How to perform a competitor analysis in 4 steps

The battle for customers’ attention and trust is fierce. To stand strong in the market and win customers’ hearts and clicks, you need to go beyond good products and fully understand who your competitors are, what they are good and not-so-good at, and what you can do to outperform them. 

In this article, we will go through how to perform a thorough competitor analysis in 4 steps. The analysis will help you find new opportunities in the market, refine your strategies, and make it even more attractive for potential customers and users to choose you over your competitors.

What is a competitor analysis?

Performing a competitor analysis is a bit like peeking into your competitors’ playbook. The goal is to find out a lot about the other players in the market who offer the same or related products and services as your business. Essentially, it is about gaining insight into competitors’ strengths and weaknesses because this lets you to look at your own business from a new angle. 
 

Having knowledge about other businesses and actors that cater to the same customers as you is immensely valuable, because it gives you new building blocks to work with when improving your own strategies, website, and communication.

Why should I analyse my competitors?

There are many reasons why it is crucial to have a good overview of your competitors. Skipping the work of competitor analysis is a bad idea because it can lead you to overlook opportunities to adapt your business to the market and your target audience. 

Spot gaps in the market

When you put the magnifying glass over your competitors, you will often discover opportunities they have missed or things they do not offer. This unlocks the possibility for you to be the first or one of the few in the market to offer precisely what competitors have forgotten to consider. 

Improve your own strategy

Being equipped with knowledge of your competitors’ strengths and weaknesses makes it easier for you to improve your own strategies, as you can be inspired by their strengths and avoid similar weaknesses when working with marketing, product development, pricing, and communication. 

Stay one step ahead

With the help of regular competitor analyses, you can stay updated on what is happening in the market, current trends, demand, and the target audience’s needs and expectations. This way, you have a much better chance of staying ahead of the curve and offering what your potential customers and users are looking for. 

Who can benefit from competitor analysis?

You might be tempted to think that competitor analysis is only necessary if you have a larger business, but that is far from the case. You shouldn’t miss the chance to do competitor analysis even if you run a small business, are a freelancer, or a blogger. 

Benefits of competitor analysis for: 

• Online shop owners: Gain insights into popular products, pricing, and marketing strategies to increase the conversion rate in your own online shop.
  
• Bloggers: Discover popular topics, improve your SEO (Search Engine Optimisation) strategy, and attract more readers by analysing other successful blogs.
  
• Physical stores: Get an overview of customer preferences, competitive prices, effective marketing campaigns, store layout trends, and local SEO.
  
• Restaurants and cafés: Explore popular dishes, menu designs, restaurant websites, booking systems, and marketing by zooming in on competing eateries. 
  
• Freelancers and consultants: Identify demanded services, pricing, and client acquisition among other freelancers to maximise your chances of attracting more clients.
  
• Online course providers: Investigate popular courses, pricing models, and course plugins to improve your own courses and increase student satisfaction.
  
• Hairdressers and beauty salons: Learn more about trending treatments, prices, social media marketing, and unique offers popular among customers.
  
• Event planners: Be inspired by trend-setting event types, marketing strategies, landing pages, and competitive pricing strategies. 

Have you not yet started your business or launched your project? Then you should perform a competitor analysis parallel to developing your business idea. This way, you stand stronger from the beginning, giving you a much better foundation to work with. 
 

And when you are ready to launch your concept, you can easily create your own website with one.com – if you choose our AI-onboarding, it only takes 5 minutes!

How to perform a competitor analysis in 4 steps

Are you ready to learn more about your competitors? In this section, we will go through the 4 most important steps in an effective competitor analysis. Let’s get started! 

Step 1: Who are your competitors?

The first thing you need to do is find out who your direct and indirect competitors are. Your direct competitors are those that offer the same products you do, while your indirect competitors’ offerings satisfy the same need for customers but in an alternative way. 

Direct and indirect competitors

Let’s take a quick example of direct and indirect competitors for the company Wagging Tails, which offers dog sitting in the owner’s home. 

Direct competitor: BarkBark, another company that also offers dog sitting in the owner’s home. 

Indirect competitor: A dog hotel that offers stays in beautiful natural surroundings where the dog can enjoy long walks with professional dog sitters.

Where to find your competitors: 

• Search engines such as Google 
• Social media such as Instagram, Facebook, and LinkedIn 
• Digital directories such as Yell and Thomson Local 
• Companies House 
• Trustpilot and other review sites 
• Keyword tools such as Ahrefs and Semrush (look for businesses ranking for keywords related to your business and products)

Step 2: Learn more about your competitors

Once you have created a list of all your direct and indirect competitors, you can start looking closely at each business to learn as much as possible about them. In this step, it’s a good idea to create an organised document or a spreadsheet to keep all the information in one place to let you easily edit and add new discoveries continuously. 
 

There are several things you should dive into when studying your competitors:

Websites

Visit your competitors’ websites and try to imagine that you are a new potential customer who has never visited the site before. Describe the following in your document: 

• Website design 
• Navigation – is it logical? 
• User experience 
• Written communication 
• Use of images 
• Colours 
• CTA buttons  

You can even create your own scoring system, where you give competitors a number of points from 1 to 5 for the various areas. If something is good or bad, you should also describe why it is good or bad.

Products and services

While you are on the competitor’s website, you can also study the range of products and services. Note what unique selling propositions (USPs) are used, how the products are presented, and how the product descriptions are written. Do they offer other products and services that fall outside their main focus? Consider whether it would make sense for you to offer something similar.

Prices

Note the prices of your competitors’ products and services. Is it a company that wants to appear budget-friendly, or does the competitor offer exclusive products in higher price ranges? You will probably encounter several competitors that lie somewhere in the middle. 

Target audience

Since your competitors cover the same, or roughly the same needs as your business, they probably have almost the same target audiences. But target audiences can surprise, so it’s still a good idea to find out who your competitors are trying to reach. They may have targeted a target audience you have not thought of. 

The communication your competitors use on their websites, social media channels, and in marketing campaigns can give you a better understanding of which target audience they are trying to reach. The website’s design and use of images can also point you in the direction of the competitor’s target audiences.

SEO strategy

With the help of SEO tools such as Ahrefs or Semrush, you can gain insight into how your competitors work with SEO. Which keywords do they rank for, and how do they write SEO-optimised content on their websites?

Marketing

Get an overview of your competitors’ marketing. Answer the following questions: 

• Do they use Google Ads? 
• Do they have a landing page for lead generation? 
• Do they have a newsletter? 
• Do they advertise on social media? 
• Do they show social proof, such as customer reviews, on their website? 

Social media

Find out which social media channels your competitors are on, visit their accounts, read their posts, and dive into the comments. Note how existing and potential customers engage with the content.  

Here you can also learn a lot about the target audience they address. For example, if they share content on TikTok, they are probably trying to reach a younger target audience.

Customer service

Good and effective customer service is a crucial factor for converting and retaining customers. Create a list of questions potential customers might have about your competitors’ products, prices, services, delivery, and returns. Note the following: 

• Do you quickly find answers to the questions on their website? 

• Is it clear how to contact customer service? 

• Do customers have several options for support, such as chat, phone, email, or a contact form? 

• Has the competitor shown how long customers can typically expect to wait for a response?

Step 3: How does your business differ from the competitors?

Once you have completed the first two steps, you have gathered a lot of information about your competitors. In step 3, you can start comparing your own business with the competitors by focusing on the same areas and aspects.

This will quickly make it clear to you what unique strengths your business has and where there is room for improvement. You can do this, among other things, with a SWOT analysis:

SWOT analysis

A SWOT analysis is a strategy you can use to identify and analyse your business’s strengths and weaknesses. The acronym SWOT stands for:

Strengths: What unique strengths does your business have compared to competitors? For example, a more user-friendly website, sustainable versions of the same products, or more accessible customer service. 

Weaknesses: In what areas does your business not stand as strong as the competitors? For example, inadequate product descriptions, limited social media presence, longer delivery time. 

Opportunities: Pinpoint opportunities for improvements. For example, better product descriptions, more activity on social media, faster delivery, or clear information about why the delivery time is longer. Also, consider if you can meet a need for your target audience that your competitors have not yet covered. 

Threats: What factors could potentially affect your business negatively in the long term? For example, competitors’ low prices, lack of demand due to new trends, negative customer reviews. 

Step 4: Develop a strategy

In step 4, you can start developing a strategy based on the information you have gathered and the discoveries you have made. Consider how you can use your strengths to become even better, and plan how you will optimise the areas where you stand a little weaker than the competitors. 

The new knowledge you have gained about your competitors will make you better equipped to make decisions that can help you attract new customers and retain the customer base you have already built.

Tools for competitor analysis

There are several tools that are useful when working with competitor analysis. We have compiled a list of some of them here below: 

• Semrush/Ahrefs: Find out which keywords your competitors rank for. 
   
• Google Alerts: In Google Alerts, you can set up notifications for your competitors’ company names and product names, so you receive an email when something new about them appears in the search results. 
   
• Google Benchmarking: In Google Analytics, by selecting benchmarking under reports, you can compare your own data with aggregated data from other companies in the same industry that share their data. 
   
• Built-in tools in social media: Platforms like Facebook, Instagram, and LinkedIn have several built-in tools you can use to find out how your posts perform compared to your competitors’. 
   
• Website Builder from one.com: In the Website Builder from one.com, you can easily gain insights into your website or online shop’s most important statistics, such as the number of visitors, your most popular pages, traffic patterns, and more. With these data, you can find your strengths, weaknesses, and areas for improvement. 

Keep your finger on your competitors’ pulse

With market trends and customer expectations constantly changing, you should regularly build on and update your competitor analysis.  

How often you should conduct a thorough competitor analysis depends on your industry. Some industries experience very rapid market shifts, while others do not see many major changes over a year.  

Regardless of your business type, it is generally strategically smart to zoom in on your competitors at least once a year.