Most online businesses are not overnight successes. For many, the early years are fraught with strategic mistakes, until business leaders eventually find the product-market fit and growth levers that work for them. Thankfully, this doesn’t need to be a strictly trial-and-error process, as you can optimize strategies as you go by studying your competitors.
By gaining a deep and updated understanding of where your competitors’ strengths and weaknesses lie, you can make more informed decisions about the avenues where you are more likely to be successful.
Ideally, you should do your competitive research before you invest too much money in a potential lost cause. You can better evaluate your own position when you have strong foundational knowledge of the experiences of different businesses in your niche. You may find the insights you find make a big difference to your fortunes.
Segment Your Competitors
The first thing you need to do is determine exactly who your competitors are. You should split them into direct and indirect competitors.
Direct competitors are those who offer a product very similar to what you provide. A potential customer might compare both products and be willing to only spend their time or money on one or the other. For instance, YouTube Shorts, Instagram Reels and Tiktok video posts all serve the same niche of short-form video content. And yet, different users are likely to have different preferences for where they go first when they want this type of media experience.
Indirect competition, on the other hand, might not be a similar product but will still fulfill the same underlying need of the consumer. For example, a meme website might not be video content like Tiktok or Instagram Reels, but on the other hand, it is a form of distraction to entertain viewers.
You may be the best of your direct competitors, but if you aren’t paying attention to your indirect competitors, your business can still fail.
Benchmark Core Stats
Today it’s easy to find the key statistics for a competitor’s website, and there are several tools available to do this. Comparing your numbers versus your competitors can help you to understand your relative strengths.
It’s useful to benchmark conversion rates and level of SEO optimization against competitors, for example. If one competitor has higher conversion rates than everyone else, you can study what it is about their landing pages that makes them more successful and apply those principles to your own site.
Likewise, if competitors are ranking high for keywords you want to rank for, then you might decide you need to try a different strategy or aim for different keywords. Which statistics you compare depends on their relative importance to your business model.
Assess Their Online Presence
You can’t rely on statistics exclusively to make your judgments and should also take a qualitative look at your competitors’ websites and social presences.
Go through their website pretending that you are a potential customer. Is it easy to find what you need? Are there any points of friction? Sometimes the positive or negative feelings a customer may have might not be fully represented in the numbers when benchmarking. For example, a user might spend longer on a website because they are enjoying the experience, or it could be because they can’t find the checkout button.
You can also assess the way your competitors speak to their customers through their social profiles. What tones do they take? Some brands choose to have a professional voice, whereas others engage in friendly banter. You might choose to try to copy their tactics or you could seek to differentiate by addressing the audience in ways that your competitors don’t.
Reach Out to Their Customers
While different tools can help you to make your own assessments of your competitors, it’s even better to understand their customers. If you know what their views are, then you can spot the opportunities of how you can entice them to try your product instead.
This can easily be done through a third-party service to ensure the consumers feel comfortable and to avoid any bias.
If you’re an established brand, you’ll want to find out why the surveyed customers use the competing product rather than your own. Some customers will not have put much thought into which brand they use, whereas others might have deliberated for some time before picking the competitor because of services they had and you didn’t.
There will be respondents who aren’t happy with the competing company but don’t know enough about the alternatives. This is a great way to determine what demographics to target in future ad campaigns and which pain points to highlight.
Uncover Their Stacks
Especially in the early stages of an online business, the tech tools you use can be critical to your success. If your competitors are using cheaper tools than you are, then their profit margins are likely higher. If they are using more advanced tools, then they’ll be able to offer options that you cannot. You’ll want to find the sweet spot where you pay only as much as you need to have the edge.
While there are many articles that suggest the best tools to use, often it varies by industry and target audience. What works well for B2B finance SaaS companies might not work well for B2C travel companies, for example. When your competitors are more established than you are, you can be sure at some point they will have researched which tools they should use.
Luckily, you can use services online that analyze your competitors’ tech stacks for you. This means if you see they all use the same website builder, then it might be a good idea for you to use it too, to save yourself from decision fatigue.
Competitor research is important to ensure that you make the best decisions possible for the future of your business. You can learn from the mistakes they’ve made and their current choices to save your team time and money.
Here are five best practices:
– Segment your competitors – you want to know exactly who you’re competing against
– Benchmark core stats – find out where your competitors are better optimized
– Assess their online presence – you might unlock new insights beyond the stats
– Reach out to their customers – learning why they don’t use your product can help
– Uncover their stack – tech decisions can be make or break for a new business