Every business has competition, no matter what industry it’s in. For instance, if you decide to open a restaurant, you’ll be fighting for customers with similar restaurants within driving distance. However, having tough competition doesn’t always have to be a disadvantage.
If you want to have a growing, thriving business, the best thing to do is study your competition and work hard to stand out from them. You can also use your analysis to find competitors’ weaknesses and then take advantage of them. Similarly, you can use knowledge to stay ahead of any threats from competitors.
This article will provide you with a guide for understanding who your competition is. We’ll also give you important tips for standing out from your competitors.
Why Is It Important to Know Your Competitors?
Many business owners and entrepreneurs just focus on their idea and getting their businesses up and running. They don’t spend enough time looking at and studying who their competition is. Savvy business owners understand the numerous benefits of knowing their competition, including the following.
Helps You Understand Your Market Position
When you know exactly who your competitors are, you have a better chance of being able to offer something they don’t. In other words, identifying competitors lets you understand your market position and discover your business’s unique selling point. You can then leverage that selling point to deliver value and grow your brand.
Provides Insights Into Mistakes to Avoid
When studying your competition, you may come across failed marketing campaigns or other underperforming strategies. These can provide you with the information needed to avoid the same pitfalls.
Learning from the mistakes of your competitors will save your company time, energy, and money. Even better, you can compare competitors’ mistakes to the successes of other competitors. This comparison will let you see what works and what doesn’t, letting you better focus your efforts.
Whether you learn about pricing, marketing strategy, launching new products, or something else, the insights will be valuable.
Improves Strategic Decision Making
Once you understand your market position and know what mistakes to avoid, you can use that knowledge to make strategic decisions. Thanks to your competitive insights, you can make more informed decisions, which are more likely to deliver good results.
Competitor research may even help you discover different niches you can explore within your industry. For example, you may realize no restaurants offer food with locally sourced ingredients.
Boosts Creativity and Vigilance
The more you look at your business’ competition, the better you will be at seeing competitors as a real threat. That, in turn, should prevent you from feeling complacent. Instead, you will always be vigilant, looking for potential errors or weaknesses in your strategies. This vigilance will also encourage you to get more creative, as that creativity will set you apart from your competitors.
Mitigates Risks
All these benefits help lower your overall risk. After all, learning from the mistakes of competitors reduces your risk of running into the same pitfalls. Similarly, by being more vigilant, you’re at a lower risk of overlooking flaws and weak spots in your business processes.
More importantly, by understanding your position in the market, you avoid wasting your marketing budget on something that won’t set you apart from the crowd. Moreover, thoroughly studying your competitors also helps you anticipate and prepare for their next move, reducing threats to your business.
Finds Marketing Opportunities
Comprehensive competitor research will also help you find marketing opportunities. Use that insight into your market position to find and advertise your unique value proposition. Or spot opportunities in the mistakes made by competitors.
You can even look at the content competitors have created to find gaps that address other customer needs. This will help you create unique, useful content that keeps customers engaged.
Types of Competitors
Now that you know, “Why is it important to know your competitors,” make sure you understand the four types of competitors.
- Direct Competition: These companies offer the same services and products as you and they have the same target audience. (Consider McDonald’s and Wendy’s.)
- Indirect Competition: These companies offer similar products and services to the same customer segment, meeting the same need. However, they offer different types of products. (Consider McDonald’s and Taco Bell.)
- Potential Competition: This is similar to direct competition, but they aren’t in your area yet. You just want to keep an eye on them in case they enter your market.
- Future Competition: Think of this as a middle ground between potential competitors and direct competitors. You know they are entering your market, but they haven’t done so yet.
- SERP Competition: These are companies that sell different products or services but optimize their websites for the same keywords. (Consider a company that cleans houses and a company selling house cleaning supplies.)
- Replacement Competition: These competitors offer an alternative to your product or service that solves the same pain point. It won’t be a direct or indirect competitor. (Consider an e-reader seller and a physical bookstore).
How to Identify Your Competitors in 7 Steps
Aside from knowing the different types of competitors you can encounter, it is also useful to learn how to identify these competitors. Use the following steps to discover who are your competitors.
1. Conduct solid market research.
The first step in how to find your competitors should always be market research. Examine the market for your product or service. Then, figure out what other companies sell something that would compete with you. Don’t forget to talk to your sales team during this process.
Once you have a list of your business’ competitors, look at these companies in more detail. Pay particular attention to their marketing efforts and their product.
2. Collect customer feedback.
Customer feedback can be an excellent tool for how to identify competitors. One option is to ask for this information after customers have chosen your product. At that point, ask them what other products, services, or companies they were considering.
Another option is to ask for competitor feedback during the sales process. Have your sales team ask what competitors their prospects are considering. This will not only help with your competitor analysis but will also help your sales team decide what features or characteristics of your product to emphasize.
For example, restaurants could collect customer feedback in the form of surveys on where they last ate and what restaurants they prefer.
3. Analyze the SERP and SEO strategies.
SEO analysis or keyword research is an excellent tool for identifying indirect competition and SERP competition. You hopefully already have an SEO strategy for Google search and likely use a tool to help with this. That tool will also list competitors that rank for your chosen keywords. If you don’t already have an SEO tool, there are many free or affordable options that do this.
Or you can even use your SEO tool to see what keywords your known competitors rank for. This can give you keyword inspiration or help you find more indirect competitors by looking for other companies that rank for the same keywords as those known competitors.
4. Look at paid ad data.
Paid ads and pay-per-click (PPC) advertising go hand-in-hand with SEO. So, look at data from programs like AdWords to repeat the process for keywords that matter to your business. As with SERP analysis, this will show you indirect competitors and SERP competitors.
5. Look at social media communities.
Yet another method of how to find your competitors is looking on social media or other community forums. From Reddit to Quora to social media platforms like Facebook and Twitter, it is easy to find communities featuring your target audience. Look for conversations about your industry and see which companies and brands the users regularly mention.
6. Talk to your business network.
Customers aren’t the only useful tool in how to identify competitors. Your network, such as vendors and suppliers, can also provide valuable feedback. Just ask what other companies they work with and gather feedback on why they like working with these companies.
7. Use tools to identify competitors.
You can also use free or paid tools to identify competitors. You could even hire a market research firm if you have the budget to do so, although many small businesses might not have the funds for this.
How to Stand Out From Competitors: 5 Tips
Once you know who are your competitors, you can work on standing out from them. Some of the best ways to do so are described below:
1. Improve your local SEO.
Boosting your local SEO rankings is an effective way to stand out, as you will appear higher on the search engine rankings and be the first brand prospective clients see. Create content to use keywords naturally, optimize your website, and work on building reviews to boost your ranking.
2. Get positive customer reviews.
Most customers put as much value in reviews as in word-of-mouth referrals. They also improve your Google ranking, especially in the case of Google Reviews. Consider tools like Podium’s Google Review Link Generator and work to get more reviews and more business for you.
3. Improve your communication channels.
Communicating with your customers and offering easy ways to reach you will create a stand-out customer experience. You can make customer communication faster and easier with Podium Inbox. This tool puts all of your conversations in one place, including emails, texts, Facebook Messenger, and more.
4. Create unique content.
You will need to create unique, engaging content as part of your SEO strategy. Make sure this content marketing is of high quality, as that will show your company is an expert in the industry and adds value for your customer base.
5. Offer a unique value proposition.
Speaking of adding value, find a unique value proposition. This is something that sets your company’s products and services apart from competitors. For example, maybe you are a restaurant with farm-to-table, sustainable practices that serve only food made with seasonal ingredients.
Surpass Your Competition With These Solutions
Using the right solutions will make a world of difference when growing your business. Podium offers all-in-one solutions to drive revenue and grow businesses.
You can make your website a conversation starter with Webchat. This tool takes conversations from your website to text with ease, displaying conversations in your Inbox. See Webchat in action on your site.
Speaking of texting, Podium also lets you send one text that drives thousands in revenue. With 500 ready-to-use texting templates, you can quickly launch text marketing campaigns.
FAQs
How do you identify a competitive market?
You can spot a competitive market if there are multiple similar or identical goods and services. Supply and demand also play a big role in competitive markets.
How do you identify and evaluate your competitors?
Identify your competitors by talking to your customers and network, looking at your audience’s online communities, looking at SEO and PPC data, and completing a thorough market analysis.
How do you do a good competitive analysis?
A good competitive analysis requires identifying your competition and then gathering information about them. From there, you analyze the strengths and weaknesses of competitors, using a benchmark to compare them to your company. Finally, find your unique competitive advantage.
