Know Thy Enemy: The Importance of Competitor Analysis
When you think of great business quotes few people will immediately think of Sun Tzu but the great Chinese philosopher, military strategist and author of Art of War knew a few things business could learn from.
Companies battle on a daily basis for customers and constantly strategise on how to win the most business and get ahead of the competition. And it is Sun Tzu’s quote on the competition that business could learn from.
“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”
Organisations often spend time and money fixing their own internal issues but fail to keep an eye on those external competitive forces that threaten their long-term success. For every victory there is defeat.
In an ever-changing business landscape, it is imperative to future-proof and safeguard your business by understanding the competition.
The importance of competitor analysis/ industry intelligence
Performing a thorough competitive analysis can help identify threats to your business and you can even learn from their victories and defeats, making the competition as much of an asset as a rival.
This analysis will also assist you in attaining an accurate picture of what is going on in your industry. It is also crucial to study industry patterns and trends occurring as this will reveal the strengths and weaknesses in own your business and help formulate a competitive strategy for the future and adjust to shifts in the market to protect your market share against new risks such as non-traditional competitors and early adopters of future standards or technology.
How to do it
The goal is to inform your strategy and create a competitive advantage by understanding how your rivals operate and what contributes to or impinges their success.
Mystery shopping has been used for decades by businesses to ascertain how their service is performing. It’s a useful tool that gives great insight into practices and highlights areas for improvement which is precisely why it should be utilised more to investigate competitors.
Call your competitors and buy their product or service – it will be money well spent. It’s a great educational exercise that allows you to directly ascertain your competitor’s fundamental strategies.
Take time to analyse their customer experience. How does their representative answer your call? How easy is it to order their product or service? What is the range of products and services they have on offer? What are they doing better than you? What are they doing worse? Reach out to their customers, or analyse social media posts relating to your rivals, and find out where they feel let down or what is winning their loyalty. Look deeper into how they package their goods, their pricing list, after sales service, and the marketing style they implement.
Much like Sun Tzu knew his foes' strengths and weaknesses and used them against them so must you with your competitors. If their service is better than yours then you must improve. If customers are dissatisfied with your competitor’s returns policy then you must use that knowledge in your next sales campaign and make your policy more attractive. A particularly effective way to get a grip on a competitor’s marketing style is to subscribe to their email marketing.
Competitor reporting can become an intrinsic part of the internal reporting to senior management, executives and the board, in your organisation. One of the ways this can be achieved is through a prepared and in-depth SWOT analysis or by properly applying Porter’s Five Forces Model. Preparing either will involve research into the reasons why some businesses succeed and others do not. Look for what factors are motivating customers towards particular businesses; at the strategies they are utlising to generate this favourability.
The ultimate goal of any competitor analysis is always to inform a new strategy or even to retain an existing one in order to attract or defend a market share. To achieve long-term success you must build your strategy upon assets and skills your competitors do not have, and take advantage of the opportunities they have not seen.
Your competitor analysis should not focus solely on your competitors. As Sun Tzu says, you must also know yourself. Conduct comprehensive competitor analysis on your own company and discover what your competitors are trying to find out or already know about you. Know yourself, and your competitors and you’ll never have to worry about losing your market share.