How to research your business' competition
Knowing who you’re up against is a crucial aspect of any competitive situation, from sports matches to running a business. And while there’s never a bad time to research your business’s competition, rarely is this a more critical skill than when you’re defining your own business’s brand identity.
Why researching your competition is important
While a fortunate few businesses will enjoy being the sole supplier of a given product or service in their market, the majority of small and medium-sized businesses face significant competition on a daily basis. Drawing the attention of an audience of consumers spoilt for choice isn’t easy, and standing out can prove the difference between success and failure. The pace of change in the business world has meant that even the biggest companies - those on the Fortune 500 - have seen their average lifespans shrink from over 60 years in the 1950s to just 15 years today. For small businesses, life is even tougher; they are expected to last just four years on average.
Among some of the larger companies to have faded away are some big names with important lessons to teach us. The rapid decline of Kodak, who commanded a 85-90% market share of film and cameras in the late ‘70s and filed for bankruptcy in 2012, is a prime example. While they didn’t ignore the rise of the digital camera, they also didn’t invest heavily enough in the new technology, as their competitors were doing, and found themselves playing catch up, only to never really recover. Ideally, savvy businesses will stay ahead of the rest, but at the very least, you can’t afford to fall too far behind.
Establish who to research
The first thing to establish is exactly who your competitors are. To an extent, this depends on your target market - if they’re mostly local, your competition will be too. But it’s also worth looking into companies that are drawing a wider audience than you may be. If all your customers come from within a ten mile radius, but a nearby competitor draws buyers in from twenty miles away or more, there’s an opportunity to find new business.
Whatever catchment area you decide on, find businesses who are offering the same, or very similar, products and services. Find out where your customers go when they don’t come to you. Look for established names as well as newcomers to the market.
Fill in those fact sheets
For each business you identify, you’ll want to do some fact-finding. While there are countless aspects that could be important to look at, some typical things to research might include pricing, customer service, social media, advertising strategies, shipping, their physical presence, and who their employees are.
Some of this research might be easily done online, but it can also be worthwhile visiting local competitors to get a feel for the in-person experience they provide. You can even go as far as purchasing from them to walk through the entire sales process and any aftercare. Collecting customer feedback should be a standard procedure in your business anyway, and you can use customer surveys as a chance to get their thoughts on other businesses as well.
All the while, you can be comparing their business to yours. What do they offer that you don’t? What do they do differently? How are they better and worse? You may find that there are things you can incorporate into your own offering, and you may also discover that you’re doing something better than they are, or ideally, that you’re doing something that no one else does!
Decide what changes to make in your own business
There will be certain aspects where you want to match or improve on your competitors, and other areas where it may not be necessary to do so. If they offer a price point you can’t, find other ways to differentiate yourself. But if there’s a gap in their product offering, be sure to emphasise that you can deliver where they cannot.
Stay informed about your small business' competition
Once your research is done, implement any changes you’ve decided upon, and then do it all again! Competitor research should be an ongoing process, but it needn’t involve a huge amount of effort every time. There are plenty of passive ways to stay informed, like setting up online alerts for certain industries or companies, or even just subscribing to their mailing list so you can have them tell you exactly what they’re doing!
With the modern business world constantly changing, innovation is essential and competitor research can be a key tool to achieve this. Thankfully, the availability of this information is higher than ever, so keeping up with the competition can become second nature for your small business.