“Never interrupt your enemy when he is making a mistake.” —Napoleon Bonaparte
When your competitors make mistakes, it makes winning so much easier. But what if it’s you who is making a mistake, while your competitors are off to the races? You won’t know until you figure out what your competitors are up to.
Knowing what the competitors are doing—how they’re thinking about the market, which tactics they’re using, how they’re crafting messages and design—can make all the difference in the battle for customers.
In addition, competitive analysis can be a treasure trove of conversion optimization insights, yet it often gets skipped. And it’s not just a CRO problem—it’s a marketing-wide phenomenon.
A Conductor study found that 74% agreed that competitive analysis is “important or very important,” but 57% admitted that they weren’t very good at it. From start to finish, this post will show you how to conduct a competitive analysis the right way.
What is competitive analysis?
Competitive analysis is a broad term for the practice of researching, analyzing, and comparing competitors in relation to yourself. Companies do it for a wide variety of reasons—SEO, branding, go-to-market strategy, pricing, etc.—and you can definitely use it for UX and conversion optimization, too.
If you invest in competitive analysis, you’ll reap the benefits of clarity and confidence. You can’t beat a competitive analysis if you want to answer questions like:
- What makes my company unique? How do we stand out?
- How do customers think of my company compared to competitors?
- How does the user experience on my website stack up to the competition?
The limits of competitive analysis
At the same time, competitor analysis should be done with proper context. As Peep Laja notes:
I hear this all the time. “Competitor X is doing Y. We should do that, too,” or “X is the market leader, and they have Y, so we need Y.”
There are two things wrong with this reasoning: First, the reason they set up Y (menu, navigation, checkout, homepage layout, etc.) is probably random. Often, the layout is something their web designer came up without doing a thorough analysis or testing. (In fact, they probably copied another competitor.)
Second, what works for them won’t necessarily work for you. You’d be surprised by the number of people who actually know their shit. Plenty of decisions are (maybe) 5% knowledge and 95% opinion.
Indeed, even if you knew that a competitor had a higher-converting site, how would you know whether that comparative improvement resulted from the site design or email strategy or brand recognition?
You wouldn’t. As Laja continues:
It’s the blind leading the blind! So instead of just copying something, have the mindset of experimentation. The thing you copy is a hypothesis—and you need to test it.
Run it against your current site and see if it makes a difference. Then either implement or discard.
With those caveats in mind, here are the eight steps to follow to run a great competitor analysis:
- Set your goals.
- Identify your competition.
- Conduct a competitive usability investigation.
- Compare competitor value propositions.
- Interview your competitors’ customers.
- Run a competitive analysis for design.
- Make a quantitative competitive investigation.
- Run a functional investigation.
1. Set your goals.
Before you start your competitive analysis, remember the first essential truth of competitive intelligence: How one thinks about the mission affects deeply how one does the mission.
The fact that your client, leadership, or colleagues believe something about competitors doesn’t mean it’s true. We all have blinders on at times. Make sure you go in with an open mind.
It’s just as important to have clear goals:
- Which decisions will your competitive research impact?
- Are you looking to refine messaging? Experiment with the funnel structure? Get inspiration for A/B or multivariate testing?
If you know your goals upfront, that knowledge will help you structure the research to meet those goals.
2. Identify your competition.
Let’s do this! This is the easiest part of the equation because you should know your industry like the back of your hand. Still, you should still conduct this step to see if there are any new players or if anything has changed with the old ones.
To find out who your top competitors are:
- Run a Google search;
- Check Google Trends, SimilarWeb, Compete, or Alexa.
- Check the list of presenters and companies running booths at your industry’s conferences;
- Ask your customers who else they considered.
3. Conduct a competitive usability investigation.
Ask participants to evaluate your website as well as the websites of your top two competitors. (More than three website evaluations is often overwhelming for participants.) To avoid biased feedback, try not to disclose which company you’re with and mix up the order in which you show the websites to participants.
If you’re doing a moderated usability study with a sample similar to your target customers, start by asking the participants to enter a query into Google.
Ask them to use the words they would naturally use when looking for a product or service you offer. Which results show up? What do they click? Why? If your company doesn’t show up in search results or get clicked, you’ve got work to do.
Next, do a 5 second first impression test. Give a participant 5 seconds to look at the first website, then ask them:
- Which three words would you use to describe the site?
- What is it about? What products or services are offered and for whom?
- How does this website make you feel?
Then do the same for the two other websites. You’ll walk away with unstructured data as well as word clouds to let you see quickly how the first impression of your site lines up with the competition.
Next, test the key flow (e.g. check-out process). Give the participants a scenario in which they use the site to solve a problem or go through the check-out process. After each experience, ask:
- What was the worst thing about your visit to this website?
- Which aspects of the experience could be improved?
- What did you like about the website?
- What other comments do you have?
Once the participant has gone through all the websites, here comes the big question:
- Which experience did you like best? Why?
Common themes in the participants’ responses are a great foundation for hypotheses.
Karl Gilis, a web usability consultant, is a big fan of comparative user testing:
Don’t forget to do your own heuristic homework and go through the check-out process yourself.
Things to pay attention to:
- Steps that don’t make sense from your customer’s perspective;
- Steps that are combined or eliminated compared to your funnel, as they may be superfluous;
- Upsells and cross-sells, which are additional revenue opportunities you could exploit.
As you’re doing your analysis, write down your observations, take screenshots, and give them descriptive names to make it easier to browse later.
André Vieira, founder of Looptimize, finds CRO extremely useful for ideation:
Karl Gilis recommends going beyond your main competitors and looking at websites in different countries or similar pages of websites out of your business area: “If you sell something online, every shopping cart or checkout procedure can be an inspiration.”
4. Compare competitor value propositions.
After leaving your website, people may remember up to three reasons to buy from you or sign up for your service. Most likely, they’ll only remember one—your main selling point. What is it on your website? Does it reflect your competitive advantage?
To create a value proposition that really differentiates your offer, you have to know how competitors position themselves.
- Points of Parity (POPs) are features you offer that are important to your prospects and shared among you and competitors.
- Points of Difference (PODs) are features that are important to your prospects and not available from competitors.
- Points of Irrelevance (POIs) are features that customers don’t care about.
Your PODs are where you’ll win the game. That said, Goward offers a word of caution:
Tony DeYoung, an SEO and CRO consultant, uses competitive analysis to craft effective value propositions for clients:
5. Interview your competitors’ customers.
Competitors’ customers are worth their weight in gold. Not only can they tell you how satisfied they are with a competing product or service, they can also clue you in as to why they picked the competitor in the first place.
To reach your competitors’ customers, use your network: Who do you know? Who do they know? Also, try “snowball recruiting”—ask every research participant whom they could introduce you to for subsequent interviews. You could ask current customers to recommend their peers for the study. (Offer compensation to both parties).
Sean Campbell recommends asking your competitors’ customers these questions:
- What caused you to start looking for a solution?
- What were your top five buying criteria (in order of importance)?
- What were the main reasons you chose the company you did?
The good old NPS survey can also come in handy. Ask:
On a scale from 1 to 10, with 10 being “Extremely likely,” how likely are you to recommend the competitor’s product to a friend or a colleague?
Please explain why you have chosen [number].
6. Run a competitive analysis for design.
Even though design is just one part of the conversion puzzle, it’s an important element of overall CRO success.
Growth designer Katya Lombrozo always does competitive analysis as part of her creative process:
Khattaab Khan, Director of Experience Optimization at BVAccel, also uses competitive analysis to benchmark UX/UI and gauge user responsiveness:
7. Make a quantitative competitive investigation.
You can pull a wealth of data about your competitors from SimilarWeb, including their traffic volume and key traffic sources, and organic and paid keywords.
Armed with your competitors’ most effective keywords, you’re in a great position to craft irresistible copy variations. Here’s Tony DeYoung explaining his process to do just that:
8. Run a functional investigation.
Studying your competitors’ technology stacks can shed light on their level of maturity as a digital marketing organization. You might also get some ideas for tools to try for yourself. BuiltWith lets you take a peek under the hood of your competitors’ websites and find out exactly what software they use.
Competitive analysis, like money, is a great servant but a poor master. Being reactive to what competitors do can be worse than doing nothing.
At the same time, knowledge is power—simply knowing how you compare to your competitors in the minds of customers can make a world of difference.
You may find that adding regular competitive analyses to your CRO process and adapting your strategy based on that analysis will fuel your creative engine and positively impact conversions.
Competitive analysis doesn’t have to be a standalone, herculean effort—you can weave it right into the research you’re already doing.