The first blog post in this series explained how competitive analysis is both necessary for your organization, and really hard to do right. This second post walks you through how to determine which competitors to include in your analysis, and how to go about getting the information you need to obtain the desired results.
Most organizations can quickly mention their top 2-3 competitors, but beyond that it’s a mix of lesser-known, occasional competitors that may vary widely by geography. There are two schools of thought: many entrepreneurs feel that “there’s no one who even comes close” while many salespeople see a competitor around every corner. The truth is somewhere in the middle. And as always, truth is in the eye of the beholder – the customer.
Step 1-Define your competition
Include your direct competitors (those whose products or services most closely match yours) and then expand the list to all possible competitors. Look to your sales team and prospects to suggest alternatives that, while not exactly the same solution, could satisfy the customer’s need in a different way. Be prepared for surprises: startups that are making impressive claims, hints that an established company is expanding their portfolio. Don’t forget home-grown solutions, offerings from cloud service providers and “do nothing” in your list. Keep in mind that there are lots of companies fighting for mindshare and share of wallet.
Step 2 – Narrow the list to the 5-6 most important competitors
Dig into each potential competitor to understand how they position themselves, what capabilities they showcase, and how big of a potential threat they pose. Not only will this exercise lead to a more manageable and useful list, it will give you a better understanding of what your prospects are hearing and thinking, which can only help with your positioning and messaging. Validate the refined list with your sales and marketing teams, prospects and customers.
Step 3 – Assess value to the customer
Do an assessment of your competitive value vis-à-vis the most important competitors, focusing on what matters the most to your prospects. We find it helps to put together a comprehensive list of 50-100 characteristics of the solution and competitor. Include product features (presented in terms of the problem they solve) as well as other characteristics such as company metrics (funding, revenue, customer base, target markets, viability, business model), ease of use and implementation, quality of support, TCO, key partnerships, share of voice, and the like. Include information on the pricing model, although actual pricing is often difficult to ascertain. Group them into logical categories.
Step 4 – Complete the value matrix
Expand the list into a matrix. Put in one column for your solution, and other columns for each of the most important competitors. Fill in the column for your company and product first. Be as specific as possible –tell how you provide each capability and call out unique benefits. Then fill in the matrix for the competition. Use publicly available information such as websites, white papers and data sheets, as well as info on funding, hiring and expansion plans. Look at public reviews and opinions, seek out experts in your network, and don’t forget to assess competitors’ use of social media, advertising, promotions and the like.
Step 5 – Rank your solution
Determine whether your solution is better, the same or worse than each competitor. Validate your assessment through primary research to separate reality from hype, polling current customers, speaking with or consulting research by industry analysts. This exercise may cause you to change some of the information about your solution or competitive offerings.
The result is a categorized assessment of your solution vs the competition. You can use this list to educate your sales team, promote your solution, message to prospects and customers, and make product feature decisions.
The final blog in this series provides suggestions for ways to use this categorized assessment, as well as how to keep it up-to-date and account for regional variations.
We’d love to show you how AimPoint Group’s expertise and experience can help drive value for your business! Contact us today for a free competitive analysis strategy session; together we’ll look at your needs and map the best path forward.