Musings of a twenty-something entrepreneur.
Jan
21

After nearly 6 months of product development, I’m currently entering the dark chasm that is startup fundraising. I have a lot to learn yet, but I thought I’d share the insights I’ve gleaned so far. This post deals with competitor research, perhaps the first thing you should do once you’ve got the idea and nerve to get going with your own startup.

Don’t underestimate how well you need to understand the competition. Your competition is smart, and you’ll find it helpful to get in the habit of listening to what smart people have to say, especially your competitors. Learning about the competition upfront will make the rest of your work much easier as you move forward.

Your competitors have already thought of features that you are 3 mental steps away from, they’ve tested and optimized their site, and they are more or less telling you their strategy. Get a grip on what’s happening in your industry, and use that understanding in developing your own plan. Why are your competitors failing? Succeeding? What really makes you better?

In the industry I’m going after, I’ve identified no less than 30 competitors that do some version of what I’m going to do. Frightening, I know. One of those things where you might just want to leave the lights off rather than look at the scary monster under the bed. But no one ever said this was easy, and its incumbent on you to face up to the reality that your competitors represent.

Here’s how I got started doing competitive research. What am I missing? What have I got wrong?

Table of Contents:

  1. Find you competitors
  2. Use your competitors
  3. Quantify your competitors
  4. Synthesize your research
  5. Keep up with your competitors

Find your competitors

First you’ve actually got to figure out who your competitors are, and trust me there are more than you think.

  • Search keywords related to your topic- anything potential users might search for. This is the fastest way.
  • The enemy of my enemy is my enemy. Look up main competitors on Alexa, Compete, Crunchbase, and iSpionage to see who the competitors of your competitors are. Rinse and repeat.
  • Get ahold of an iPod & Android  and do all the searches you can for keywords related to your company.
  • Google multiple competitors’ names at once- this way you’ll find lists that will likely include other competitors.
  • Create a “Competitors” folder in your bookmarks. Every time you stumble across a new one, bookmark it there. Later, you can open all of them at once, which is a LOT easier than typing them in each time.

Use your competitors

Buy their apps, get an account, use their services, sign up for their updates, and explore their websites. Get a sense for what they do, check out their features, and fertilize your mind to prepare yourself for developing your own product. Keep notes (mental or otherwise) on what you like and dislike.

Quantify your competitors

Getting a feel for competitors is good and necessary, but you’re going to need to justify that “feel” and communicate it to investors. You’ll need some quantitative (and qualitative) analysis for that. Following the steps below will help you clarify your analysis of the competition, remember who they are, and communicate to investors.

Get Traffic Info

Nothing points to a potential market like a huge number of visits to your competitors. Trust me- you want as many people in this market as possible because you’re going to go after them later.

Get an account at Compete.com, and do site comparisons for 5 competitors at a time. Save each one as a group so you can do this again quickly later. Download the CSV traffic file, and create a table with visits to your competitors. Always keep your raw data, but in my final analysis I assume that compete misses 25% of visitors based on what I’ve read, and from my observations 25% is probably conservative (if not downright charitable). In any case, knowing an aggregate traffic number for your competitors will give you a good idea of how realistic your own projected estimates are.

Get the Visitor Details

Type in each competitor on Alexa.com and you’ll be rewarded with a wealth of visitor information. In my opinion, the most telling signs of strength are pageviews/user, time on site, bounce rate, and the percent of traffic that comes from search. In this graph, I’ve colord-coded cells using Excel’s Conditional Formatting to make it easy to do a quick scan.

Visitor Details from Alexa

Do Qualitative Research

Not every piece of data comes nicely packaged in a number. How good is their design? User experience? What’s the high-concept pitch embedded in their “tagline”? How well-funded are they? What platforms are they on? What’s their marketing spend (see iSpionage)? Of the 10 features you’ve identified as relevant, how many of them do they have? How are they positioning themselves?

To tackle this issue, you’ll have to dig-in, explore each site, and be diligent. It’s kind of bitch work, I know, but it ain’t all roses and you might as well get used to it.

Qualitative Research

Synthesize Competitor Info

Great that you’ve collected lots of data! Unfortunately, you can’t just send it on over to an investor- they’re not going to bother. You need to summarize it- your brain is the hammer, analysis is the nails, and your data is the wood. You need to build something out of it so that you can communicate it effectively.

Like any part of your business plan, every situation requires an approach tailored to your specific project. But here’s a list of tried and true ways to organize your analysis:

  • Feature-based. You can use Harvey Balls to visually summarize the important features and who has what. Cliché, yes, and few investors will just take your word for it, but nevertheless if done honestly it can be useful. Don’t forget to include features that you will not have (part of the being honest part). You can download the Harvey Balls font here.

    Harvey Balls Feature Comparison

  • SWOT Analysis- For the uninitiated, SWOT stands for “Strengths, Weaknesses, Opportunities, Threats.” Right off the bat might be a little too early for a full-fledged SWOT, but it’s a great tool for structuring the way you think about competitors.Strengths and Weaknesses refer to the present situation, while Opportunities and Threats relate to the future. If you’ve got a lot of competitors, rather than do a SWOT analysis for each, much better to group them into categories. If you want to sell cars, you might have groups like “Paper Classifieds”, “Online Classifieds”, “Online Dealers”, “Brick and Mortar Dealers”, “Consumer-to-Consumer”, etc.
  • Detailed Qualitative Analysis for Fiercest Competitors- Your toughest competitors deserve the most scrutiny. Do a SWOT analysis for each. Take screenshots of their website and create a reference deck in powerpoint with them. If they are public, read their annual financial report- they are goldmines! Search the news and read their blog: find out how many employees they have, who runs them (and what else do they run), what makes them tick, what they had for breakfast yesterday.  Twitter is the best tool for this- go through their Twitter history and you’ll be delightfully surprised. And remember how fierce they are lest you forget and have your lunch money taken.

Keep Up With Your Competitors.

Set a Google Alert for each competitor. Not only will this give you timely updates on what your competitors are up to, but its also a great way to keep track of people who might be interested in writing about your own startup. Glance over them each day and bookmark the ones with potential- this will help you down the road when you’re concerned about press coverage and backlinks.

Remember to sign up for their newsletters! I love checking the copywriting of my competitors- I’ve gleaned some very valuable insights from these, particularly about competitors’ future plans.

——————————————–

I hope these tips have given you a feel for how to approach competitor research. I’m sure I missed a ton though, and we’re only as strong as our weakest link, so share your own insights in the comments or hit me up at jesse @ this_website.


Onwardly,

Jesse

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About jesse:

"I move Onward, the only direction. Can't be scared to fail- searching perfection... Loiterers should be arrested!" -Jay Z Find out more about me at www.JesseMaddox.com

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18 Responses to “Getting Started With Competitor Research”

 
  1. […] This post was mentioned on Twitter by HN Firehose, Jesse Maddox. Jesse Maddox said: Just blogged: Getting Started With Competitor Research http://www.onwardly.com/getting-started-with-competitor-research […]

  2. Jesse says:

    Great comment on Hacker News:

    ekanes says:

    “If they use GetSatisfaction or UserVoice, click through to their community. If they have any traction at all, you’ll find a bunch of feature requests, how popular those requests are and how they responded.”

    http://news.ycombinator.com/item?id=2128408

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    This post is very competitive…Anyway, thanks for sharing this post to us…I hope this can help in every business…

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    what you have posted here are a great list of tips. we are having a hard time with our competitors but i think with you wonderful insight we will surely go back on top.

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