Today, I’m going to share my competitor research hacks in the hopes that you will fare way better than I did.
Dumpster Diving – vs – Value Driving — Which would you pick?
“Instead of spending all of our time and money figuring out what the competition is doing — shouldn’t we just give our customers what they want?”
Yeah. That little sentence almost got me fired.
But, I had honestly had enough. It was getting ridiculous. I was the 1-woman competitive intelligence department for a large pharmaceutical packaging company who had suddenly had a reality check moment when they saw bits and pieces of their multi-million dollar business start vanishing before their eyes. Suddenly, I realized that there were other companies that were providing the same products and they went from one extreme to the other.
Over the next year or so I had done phone interviews, customer interviews, and even some dumpster diving — all for competitor research and with the intent of trying to figure out what was going on. This was all in the days before the internet, so there was a lot of hands-on, feet-on-the-ground, kind of competitor research that I did. And my conclusion — customer satisfaction was a way better investment of time and money. But that doesn’t mean that you should ignore the competition and not doing competitor research — no way.
How to begin the competitor research process
Figure out what do you want to know and why?
When I first started doing competitive intelligence, it was a knee-jerk reaction to seeing sales and profits dwindle. “Where did the money go?” “Why aren’t they ordering the same number of parts as last year?” “Who took my business?” And ultimately, the most important questions underlying all of these was “WHY were our customers leaving us?” and “What are we going to do about it?”
This was a good place to start our competitor research and competitive intelligence journey — the first step is knowing that you have competitors (duh — EVERYONE has competitors) and then understanding exactly what was important to our customers that we weren’t fulfilling on and our competitors were.
What’s your competitive dilemma?
- Do you see a competitor getting more of your ideal customer than you are?
- Do you see customers spending more on your type of product or service with someone else?
- Do you see customers “doing it themselves” when you can do it better?
Get as specific as you can about exactly what you want to know and why.
What decisions are you going to make and what information do you need to make them?
This is a sister question to the first and will often come only after you understand exactly what’s going on in your competitive landscape. But it’s a critical piece of information to have in your competitor research because it will drive your time, money and resources for a good amount of time. So, the clearer you are on what decisions you’re going to make and what information you need to make them, the faster the process will go and the more effective you’re going to be.
What is it about this “competitive situation” that has you stumped?
- Are you trying to launch a new product and not sure if customers would switch from a competitor to you?
- Are you considering getting into a new market and wondering how to position yourself against an entrenched competitor?
- How many customers would you need to be successful?
Imagine that competition was NOT an issue, what would you need to know to be successful. This will help you identify and focus on very specific questions that will move your story and strategy forward and keep you from getting mired in “nice to know” information.
Decide on who your actual competition is
I’ll bet you think your competition is the guy down the street or across the country who makes exactly what you make or who provides the same service you provide — WRONG?
Your competition is any other alternative that your customer has for achieving the outcome that you provide. (That’s my definition). You see there are three kinds of competition:
Direct competitors – These are the folks who do exactly what you do. A popular example of direct competitors might be McDonald’s and Burger King.
But there are two other levels of competition that you may not have considered.
Secondary competitors – These are folks who offer the same thing you offer but from a different context. Let’s say, Red Robin, who also serves hamburgers but in a very different way than either McDonald’s or Burger King. They focus on the gourmet aspect of burgers and fries.
Indirect competitors – THIS is the category of competitors everyone forgets about. These would be businesses who are alternatives to the problem your customer is facing. In this case — hunger. So alternatives might be Pizza, Taco’s, Chinese food, or even cooking at home.
Take a moment to list some of your direct, secondary and indirect competitors now. This will really help you get some context around your competitor research. Here are some Cool Tools That Will Help You Track Your Competition. Meanwhile yourself you can use some of our product survey templates and find out where your competitive advantage lies.