In order to improve your digital marketing, you need to start by trying to understand what is the industry standard. Determining this is not always a simple and straightforward task. It’s not enough to just look for industry averages, seeing as how the bulk of them may not apply to your particular case. Instead, you need to be a lot more specific regarding the data you need. For instance, you need to compare yourself against businesses in your own area, that are of a similar size and industry.
You need to measure yourself against your direct competitors.
Still, why is this so important? How do you recognize your direct competitors? Most importantly, how do you analyze your competitors? Finding answers to some or all of these questions can revolutionize your entire business model.
Here’s how competitor analysis can improve your digital marketing and your business as a whole.
Why do you need a competitor analysis?
There are several reasons why competitor analysis is relevant for your enterprise. It is also relevant that you manage to maintain an ongoing competitor analysis, instead of just performing this once and never returning to it again.
While, early on, you may manage to outperform your competitors in several fields, they won’t stay dormant and just allow this to happen. Chances are that they’ll look for methods to overcome you and make adjustments. Some of these methods will be quite effective, which is why you may decide to implement them into your organization. Others may not be cost-effective and it’s far more frugal to check this out on someone else’s example than to try it out on your own.
Noticing new trends early on
By the time reviewers and customers start talking about trends, it’s probably too late to become one of the pioneers of the industry. The best way to pursue this objective is to be proactive in your market analysis and notice shifts in the industry before the general public. One of the best ways to stand out and be seen as unique is to learn how to offer people things before they even notice that they actually need them.
Refining your goals
Having measurable, realistic and attainable goals is one of the most important things in any industry. For instance, if you’re pursuing averages when it comes to conversion rates, it’s incredibly important that you measure yourself against similar businesses. You’re looking at businesses in the region, belonging to the same industry and that are of the same business size. The most reliable way to make this comparison is to do your own competitor analysis.
How to identify a competitor?
Before we proceed with this topic, it’s crucial that you learn how to identify a direct competitor. Not everyone in your industry is a competitor and even if they were, not everyone is worth analyzing. Here are several criteria that people need to fulfil in order to be categorized as competitors.
Competing for the same audience
The simplest way to describe a direct competitor is to say that this is an organization that has the same target audience that you do. This target audience is finite and it has a finite amount of purchasing power. With every conversion and every dollar spent at your competitor’s store, you’re left with a smaller potential audience pool. More often than not, local businesses in the same industry usually fulfil these criteria.
Competing for the same keyword
According to renowned SEO Sydney veterans, even companies competing for the same keyword are your competitors. From the perspective of digital marketing, regardless of their location, these are the business entities that are aiming for the same digital space as you are. Outcompeting them will result in a massive yield, while your online presence is threatened by their direct digital marketing activity.
Other relevant factors
Other factors that determine someone is your competitor are the fact that you belong to the same industry. More precisely, a competitor is a company that is selling the same products or offering the same services. Aside from this, a company working in the same area is usually a direct competitor. There are many reasons for this and the intensity of this competitiveness varies between industries.
What is an indirect competitor?
Previously, we’ve mentioned the concept of an indirect competitor. There are a lot of definitions on this subject but, the simplest way to put it is to say that it’s someone who sells a different product/service that fulfils a similar need. Renting out a pressure washer is not the same as doing a façade but it’s easy to imagine people opting for one of these options as an alternative to another. Keep in mind that spending money on competing against indirect competitors usually isn’t worth it.
What are the benefits of competitor analysis?
There are numerous benefits to conducting an analysis of your competitors. This way, you have a safe environment where you can explore various options that you may eventually choose not to implement, at all. Here are several such benefits.
Better research on your target audience
Researching your own target audience is quite effective, however, by researching the target audience of your closest competitors, as well, you also get a much larger sample group. The bigger the sample group, the more conclusive and reliable the end results will be. This is especially true if you’re new in the industry, which means that your own market isn’t large enough to conduct such surveys. It provides you with a shortcut; someone to test the waters in your stead.
Better financial projections
Keep in mind that every business embarks on a cycle when they first enter the business world. Then, they grow exponentially, which is why it’s so hard to make an accurate financial projection. Fortunately, by doing your research on businesses that are similar to yours (only with a head start in the industry), you get a more accurate idea of what your own development path would be. This will also allow you to understand your competitors much better and help understand what shaped their enterprise in such a manner.
Identify missed opportunities
Competitors make mistakes but sometimes, it takes a backseat observer to notice them. This is one of the best-hidden perks of competitor analysis. When it comes to digital marketing, it’s so easy to find these missed opportunities. For instance, when looking for competitive keywords, it’s fairly hard to find something new and unique. However, through extensive competitor analysis, you can identify keyword overlaps (and avoid these keywords) but also identify keyword gaps. This is your unique opportunity to stand out in this field.
Aspects to focus on
When preparing for competitor analysis, you need to have a clear idea of what you should focus on. In terms of their digital marketing, here are several most important aspects to pinpoint.
Key performance indicators
The first thing you need to focus on is the key performance indicators (KPIs). This is really the best way to make this evaluation system completely unbiased. When you find necessary metrics and ensure that they’re actually quantifiable, you can just put them in the right timeframe and see average values. By keeping records for prolonged periods of time (there’s really no reason for you to erase them ever), you will be able to keep track of your growth and compare it to other businesses at the same stage of their development.
Lastly, you need to focus on the competitor’s website. This is a bit tricky, seeing as how it requires a lot of subjective evaluation in order to work. Sure, the KPIs that we’ve mentioned are quite objective but the layout and design of their website and digital marketing channels can be interpreted in more ways. This is also a creative process, during which you can ask yourself – what should I embrace and what are the things that I can do differently?
The efficiency of tools
When you decide to improve your digital marketing efforts, you need to start implementing various specialized tools for the task at hand. Comparing yourself to others before and after using some of these tools is also quite important for your long-term image of this situation. Remember that all your competitors are either outsourcing, using specialized tools or both. Trying to compare yourself to them without doing the same will be quite futile. Ideally, you would also find out what kind of digital arsenal they’re using in their marketing campaigns.
In the end, competitor analysis is incredibly important for your ability to evaluate your own business. In theory, living up to your own expectations is the most important thing in the world but sometimes you’re too subjective about this and completely unaware of whether your expectations are realistic, to begin with. The best way to avoid this, as well as to make more accurate projections is to do an extensive competitor analysis and see exactly what you’re up against. Looking at other people’s work can also serve as both a caveat and a source of inspiration.