A step-by-step guide to running competitor analysis
Tips & Tricks

A step-by-step guide to running competitor analysis

Approaching competitor analysis with a non-competitive mindset.

Cover image credit: Johnson Wang.

Software products dont exist in isolation. More products enter the market every day, and existing products need to rapidly learn, adapt, and anticipate the needs of their users to survive.

If you obsessively fixate on what other people have built, you end up with a me-too product that doesnt solve the problem better than whats already out there. If you ignore the competition to focus on your great idea, you end up blind to how people are currently solving the problem. You reinvent the wheel, and build what you think is cool rather than what your users need.

Competitor analysis helps you build software more intelligently. It allows you to rapidly test and validate product ideas by analyzing what other people are doing in your space. The key to this is approaching competitor analysis from a mindset of non-competition.


How to run non-competitive competitor analysis

Don't do this.

Lean Startup pioneer Steve Blank recounts an episode where a startup CEO brought him a competitor analysis table with a blow-by-blow teardown of every feature that every other product in the market had. As Blank points out, the problem with this type of thinking is it leads to the conclusion: Our competitors have these features so our startup needs them too. Get to work and add all of these for first customer ship.

Competitor analysis doesnt work when looking at the competition becomes a proxy for digging into real users problems. Feature comparisons dont make for good product specs. Having an overtly competitive mindset is likely to blind you to where you could actually help users to solve the problem better.

Whether youre building a new product from scratch, or researching ways you can improve an existing product, you want to approach your analysis from a mindset of non-competition. That means youre trying to root out your own internal biases and knee-jerk competitiveness to get a birds-eye view of the landscape so you can find opportunities where the competition falls short.

Well walk through a three-step process of how you can run competitor analysis by identifying the competition, defining evaluation criteria, and drawing insights from analysis over time. By doing each of these things non-competitively, youre better equipped to delve into customer needs, and figure out whats working, whats not, and what to do instead.

Identify the competition

Gallery View in Gadgetopedia of competitor tracking for smart camera devices. Check out the full template here .

In all likelihood, you have an idea of who your competition is before you get started with running user research or building a prototype. Youve encountered competing companies online. Youve talked to friends and customers about products theyve used in the past. Thats the bare minimum you need to get started.

But identifying the competition is about more than just putting a name to the competition. Its about getting insights into your users and the problems that theyre trying to solve.

You dont just want a list of products that are similar to yours. If youre building a team chat tool, for example, you might compete with tools like Slack and HipChat but you also might compete with other forms of communication like email or messaging forums.

Break your competition into two categories:

  • Direct Competitors are companies that solve the same problem, have the same core functions, and an overlapping user base. Direct competitors are typically the focus of competitor analysis. If youre building a chat tool, your direct competitors would be companies like Slack, HipChat, and Campfire.

  • Indirect Competitors either solve a different problem for the same customer base, or solve a similar problem for a different customer base. If youre building a chat tool, indirect competitors would include email, Google Groups and potentially companies like Skype or Trello.

Its important to get a good spread of both direct and indirect competitors. Direct competitors offer a lens into how you could do better and make more revenue today because thats who potential customers are spending your money with today. Indirect competitors help reveal opportunities down the line while theyre not targeting your immediate customer base, or problem, they cover areas adjacent to your product where you might expand in the future.

You can identify direct and indirect competition by searching for specific keywords in Google, or by using Googles Keyword Explorer. Then, dig deeper. Go to places like Stackshare and Siftery to see what products people in your space are using. Get on places where users are spending time like Quora or Twitter, and talk to them directly.

Ask them the following questions:

  • What products do you currently use?

  • How happy are you with the products you use and their features?

  • Do you use multiple products or tools to solve the same problem?

Create a list of 510 competitors and organize them according to categories like competitor type and pricing.

Competing products grouped along two dimensions: price point and competitor type.

Define the criteria for evaluation

In your competitor analysis, you wont be able to monitor *everything *the competition is doing across their website design, marketing collateral, blog content, and social media. Running an effective analysis is all about how you narrow the field by figuring out the right criteria to use to evaluate the competition.

Customers dont buy features, they usually buy something that solves a real or perceived need. Thats the comparison you and your investors should be looking at what do customers say they need or want?

That doesnt simply mean listing out features of competing products for a blow-by-blow comparison. Select criteria that will provide you with more context around what theyre building, who theyre building it for, and how theyre reaching users through marketing and design. As Steve Blank says: Customers dont buy features, they usually buy something that solves a real or perceived need. Thats the comparison you and your investors should be looking at what do customers say they need or want?

By breaking down qualitative and quantitative data around the competition, youre forming deeper intuitions around how your target audiences needs are being met and how you can go even deeper.

In the sample Gadgetopedia base above, were using the following criteria to evaluate competing products:

  • Company

  • Target Audience

  • Features

  • Messaging

Once you have a set of criteria, you can also add a long-form notes field to fill in with heuristic evaluations of products along those axes.

A heuristic evaluation simply means judging the product according to the criteria that youve outlined above. It helps you make judgement calls on competing products and how it relates to what youre building.

Organize the information

The final part of running your competitor analysis is devising a way to structure the data that makes your analysis easy to update and mine for insights over time and also easy for members of your team to reference and cross-check it with what theyre building.

Once you have the basic criteria youre using to evaluate the competition, there are a variety of places you can look to use as a springboard for your evaluation. By keeping these in a single place, you make it easy to update your analysis with new research over time.

  • Competitor websites & marketing collateral: Website copy, design and marketing collateral in the form of white papers and content can tell you a lot about how a specific company is positioning themselves in the market.

  • 3rd party sources: Search community forums like Reddit and ProductHunt as well as review websites to see what users are saying about the competition.

  • User interviews & usability tests: Find users to test within your network, or use a tool like UserTesting.com, which sources interviewers for you. In our sample competitor tracking database, were drawing conclusions based on the website and marketing material from competing products.

In our sample competitor tracking database, were drawing conclusions based on the website and marketing material from competing products:

Having all this information in a single place makes it easy to create views that are most helpful to respective members of your team.

Product positioning and messaging

Feature comparison

The following view lists the total number of features encountered in the analysis, and is sorted by the number of products within each feature.

and feature gaps

Once you have that, your product team might create a separate view that includes only features your product doesnt offer:

Landing page analysis

Not only is it important to get a sense of what other products do, you also want to see how theyre being targeted at their intended audience. Your marketing team might mock together a view that organizes competing products by landing page:

Review tracking

This view organizes 3rd party reviews into three categories: Positive, Neutral, and Negative.

Hit the ground running: competitor analysis templates

Now that youre equipped with an understanding of how to run a competitor analysis, its time to get started on your own. Below, weve included templates in Gadgetopedia that real companies have used to monitor the competition. Play around with them, mix and match, and borrow!

Yexts Incident Tracker

Yext, a company that centralizes business listing data across the internet, uses a base in Gadgetopedia to monitor the competition.

In the Companies table, Yext keeps tabs on competing companies, monitoring comparable features, and company information. A separate Incidents table is linked to the Companies table with specific noteworthy events for example, a writeup of a competitor in TechCrunch, or a new feature launch.

As Yexts VP of Product Jonathan Kennell points out: The philosophy of your business and how you actually model that in processes and technology is always changing.You cant just set your systems up once and assume theyll still work years or even months later.

You cant just set your systems up once and assume theyll still work years or even months later.
Jonathan Kennell, VP of Product at Yext

Take Yexts Competitor Analysis Tracker base for a test drive here!

UX Teardown Template

For specific product launches or redesigns, youll want to dig deeper into specific UX elements in your competitor analysis.

While preparing to design a shopping flow for an e-commerce app from the ground up, Melanie Oei put together an extensive database of 22 different competitors:

The base documents major design decisions around each app, focusing on navigation hierarchy and search flow. It also includes screenshots of specific UX elements like navigation bars, drop-down menus, and search bars.

Check out Melanie's base here .

Competition today

People building products today have to deal with an increasing amount of competition. Its easier to write code, and faster to deploy it. Simply focusing on what you want to build ignores the bigger issue of how you can best solve a problem for users.

Take something like Instagrams imitation of Snapchat. Instagram co-founder Kevin Systrom never denied looking to Snapchat for inspiration when adapting Stories: It would be crazy if we saw something that worked with consumers that was in our domain and we didnt decide to compete on it.

As Systrom says, You can trace the roots of every feature anyone has in their app, somewhere in the history of technology.

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