Stop Ignoring Your Competitors And Learn How To Do Competitor Analysis Instead
You’ve heard it time and time again.
Ignore your competitors. Don’t worry about them. Don’t obsess over them. Don’t focus on them. Pretend they don’t exist.
Everyone’s said it, from Peter Thiel to Sam Altman to Dharmesh Shah.
The concept behind the advice is well-intentioned.
Instead of “wasting time” thinking about your competitors, spend your time and effort focused on your customers and on building your own business. Don’t get caught up in what others are doing, instead, focus on what you are doing.
This advice of ignoring competitors isn’t as relevant as it used to be.
It’s not that competitive advice was wrong, it’s that times have changed. Ignoring your competitors used to be a great strategy. Now it’ll be your downfall.
The environment has shifted. We need to change our approach to competitors.
The iPhone app store didn’t exist until 2008 so the market for apps didn’t exist until 9 years ago. How many apps do you use on your phone? I’m guessing it’s at least a dozen (or several dozen if you’re like me). And you’re checking out new ones on a weekly basis. Today there are over 6.5 million apps available in the mobile app stores.
Have you seen that Marketing Technology Landscape Supergraphic lately? My Retina display can’t even keep up with the number of pixels in that thing. When we first built Crazy Egg in 2005, we could list most of the marketing SaaS tools off the top of our heads.
In 2011, there were only 150 different marketing technology solutions. Just 6 years later, there are now over 5,000 solutions. No wonder this year’s supergraphic is nicknamed the Martech 5000.
Product Hunt alone has a database of over 90,000 products. There are over 80 products posted each weekday. By browsing and searching Product Hunt it’s easy to find many competing solutions for most problems that businesses and consumers have.
There’s more competition now and the pace at which new products and solutions are being created is only increasing.
If you don’t pay attention to what’s already out there, you’ll accidentally become a copycat product or start several steps behind everyone else in your space. There’s just too much competition to build blindly.
So who are your competitors? Competition isn’t just about the companies that do exactly what you’re planning on doing. It’s not even just about companies that have similar features to yours.
- Direct competitors – Companies that do something very similar to what you’re building. These companies are solving the same problem for customers that you’re going after. They may be targeting a broader or more specific set of customers, but if you share similar features, they are direct competitors and you should be including them in your analysis.
- Indirect competitors – They offer different features than you are building, but they are servicing the same customer. They could be building a product that wasn’t originally created to solve the same problem as you, yet it’s being used for that. Or they could be solving the problem as part of a larger solution.
- Alternative solutions – The most common alternatives to software products are manual solutions. Spreadsheets, checklists, pen and paper solutions, books. Even hiring consultants or contractors to do something for you is a common alternative. If they aren’t using software, people are solving their problems through one or more of these alternatives.
- Multiple tool solutions – When people don’t have or choose a single software solution, they find ways to solve their problem by stitching together multiple tools. They could already be solving their problems using tools like Zapier or Google Spreadsheets to help automate manual processes.
Researching and analyzing your competitors is all about one thing: understanding your customer and their challenges. And you don’t have to build anything at all in order to learn what problems customers have and how they are solving them today.
What You Can Learn About Your Customer Through Your Competitors
The competitors and alternatives
Researching what products and systems customers are using to solve their problems will help you pinpoint your direct and indirect competitors in the market. By using the different research methods I’m about to teach you, you’ll be able to get a holistic view of who your competitors and alternatives are. Just doing some Googling isn’t enough – you’ll need to go deep to identify them all.
Target customers
By deeply understanding competitors through research, you’ll learn what types of customers the competition are targeting today. They might be focused on Enterprise customers, for example, or on inside salespeople. By understanding who competitors are targeting, you get a lens into where competitors believe there is an opportunity, or what customer segments find their products particularly useful. You can also find out how much customers are paying for these products and the different pricing plans that are available to them.
Features
What features are important to customers? Features show you the value proposition that customers are seeing. The features customers are exposed to set the expectation that they have for products in the market. Just looking at a single competitor won’t help you understand the market from your customer’s perspective. You should figure out what features all the competitors have versus the ones that are more specialized to specific competitors. Find the patterns in the features that are included in competing products and also analyze them with your (and their) target customers in mind. As you analyze competitor features, you’ll start to understand how your market has evolved based on the way features have been added over time in these competing products.
Customer sentiment
How well are competitors meeting customer needs? Digging into competitors helps you understand how customers feel about existing solutions and products. You’ll also quickly find out which competitors and alternatives customers prefer over others, and why. There will likely be trends that emerge on how companies evolve their use of tools. For example, when they are very small they might use a free tool with few features or a spreadsheet, and as they grow they might choose other products that better fit their needs. Based on what you learn from customer sentiment, you might also be able to identify where customers believe there are feature gaps.
How to Learn Everything About Your Customer Through Your Competitors
Over the years I’ve tried a lot of different competitor research methods. Here are my favorite tactics to unearth the best information about your competitors. And it all starts with having a plan.
You don’t just go blindly into customer interviews, do you? This research is no different.
Before you start, create a research plan outlining what you want to learn and what methods you’re going to employ to find the information. This will help you stay organized as you research, so you know what your goals are with the research, and whether or not you achieved those goals. This is also a great way to get the team aligned and split up who does what parts of the research.
Customer interviews and survey results
Talking to customers is the single most valuable thing you can do in product development.
In the interviews and surveys you conduct, you should be asking customers what tools or processes they are using today. This is your chance to get a detailed perspective about your competitors from your customers that you won’t be able to find anywhere else.
Here are just some of the things you can ask about and learn in surveys and during interviews:
- What products and processes are customers using?
- How do they use different products with each other?
- What do customers think of the tools they use and their features?
- How are they using them?
- Are they using many tools to solve the problem, or just one?
- Have they ever switched tools/processes? Why?
Competitor surveys
If you have a way to get a competitor’s customers to fill out a survey, this can be one of the best ways to learn exactly what customers think about that solution. It’s best to survey a company that has a large user base, is growing fast and seems to have product/market fit.
To find survey participants, start with your network. If you can’t get enough responses by asking people you know to fill out the survey, another option is to buy advertising on a site like Facebook and route people who click your ad to the survey. Another way to get responses is to partner with someone who has an email list that targets your audience but isn’t competitive. Don’t forget to offer to share the results with whoever fills the survey out, it helps increase response rates.
A competitor survey can be as simple as asking the net promoter score (NPS) question about a competitor and understanding how satisfied customers are with the product. When doing NPS surveys make sure you ask people to tell you why they chose their answer after they respond to the initial multiple choice question. This will help you learn why people like and dislike the product, in their own words.
In 2015, as a fun research project, I created a survey for Slack users to understand more about the market. In this blog post, I share the detailed analysis of the 731 responses I got for the Slack survey. I also share exactly how to analyze these types of surveys. If I were on the team at HipChat, Microsoft, Google, or any of the other businesses that compete with Slack, I’d be running competitor surveys to understand exactly what makes people love Slack so much.
Competitor websites and marketing materials
Don’t underestimate what you can learn from what’s publically available within a competitor’s marketing copy. There’s a wealth of information waiting for you to explore and learn from just by going to competitor websites.
Here’s a checklist of what items to always run through when looking at competitor pages:
- Homepage – You’ll be able to identify what value propositions they use. Usually, these are on the homepage, or you’ll see the same language repeated over and over again throughout the website.
- Pricing – Pay close attention to the pricing page. Are there different pricing plans? Which seems to be the most popular or is featured?
- Features – You can find lots of details on what features competitors offer customers, and which customer segments they are targeting for those features.
- Demos – Check out any demos and videos competitors have on their site to see how they are presenting their product to potential customers and which features they highlight.
- Testimonials – Testimonials from customers are often listed on dedicated pages or on the homepage. They teach you who the customers are and what key benefits the competitor wants to highlight.
- Competitors – Many companies will include pages that compare their product to competitors. Looking at these helps you understand what competitors feel differentiates them and what features they focus on with customers. Even more important, these comparisons show you which products companies think are their competitors.
Software review sites
The Internet is full of websites that review software. People have started to use these websites to make decisions about the software they purchase. For mobile apps, there are websites that show you user reviews from the app stores. These websites are now a goldmine of data from actual customers.
Review sites will help you understand exactly which software is competitive to you in the category you are in and in adjacent categories. Just as you look for themes in your customer interviews, look for patterns in the reviews.
What do people like? What do people dislike? What features did they wish they had? What types of people are reviewing the product?
Here are some of my favorite review websites:
Competitors are simply a way to get a clearer view of the customer. The easiest way you can understand customers before you write a single line of code, before you even know exactly what you are going to build or the specific problem you are going to solve, is to research competitors.