The idea stage is the perfect time for market research and researching your competition. You may have a rock-solid idea that you think will blow the competition out of the water, but the problem that many startups have is that they don’t invest an adequate amount of time or energy in determining who their competitors are, what they’re doing that’s working and not working, and where their weaknesses lie that you can leverage.
It’s crucial that moving beyond your idea you justify how exactly it will fit into the market and how you will differentiate yourself from others. Your idea may be great, but if it’s being done better and with more established practices by companies that have three or four years ahead of you, it’s possible that it will need some fine-tuning.
In the idea stage, draw up a business plan for analysis that you can use, and figure out what metrics you will use to determine how the competition is doing, and know what mistakes you need to avoid. Ask yourself what questions you need answered: Who are your potential customers and how does the competition reach them? What kinds of marketing does the competition use? What are the business models of the competition? What are some potential myths holding you back?
Once you know how you’re going to proceed with competitive analysis, it’s crucial to use all the tools at your disposal that are cost-effective and strategic to make sure you find out where in the market you will fit.
1: Measure the Market
It’s absolutely crucial to figure out what the market looks like, who the major players are, and what the key industry trends are that are impacting your competition and potentially creating gaps that you can enter to find your niche.
- Look at blog posts, industry experts, and press coverage in the space to determine the industry trends. Look for potential gaps that you could leverage.
- Look at the major players and your most threatening (primary) competition to learn what their total revenue is and market cap, if they have one.
- What are the business models of your competition? What are the big players doing? It’s even important to look at people you may not be directly competing against to see where the tide is turning. Figure out what kinds of beta testing they’re performing (landing pages, getting the products in other peoples’ hands, etc.)
- How do they reach their customers? Look at marketing and sales, and branding engagement to determine how they
2: Pay Attention to their Employees
A quick glance at the make-up of their employees can tell you a lot of things about what they’re focusing on, whether explicitly or hidden behind closed doors. By understanding their team, you understand what sorts of projects or sales processes they’re focusing on.
- Take a large survey of everyone who has the company listed on their LinkedIn and look at their skills. Create a spreadsheet with information regarding their company makeup. This can help you figure out where there are gaps in their talent and where you can
- Pay attention to job postings. If they’re about to hire a bunch of HR people, it’s possible that they’re looking to scale up, which means you should prepare for their growing strength. If they’re looking for more marketing experts, it’s possible that they feel like their current sales and marketing approach is a weakness. By knowing what gaps they have by who they’re looking for, you can leverage that information to gain strength in those areas.
- Consider having a competitive enough business plan that you could hire your competitors’ employees and figure out what kinds of trade secrets they’re hiding.
3: Become a Customer
The best way to know thy enemy is to keep them close. Consider purchasing whatever product or service they offer and do your best to take an objective approach to it. What do you like about it? What do you wish they were better at doing? Knowing what their engagement is like at every step can help you determine where they’re falling short.
- Subscribe to any newsletters or email campaigns they have. This will keep you updated on their trends and any important innovations or updates they are sending out to the masses.
- Engage with other customers. Talk to people who buy their product. Pay attention to customer reviews and look for what they do well and where they’re not performing strongly. This is crucial for figuring out where your idea can best them and what you need to do to get a leg-up on the competition.
- Attend a trade conference and ask them about their company. Find out what their employees think about the company, and how they advertise themselves. Don’t necessarily be open about your competitive stance; instead, take on the persona of a potential customer to see how they sell themselves.
4: Go Beyond Google for Researching Your Competition
Google is going to be one of your best friends when it comes to researching the competition. However, you can’t just stop at a simple Google search—though Google does have plenty of other tools you can use to determine their business plans, advertising models, keywords, and other information beyond simply seeing how a search engine crawls their site. Use every bit of information at your disposal when finding out more information about them.
- Yes, a quick Google search is important, but don’t stop there. Look at Google Trends and sign up for Google Alerts with either the keywords they use, or put an alert out there on the company itself. This can help keep you updated on them in addition to any subscriptions you have to their emails or newsletters.
- Look at SEMRush to learn their advertising and organic search patterns, and you can learn what people invest in so you can either do better or choose a different vertical. For instance, if they’re spending a lot of money on SEO or marketing, you can determine that you either need to invest time and energy into doing that better, or figure out somewhere they don’t invest in and turn that into a strength.
- Alternatively, you could look at sites like Compete, Quantcast, and AppData to see their traffic data, learn the demographics of their site, and see how engaged their internet or app users are.
- Pay attention to the UX/UI on their website or app. Where do you feel they’re not performing well? What could be done better? What do you offer that you feel can overcome their shortcomings? What sorts of engagement are they lacking?
- Follow them on social media. This is the best, most cost-effective way to see how they engage with your potential customers. Keep updated on their Tweets and Facebook posts and figure out what you can do better.