As a business owner, you might not want to spend a lot of time dwelling on your competition. The general mindset is often to put on some blinders and focus on yourself… right? Well, this might not always be your best bet. In fact, regular competitor monitoring and an occasional competitor analysis can actually be healthy and productive practices for your business.
Remember that competition is a good thing; it means there’s a proven market for your business, and it also gives you peers against whom you can measure your own traction and trajectory. Here’s a look at what to monitor with your direct and indirect competitors, as well as some insight into how to do that.
1. So what is the difference between direct and indirect competitors?
When you think about your competition, your direct competitors are probably what come to mind first. If you provide digital education for adult students looking to gain trade skills, for example, you might immediately think of the school in your area that provides in-person and online education in similar fields that you do. If you’re a swim school, you’re probably thinking of the other local swim schools. These are absolutely worth paying attention to, so make a list of them. But then, remember to consider your indirect competitors too.
Going with the examples above, an indirect competitor example for the adult online education provider might be a university or trade school. The facilities might not necessarily have the same business model or fields of study, and may not spend any time targeting adult students, but they’re still a competitor if they could end up with some of the adult online education provider’s target students.
When it comes to the swim school, they could consider other children’s activity programs as indirect competitors. No, they’re not offering swim classes, but they are still offering activities that parents may choose to enroll their kids in instead of your swim classes. So make a list of your indirect competitors too.
2. Customer acquisition and market share.
The two main things you want to evaluate with your competitors (direct and indirect) is how they get their customers, and how much of the market they have. You might not be able to get precise details about both of these, but you can make educated inferences. For example, spending some time on your direct competitors’ social media channels might reveal that they exhibit at several industry trade shows throughout the year. Consider your own trade show strategy. You may also see that they advertise via billboards in your area, use pay-per-click ads and retargeting. If you haven’t tried one of these methods, you might want to look into it and see if it seems worth your time. After all, if it’s working for your competitor, it just might work for you.
As far as market share is concerned, this can be difficult to get right, but a little bit of research can give you a decent idea. Look at your direct and indirect competitors, and see if you can access their customer lists online (many businesses post their customers on their websites, so if you’re in a B2B business, this is a good place to start). If you’re in a B2C business, see if your competitors’ websites have any customer numbers on them (many businesses freely make this known).
If you have an idea of how large the total market is, you can then back into how much market share your competitors have and compare that against how much you have. This will help you understand how much growth potential there is for you, and where you stand next to your competition.
3. Tools to use.
Finally, there are some good tools we recommend you get in the habit of using when you’re performing a competitor analysis. Put your competitors’ names (both direct and indirect competitors) in Google Alerts, so you can stay aware of what they’re doing online. You can also search for them and their content on a site like SocialMention, and see how you compare to your competitors in terms of SEO rankings by using a service like AccuRanker. These are all easy ways to keep an eye on your competition, see if they’re doing anything you’re missing and see how you’re performing in comparison.
You never want to mimic your competitors, or dilute your own brand by blindly doing what others are doing. But you can learn a lot about your industry, your customers and changes in the market by regularly reviewing and monitoring your competition. Contact us if you’d like to learn more, or if you’d like help establishing a digital strategy.