In a recent article titled Competitive Analysis – The 3 Essential Building Blocks, I presented a framework for building a strong competitive analysis.
The three basic building blocks needed to gain a deep understanding of your key adversaries are Competitive Profiles, Product Face-Offs, and Win-Loss Analysis. Any one of these is valuable on its own, but when they are combined, you have the full and powerful picture. Today, we are going to focus on building Competitive Profiles. It should be noted that going through . . .
“How can you win against an enemy you can’t see?”
Sun Tzu, The Art of War
Knowing your competition inside and out will help you: learn what others in your industry do; what prospects want; and how to position and differentiate your company with higher impact. All of which leads to more sales!
If this makes so much sense, why don’t companies do enough of it? Why can’t they sustain it once they have started? Great questions and a few simple answers come immediately to mind:
1. They have glossed through the exercise 5 years ago and feel they still have it covered
2. They don’t make it a priority and it sits on a long to-do list somewhere
3. There is no ownership or process to keep the information current
4. They don’t know how to do it well or don’t have a disciplined process to manage it
Competitive Analysis Overview
A thorough Competitive Analysis consists of three basic building blocks: Competitor Profiles; Product Face-Offs, and Win-Loss Analysis. The ultimate goals of having this information are to help you win more often, with less effort and better margins. As you would suspect, sales and marketing leverage competitive analysis the most. However, the data will also provide essential inputs into critical decisions that impact your product development roadmap, overall business strategy and potentially M&A considerations.
Competitor Profile Components
Listed below are the typical elements of a detailed Competitor Profile. Not an exhaustive list, but the essentials. Again, some of these may be more or less important depending on your business.
Competitor Profile Components
A Competitor Profile starts with the background information about your competitor’s business situation, structure, and so on. If they are a public company, most of this data will be readily available. If private, then you will need to do more digging. The typical attributes you will want to know are as follows:
- History: When did the company start? How has it evolved? What was the founder’s vision? What is their current focus?
- Lines of Business: What other products and services do they offer? What percentages of revenue come from each LOB?
- Structure and Size: Public/Private? Annual income? (particularly in the areas that impact your market), Number of employees?
- Locations: Where is the head office?, Where are other offices, plants, and service centers?
- Leadership: Who are the relevant key executives? (tenure, responsibilities, backgrounds, etc.)
- Financials: How they are doing financially and how is the growth rate trending?
- Reputation: How they are perceived in the industry and within your specific battlegrounds? Have they had previous legal issues, negative press, etc.?
Strengths / Weaknesses
Perhaps the most useful element of the Competitor Profile is defining your competitor’s strengths and weaknesses (SWOT analysis), and this is often the starting point. There is always a subjective aspect in identifying strengths and weaknesses, but try to gain as much external perspective and as many hard facts as possible. Some of the best sources of this data include: learning gained from previous sales cycles; publicly posted reviews (social media, Glassdoor, etc.); and their customers, prospects, and former clients. An entire article that could be (and surely has been) written on how to gather this information, but the simple premise is that the more data and proof-points you have – the better! Making a statement about a competitor that your prospect knows, or believes is inaccurate will instantly dissolve your credibility. The only worse thing is making a comparison that is a distinct competitive slam. Every company has its weak points. If you look hard enough and talk to enough people, you will find them. It’s also critical that you identify and respect their strengths as well, so you can use your competitive strategy in the way that artfully deals with them.
This section is intended to provide a high-level overview of the offerings your competitors have that are comparable to yours. Unless what you sell is incredibly simple, the detailed product comparisons should be created in separate Product Face-Off documents. The information in the product summary of your Competitive Profiles would include:
- Your competitor’s product names and brief descriptions
- The name and brief descriptions of your products aligning with those stated above
- The top 3 strengths and weaknesses of each product
- An indication of whether your product wins more often, less often, or relatively the same in your deals (percentages would be best)
- Relative overall quality and pricing comparisons (superior, equal, inferior for example)
Again, the idea here is that the Competitor Profile is a single view of a rival and not a 20-page document. It should give the reader a good “feel “of the products you are competing with and how your offering stacks up.
This section is really about several things – who the competitor sells to and where, and how strong they are relative to your company. It also should include your win-rate against them in competitive situations – you can draw this from your Win-Loss Analysis. Some of the key questions to answer here would be:
- Market Focus: What vertical markets do they target? How large are the companies they target? (small business, SMB, Enterprise, etc.), Are there new areas they are trying to break into?
- Geographic Sandbox: Where do they sell? What are the overlaps with your geographic presence? How do you stack up in each region (win-rate, regional market share, focus, strengths, etc.)
- Market Share: How big is the overall industry in which they are competing against you? Can you approximate how much share they own?
- Customer Base: Who are their major clients? How much overlap is there with your client base? How much direct competition has there been for your large customers and theirs?
One of the more important factors in looking at competitors is how they market and sell against you and others. Knowing this will help you better prepare your go-to-market strategies. It will also help your sales people when going head-to-head against them. Some of the key questions to answer here would be:
- Positioning: What are they trying to be to the market? (low price leaders, best service, highest quality, premium provider, etc.) What themes and messaging do they use to reinforce the positioning goal?
- Value Proposition: How do they define their audience, offering, value and differentiation?
- Marketing Effectiveness: How do you perceive the quality of their marketing program? What does their marketing strategy focus on? How are they building awareness in the marketplace? What tactics and campaigns are they using to drive engagement? How effective is their website, social media coverage, traditional media coverage and analyst recognition?
- Channels: Do they sell through partners, direct, online, or a combination? How much of their business that competes with you comes from each channel?
- Sales Team: If they have a direct sales team – what is the structure? Where are the people and are they well-trained? Is there a general style? (consultative, aggressive, etc.)
Finding Information About Competitors
Gathering the information that goes into a Competitive Analysis does take time and energy. Some find it better to outsource their competitive research which will cut down the work significantly. However, the most vital sources of input will come from your sales team and actual competitive situations. Here are a few ideas that might help you get started:
- For competitors that are public companies, leverage readily available corporate SEC (US) and SEDAR (Canada) reports online.
- Leverage government resources (Statistics Canada, public directories, etc.)
- Go through your competitor’s website with a fine-toothed comb. This exercise will fill in the majority of your information gaps.
- Scour online blogs, reviews, press releases and any other web resources related to your competitor and the industry
- Have a formal internal feedback process to gather real-time input from sales, marketing, and other relevant stakeholders in your company
- Ask clients or prospects who have dealt with them for information
Finding Information About Competitors
I believe that having the best possible “handle” on your key competitors will help win more business. If you agree, you may want to consider investing more time and energy into it. If you don’t have the resources or know-how, consider outsourcing. Hopefully, you have picked up a point or two here that helps. For a higher level view of industry analysis and competition, you may be interested in this good overview of Porter’s Five Forces Analysis on the MaRS website. Remember the famous words of Sun Tzu “Know your enemy and know yourself and you can fight a hundred battles without disaster.”
I hope you have enjoyed this article and would love to hear your thoughts about Competitive Analysis or any experiences you can share. Please follow us on your favorite social feed and Contact us if we can help in any way.