How you can execute a competitive audit after establishing a frame of reference.
Do you honestly know what your ideal consumer would like to accomplish by working with you? You offer services as a business or organization, talking to your consumer base often, but have you ever asked a member of your target audience what they are trying to achieve in their life by seeking your help? Did you know that asking questions like these could be one of the best ways to establish your competitive advantage?
You may think you are competing directly with other businesses or organizations similar to yours, but what were your consumers’ actual full list of considerations. You can determine this by asking members of your target audience directly.
For example, as a brand strategist, a potential client could decide to take no action, get the help of a friend or family member, do it themselves, or hire my competition. In this case, the options are rather limited because both marketing experience and expertise should inform brand strategy development.
Service businesses and organizations often consist of people or teams with a skill set they have been honing or refining for years. Your ideal consumer may be lucky enough to have things work out in their favor by doing things themselves, let’s say. But you know, and I know, that anyone doing what you do themselves is likely to be “asking for trouble” that they aren’t even aware of yet.
For another ‘frame of reference’ example, let’s consider a consumer’s workaround for, let’s say, hiring a licensed therapist?
Do nothing
Talk to friends or family members
Go to teletherapy via an online app
Seek help from a religious institution
Indulge in things that keep one numb to the help they need
Hire a direct competitor
Meditate
The key to doing this exercise well is not to assume you know the answers. Instead, you must seek the answers from outside of you or your business—10+ people. Now, if you are hesitating to move forward with this exercise because you lack consumers, find members of your target audience “in the wild” to ask for informational interviews. And if your service is something you know your family members and friends would use, ask them. Just be sure to ask them within the context of your price point.
For example, “Hey Olivia! If you want to do business with an accountant, but they were out of your budget...
What would you consider doing instead?
Is there any other service you would use to take the place of this service?
What would make you want to still work with this business if they were more expensive than you would have liked?”
All this is to say that you must know your real competition to position your brand correctly in your consumer’s minds. Therefore, you want an ideal frame of reference that comes from “the horse’s mouth” so that you can make educated marketing decisions.
Understanding your ‘frame of reference’ will also allow you to state how you are genuinely different from your “competition” and grow that difference over time to outshine alternatives to your service(s). If you determine that your competition are more direct competitors, continue reading.
How To Do A Direct Competitor Analysis
First things first, a competitor analysis is an umbrella term for the process of researching and analyzing competitors similar to you in size and scope. You may even look at businesses trailing right behind you as competitors.
If a company is bigger in size and scope, look to them as companies you aspire to reach the scale of if you do. Aspirational companies are great for seeing how you can maneuver to achieve a similar level of success for your business or organization.
Circling back to analyzing your direct competitors, start looking for businesses that offer the same services you provide to the same audience you do. Just look at 5 to 10 companies like yours.
And if you have a brick-and-mortar service business, you can find your competition by Googling keyword phrases related to your business by mentioning your business’s location. Still, only look at 5 to 10 businesses like yours.
Analyzing Your Findings
You may find that many of your competitors kind of look similar. The truth is, most companies have not uncovered their uncommon denominator. And at the start of your business, you may look to be doing the same things as the competition you have discovered. But this does not mean you give up trying to establish a competitive advantage.
It would be best if you still collected research on your competition to learn about their offers, key messaging, personality, color schemes, tone of voice, and services.
While studying your competition, ask yourself:
Whom are they targeting?
What are they offering to them?
How do they promise to make their lives easier?
What are they missing that you can leverage?
Few businesses take the time to research these things or ask themselves these questions to find ways to stand out. Instead, many companies look to leaders and copy them. However, your goal should be to find ways to stand out from your competition with a brand strategy that zigs when everyone zagged as it relates to your brand’s presence and messaging.
Considerations Given Your Business Strategy
As for your services, I will assume you’ve either decided to become a one-trick pony or a jack of all trades. So, it is up to you to determine if you fall short of those who have chosen the same business strategy as you based on your business strategy.
The more niche your business, the easier this exercise will be. However, if you find that you are competing with thousands of other companies given your service and audience, you haven’t niched down enough. And if you are living with FOMO, you never will.
There’s your ideal consumer, and then there is your addressable market, so don’t be afraid to niche down as long as a decent market is available. You don’t need a million people to win at business. I bet all you are hoping for is just an extra 10-20 this year.
Your Key Takeaway
First, understand the frame of reference for your business. Then, if you need to, check out your direct competitors. In any event, it doesn’t hurt to do both.
This article was written by Vanessa Matthew and Erica Koina