems to get their product built into the aircraft direct. My client had to retrofit their product, and it was a bit of a shock to them. Especially when BAE Systems was an organisation, they were talking too, and their BAE contacts never knew either! Where did we find this fantastic piece of Intelligence? A 12-month-old online press release Googled — Granted it was a Brazilian subsidiary of BAE, but the information was there. Out in the open.
When it comes to competitors customers, you need to ask questions like:
- What are the needs of your competitor’s ideal customers?
- How do they acquire new customers?
- What type of content do they publish and where?
- What are their sales channels processes? What is their customer road map like?
- Can customers easily switch from them? Why should they move to you?
- What are the barriers to entry
In this article, we suggested how to do a competitive analysis in 5 easy steps. Be starting collecting the basics and then drilling down deeper. We suggested taking a look at company overviews and revenues, investor and M&A activity, market share, underlying strengths and weaknesses and understanding who are your competitors’ customers.
Follow us on Twitter
And, get in touch here
Also, for more information on Intelligence ethics click here
© 2020 Octopus Intelligence. Our Policies | ® Logo is a registered t