When the economy gets tough, the level of competition increases. The reason is, companies tend to focus harder on defending or winning a larger share of their existing market, with their existing products, rather than invest in new products or new markets. Everyone sees it as a safer bet and less costly.
To beat your competitors, firstly you have to really understand them. We have found few companies have the right level of competitor information. Our experience over the last three years is that companies either have too little or too much competitor intelligence to take effective action.
Neither situation is ideal, but we see more of the latter type. In a sea of so much data, how can the leadership team decide what to do? The answer is to start with the end in mind.
Just as the real purpose of a light bulb is to help people see, not provide light; so the true purpose of competitor analysis is to increase competitiveness, not know your competition. This means collecting and analysing competitor data in a way that provides insight and supports action.
One useful way to think about analysing competitors is to use purchase funnel analysis. The concept is simple; potential customers go through a series of steps (see diagram) before they make a purchase:
If you collect your competitor data in this format, by segment and by geography, you will be able to see what you need to do to increase your competitiveness.
For example, if you find your competitors have higher brand awareness than you, then they are able to bring more potential customers into the top of the funnel. If they have the same level of awareness as you, what proportion of your customers would consider purchasing from you and your competitors? Along with the quantitative scoring, it is important to understand what opinions they hold about each competitor to understand what is driving “consideration”. What and how effectively is the competition communicating with potential customers? Is this a critical bottleneck for your future sales? What should your competitive response be to increase your company’s impact?
You get the idea. Systematic competitor analysis at every stage of the process, helps the leadership team understand the real problem and target resources on the barriers to sales and profitable revenues.
Those of you that have worked with this methodology before, will know that the discipline of funnel analysis leads to structured competitor data collection and findings that drive action.
Please get in contact with us if you are interested in increasing competitiveness
The Purchase Funnel provides a method of understanding and tracking the behaviour of an average customer throughout the sales process. This can help with the following: