A startup competitor analysis (SCA) helps entrepreneurs and to-be founders understand their competition by looking at how their competitors are addressing the pain point that your startup is planning to address. It is an important step in creating your business plan. SCAs provide valuable information such as product features, pricing models, marketing strategies, customer acquisition channels, etc. As long as you’re aware of the pros and cons of each method, then you’ll be able to choose the right approach for your own business.
Freshworks, a billion-dollar unicorn, during their initial days came up with their iconic Freshdesk solution by reading the market carefully. The competition was missing out on a critical piece of the solution to the end customers and Freshworks leveraged on the missing pieces by building a solution that addresses these pain points. The rest is history.
The Importance of Competitive Analysis
Competitors can be your most significant source of inspiration when you’re trying to build something. They may have already solved some problems that you haven’t thought about yet. Or they might offer an entirely different approach to solving those same problems. Either way, understanding who else is out there will help you focus your efforts to address the pain points that you have sought out to address.
How to Perform a Comprehensive Competitor Analysis
There’s more to a successful competitor analysis than simply identifying competitors. You need to dig deeper into how well these companies solve similar problems, whether they’ve been able to scale successfully, and if not, why not. This requires digging through public data sources like Crunchbase, AngelList, and Crunchboard. It also means talking with people inside the company, including founders, CTOs, engineers, marketers, salespeople, investors, customers, partners, and anyone else involved in the business.
Identify your competitors (online)
Use Google Trends to identify keywords related to your industry. Then use Buzzsumo to find blogs written by influencers in your space. Finally, look at which companies appear most frequently across all of these sites. These are likely your top competitors.
Analyse Your Competition
Research online review sites G2, Clutch and Capterra
Look at reviews from previous clients and try to figure out why they chose one vendor over another. If possible, talk directly to current users of each solution. Ask them questions like “What was missing?” and “Why did you choose us instead?” and “What’s the biggest pain with this (competitor) solution?”. Use this feedback to determine areas of difference and improvement.
Analyse Product Features & Pricing Models
Look for commonalities between products. Try to get a sense of the competitive landscape for each feature. How much does it cost? What percentage of customers pay extra for certain features? Is there any overlap in functionality between competing products? Are prices increasing rapidly? Do competitors seem to be losing customers because of price increases?
Compare Products Side-by-Side
If you want to compare two products side-by-side, consider creating a spreadsheet template that includes columns for:
Product Name, Price per Unit, Number of Units Sold, Market Share, Customer Acquisition Cost, Marketing Spend Per Customer Acquired, Sales Team Size, Average Revenue Per User, Revenue Growth Rate, Cost Structure, Pricing Model, Key Differentiators, Features, Inventory Management, Support, Customization Options, etc.
You’ll then fill in the numbers based on publicly available data points. For example, you can pull revenue figures from CrunchBase, marketing budgets from LinkedIn profiles, customer acquisition costs from websites such as Kissmetrics, and so forth. You can also try collecting all these details in one place using Enkiai, an AI-driven Sales Intelligence tool without having to run through multiple sources in order to collect information about your key prospect. The goal here isn’t just to make sure you’re comparing apples to apples; it’s to ensure that you’re looking at comparable metrics.
Understand Customers and Their Awareness
It is essential to make some educated guesses about the customers of your competitors. You don’t need to know everything about every single person who uses your competitor’s product, but you should have an idea of what kind of user base they serve. Who are they targeting? Where do they live? What industries do they work in? What problems do they solve? Why would someone switch away from your competition? Which channels work best for acquiring new customers? Which marketing channels don’t work well? The answers will help you understand how different types of customers behave when making purchasing decisions.
Analysing Your Competitors’ SEO and SEM Efforts
Companies often use search engine optimization and search engine marketing efforts to attract more traffic to their website. These techniques include things like keyword research, link building, content creation, social media management, paid advertising campaigns, and many others. It may not always be obvious which tactics were employed by your competitors, primarily if they use multiple vendors. However, you can still learn valuable information through these methods. Here are some questions to ask yourself:
What keywords did my biggest competitors target with their SEO/SEM strategies? Did they focus on specific verticals or broad categories? If they targeted both, was one approach better than another? Were they successful?
How did they build links? Which high domain authority sites point back to competitors’ websites?
Which are their high ranking pages?
What does their content strategy look like? Which topics are similar or related to yours?
Do they use social media influencers?
Review direct competitor’s ads and landing page copy. How effective are they? Do they offer any value? Are there any mistakes made? Is anything missing?
Keep an eye on your competitors’ social presence.
For the type of offering you have, first, decide which social networks make sense. Then, do a competitive analysis on those platforms. You will analyse your competitors’ social media engagement levels, including likes, shares, comments, retweets, followers, guest posts, and other indicators. You can also find their frequency of publication and the types of content published. This way, you understand where your company stands compared to its competitors and the kind of content your target market segments love.
Analyse Customer Acquisition Channels
You want to see which customer acquisition channels worked best for your competitors. For example, email marketing works great for B2B businesses because it allows them to communicate directly with potential buyers. Facebook Ads might be ideal for consumer-facing products that sell via word of mouth on the flip side. Accordingly, you should know what kind of business model is most appropriate for your product before deciding whether to invest time into each channel.
Going to the market without a deep understanding of the market is like driving blindfolded. You could end up in a ditch. So, take this checklist as a starting point to get started. As you go along, keep asking yourself, “why am I doing this?” and “what else would I need to know about this topic?” Once you’ve answered all of these questions, then you’ll be ready to start planning your next steps.
We hope this article helps you dissect your competitors in many ways and gain valuable insights into your market landscape. As a result, you’ll be able to make informed business decisions about your product positioning, marketing and sales strategies to help you stand apart in the marketplace.