Competitive Gap Analysis: What Is Your Competition Telling You?
You’ve planned and prepared and put in the work on your unique product. You’re aligned with customer needs. You’re on top of your game. Then… you’re knocked out by a competitor you didn’t even see coming. One of the universal business owner experiences is losing to the competition. Maybe they released a new product before yours was off the production line. Or they launched a stellar marketing campaign that won over some of your customers. The trailblazing tennis champion, Billie Jean King, once said, “For me, losing… isn’t failure, it’s research.” If you are losing to the competition, put down the tissues and voodoo dolls. And do some research instead. Use your losses to gain some competitive intelligence and refine your business strategies. Here are three words to give you a jump start — competitive gap analysis. What Is Competitive Gap Analysis? Most businesses conduct some form of strategic analysis. The most common practice is standard gap analysis. This process compares your business’s expectations to its results. It can help you close the gap between them. Competitive gap analysis expands on this tactic by factoring in competing businesses’ results as well. Analyses can center on many aspects. These include product design, business structure, advertising, and website performance. Based on your needs, competitive gap analyses can be broad or focused. Refining your analysis by focusing on either a content gap or a product gap can help you pinpoint your weak spots. A content-focused competitive gap analysis looks at competitors’ SEO advantages. In comparison, a product-focused analysis shines a spotlight on how a competitor meets their customer’s needs. Why Does It Matter to Your Business? The 2023 State of Competitive Intelligence Report found that over half of stakeholders said their industries are growing more competitive. They also said that competitive data is vital to their success. Competitive gap analysis is a key method in gathering competitive data. By examining competitors’ successful tactics — things like product, process, market share, marketing strategies, and customer experience — you can gain crucial insights into your industry and unlock opportunities to improve your performance. A competitive gap analysis can support key business tasks. Here are a few: Proactive Risk Mitigation: More data allows for more informed decisions. By assessing your competitors’ strengths and weaknesses, you gain crucial insights. This can help you plan for risks and divide resources better. Long-Term Strategic Planning: Comparing your performance to competitors shows your successes and areas to improve over time. Understanding your competition’s successes can help you build a better planning framework. Adaptation to Industry Changes: Studying other businesses in your industry helps to identify market shifts and stay ahead of changes. A competitive gap analysis can reveal opportunities like untapped demographics and unmet needs. It’s important to know what competitive gap analysis is and why it matters to your business. But, before you can do any competitive research, you must identify who to research. That is, you need to know your competition. Identifying Your Direct (and Indirect) Competition You can’t conquer an invisible monster. To win, you must know who you’re up against. Identifying your competition is the prerequisite to performing a competitive gap analysis. In the business world, there are two main types of competition — direct and indirect. Knowing the distinct types of competition can help you identify them in your market: Direct Competition: Direct competitors are businesses that target the same audience and sell comparable products and services. For example, if you run a local movie theater, your competitors are nearby theaters. Indirect Competition: Indirect competitors sell different products and services than you but serve the same customer needs. A prime example of a movie theater’s indirect competition is at-home streaming services. Other indoor venues, like bowling alleys and skating rinks, are also in indirect competition with movie theaters. A Google search with your business’s keywords will show top competitors. Use tools like Google Trends and SEMrush to discover who’s ranking for similar keywords. Studying social media influencers and trending topics in your industry can also help you target your competition. Understanding direct vs indirect competitors helps you tailor your analysis strategies to yield more deliberate results. Ensuring you gather data from both types of competition helps you finely hone your competitive edge and top the competition. 5 Steps to Performing Competitive Gap Analysis Gathering effective competitive intelligence requires a systematic approach. Here are five steps to help you get started. 1. Understand Your Customers’ Needs Using a competitor’s product as your only metric for what the customer wants will get you somewhere… But it’s like trying to decipher an entire cake recipe by eating one slice. You’ll get an idea of what’s needed, but it will be impossible to isolate specific details. Truly knowing what a customer needs will only come from one place. The customer. Talk to your customers and get their direct feedback. What do they like or dislike about your product/service? What do they think of your competitors? What would they most love to see from you? Offering surveys on your website and social media accounts or sending questionnaires to your virtual mailing list are excellent ways to collect this valuable data. 2. Gather Your Competitors’ Data You already understand the types of business competition and how to identify them from the previous section. Once you find a competitor, it’s time to start gathering intel on them. Focus on the following areas: Website and SEO Analysis: Evaluate their website design, user experience, and content strategy. Use tools like SEMrush or Google Analytics to assess organic search traffic, keyword rankings, and backlink profiles. Product Analysis: Pull product data from item description webpages and technical manuals. Study the company’s past sales trends and market share. Use the Statistics of U.S. Businesses website to find applicable information. Social Media Presence: Analyze their social media engagement, follower counts, and content strategies. Which posts generate the most engagement? Are they dominating any platforms? Customer Opinions: Explore reviews on platforms like Yelp, Google My Business, and social … Read more
