How to Do Competitive Analysis

Competitive analysis done right ... and wrong
Most businesses agree it's important not to confuse your customers. It's also important not to miss the boat when industry standards and customer expectations shift. This is where competitive analysis can help, especially when considering changes to a site or marketing.

Competitive analysis can be a valuable tool when it's used correctly. But it's a waste of time and misleading when used stupidly.

The Right Way to Do Competitive Analysis

There are two worthwhile ways to use competitive analysis: for brainstorming alternatives or for comparative usability.


If you already recognize that there is a gap in your business, looking at how your competitors fill that gap can help you brainstorm solutions. Then, using your own noggin, come up with several variations to test. A common mistake at this point is to assume that if your competitors are all filling the gap the same way, they know something that you don't. That's not usually true. It's just as likely they all copied each other for the same reason you're tempted to.

Let your competitors' approaches inform your ideas, but don't confine yourself to what they are doing. Test several variations to determine which one works best for your unique situation. Then implement it.

Comparative Usability

The other useful role of competitive analysis is side-by-side usability studies. Have the customers look at how you approach something and how your competitor approaches the same thing. Then ask which they prefer. My experience is that customers' preferences don't always line up with what the conventional wisdom says is best for them.

Comparative usability is the closest you can get to measuring how valuable your competitor's approach really is. The other benefit is that the customers can tell you exactly why they like one approach over the other, which may actually lead you to innovate a third approach that is even more effective.

The Wrong Way to Do Competitive Analysis

Following the crowd is the wrong way to get ahead
The underlying mistake I have seen in using competitive analysis is to make assumptions about how valuable a competitor's approach is without any real data. Without inside information, it's usually impossible to know whether (or why) a competitor's approach is better than your own. Analysts succumb to a kind of peer pressure and feel compelled to follow the competition. That kind of analysis is actually just guessing.

Comparing site taxonomy, for example, might reveal that your competitors all use a specific phrase. You might assume that it's an industry standard, and deviating from a standard would confuse customers. However, it would be impossible to tell whether customers preferred your unique phrasing over your competitors' without either doing a comparative test or having access to your competitors' internal data and comparing it to your own.

Your competitor's site might rank much better for certain search terms, but without knowing the value of the traffic that comes from those terms, you have no way of knowing whether that actually benefits them. If they are generating a higher number of unqualified leads, they may actually be losing money by ranking so well.

Industry leaders experiment. By mimicking a competitor's approach, you run a good chance of mimicking an approach that they still haven't proven or that they haven't tested at all.

Using competitive analysis incorrectly can actually cost you money and frustrate your customers.

No comments:

Post a Comment