Conducting a Competitive Analysis

competitive

Conducting a thorough competitive analysis of the market is important for any enterprise software firm.   Obtaining and leveraging competitive intelligence helps you develop differentiated positioning, segment more effectively, and arm sales with knowledge that can help them close deals and avoid traps.

You must know what features the competitor is going to push, and how they are going  to position their solution.  You must gear your sales and marketing strategy towards your customer’s needs in a way that proves why your product is a better fit than your competitor’s.  To do this requires implementing a structured competitive analysis methodology.  In addition, a good competitive analysis program will be helpful to upper management as they develop the company’s corporate strategy.  And if your input helps – it will help your career because competitive analysis is usually a high profile task in software companies.

But competitive analysis isn’t easy to do.  In fact, I’ve always found it to be one of the most challenging tasks we face as product marketers.  The organization is relying on you to provide reliable knowledge, which requires a lot of time to acquire and parse through.  Time that many simply don’t  have.  It also requires knowing how to get the information.  So how can you succeed?  Here are a few suggestions:

Identify the Competitors

The first step to conducting your analysis is to identify your key competitors. Depending on your market this can be an easy or difficult task.  For most B2B software markets the heavyweights (IBM, BMC, HP, Oracle, SAP, CA, etc) will have some presence and then  a whole set of upstarts focus on niche markets. Talk to sales, read analyst reports, and if you use a sales management system such as salesforce.com try to generate data on number of competitive encounters so that you can get a quantitative sense for how often you see specific competitors in deals.  That will help you figure who you are truly competing against.

Catalog Informational Sources

Next, figure out your information sources.  There are many ways to find out  what your competition is doing.  It takes good researching skills and the ability to ask questions.  A few examples I have used in the past:

  • Google alerts – This is the first step for all competitive intelligence projects.  Simple to set up and constantly updated.
  • Competitive intelligence software – Many companies offer services that surf the deep web for information that might be helpful like price lists, presentations, org charts, etc.
  • Collect collateral – Download everything you can find from their website as well as any public engagements or campaigns they are running.
  • New employees – Chances are that new hire came from a competitor.  Find out what they know.
  • Analysts – They generally don’t share sensitive information but you can sometimes get directional knowledge from them.
  • Ask sales – Conduct win/loss interviews and generally engage them in dialogue.  They are out there every day.  They know what’s happening.
This is a very fluid list.  Please leave some suggestions in the comments if I missed any sources you find valuable.

Develop a Features Matrix

A handy tool that can help you understand competitors better, and educate your sales force is a product features matrix.  You will be able to find the list of features easily through the competitor’s website and marketing collateral. If additional information is needed consult analyst reports.  You may also wish to research if there are any free or low cost software demos that you can evaluate.

Now that you have a list of your competitor’s product features you will want to develop a strengths and weaknesses feature matrix for each product.  To develop this list start by using the product features matrices you already created for each competitor. Identify which products are better than others at delivering on these key features by marking capabilities as full, partial or none at all.  For product features that are truly unique to one competitor that is a key strength for that competitor and you should take note.  Make sure to rate your own product’s strengths and weaknesses as part of this exercise. It is vitally important that you know how your product stacks up against the competition.

These are useful but potentially dangerous.  If you are truthful about these features you may not look as good in certain areas.  You have to make sure they never make it out of the company.  However, you can use this matrix to create a customer-facing version that highlights your strengths.

Create Cheat Sheets

It is also helpful to create “cheat sheets” for sales.  For each competitor list the 5 traps you can set, and the traps that are set for you.  Provide positioning  around strengths and weaknesses.  Find out what’s real and what’s not in their positioning and hone your message against that.  But make it easy to remember.  Sales needs to be able to recall this information.  It might be helpful to do 5 minute video recordings where you talk about the key positioning points to help retention.

Also make sure to include an analysis of pricing. It is important to know how your product stacks up against others in cost. When evaluating cost make sure to consider any consulting, customization or installation fees. Additional costs, above and beyond the cost of the base product, can often sway a customer at the final decision point.  Maintenance costs can be a hidden factor in high total cost of ownership.

Write Competitor-Specific Collateral

In one of my previous roles, I noticed I kept getting requests from sales to help position against a specific competitor.  Generally I would send the cheat sheets with a personalized email that addressed whatever specific information they gave me on the deal that was at hand.  This helped a lot as sales would reword the email and forward to their contact with reasons why we were better than the competitor.

But it kept happening.  The emails were consistent.  To streamline the process, I wrote a new collateral piece.  I called it the “Why” document.  Why our product.  Why not anyone elses.  I didn’t mention the competitor by name.  I simply put together a list of the 5 key reasons to buy our product.  However, they related directly to the strengths of our product.  But the trick was, I had 6 of these documents.  Each slightly different depending on who we were competing against.

This wasn’t a document I gave out to early stage prospects.  It was later in the deals, when the decision was between us and one or two firms max.  These documents became crucial to positioning our solution as our rep would get this in his/her champion’s hands.  The champion would read it, learn how to talk about the solution and many times pass it on to other members on his team.  It’s amazing how far these documents go within the organization.

You can do the same thing with presentations.  Give your sales team slides that focus on the strengths you know you can beat the competition on.  And don’t try to beat them if they are clearly superior in one feature.  Then you are playing the game in their ballpark.  Enforcing the value of what you do well is the best way to position against an opponent’s strength.

Beware though, many times these documents make it into the competition’s hands and they’ll know your playbook.  So be prepared to keep this content sharp and evolving so they can’t map out how to beat you before you even show up.

Bringing it Together

If you take the steps above, you’ll give your team the ability to compete effectively.  However, it won’t matter if you don’t evangelize.  Let sales know that these tools exist.  Hold internal webinars to cover competitive analysis on each chief competitor.  Ask for feedback and get the team talking to each other to share their experiences.  If there is a quarterly sales meeting, make sure there’s some time in the agenda to talk competitors.  Nothing beats the knowledge you get when everyone starts sharing what they’ve seen.

What about you?  Do you perform competitive analysis differently?  Are there any other resources or steps I’ve missed?  I’d love to hear what you have to say.

9 Comments on "Conducting a Competitive Analysis"

  1. Giles Farrow says:

    Very useful, I particularly like the advice about competitor-specific collateral

    • Diego Lomanto says:

      Thanks Giles, it is one of the best time savers I have found. The requests are usually very similar so investing some time up front to think through the answers and having a document that you can edit quickly to apply to the specific situation is really helpful in crunch time.

  2. Diego, very nice post. At my company, we’ve taken the cheat sheet / landmines content a step further – by mapping out our competitors’ tactics at each stage of the sales cycle and providing guidance on how to neutralize their tactics and advance our own agenda. This complements the product/technology level competitive analysis we also provide, so there’s a mix of materials for sales reps and SEs.

    • Diego Lomanto says:

      Michael, nice idea! Anything that you can map directly to the sales cycle stage is going to probably be better than a broad task. Thanks for the tip. I’m going to start using that.

  3. Thanks Diego!

    This seems like exactly the right approach (certainly the one that I have learned) when the goal is to know how best to position your (existing) product against the (existing) competition.

    How would you change this approach if the goal is to prioritize the right things to build next?

    Scott

  4. Sudha Jamthe says:

    Loved the post, Focused tips to close sales, love the customized cheats sheets.
    Two things I’d add:
    1. Treat the staruips competing differently from other big players. I’d do scenario planning if one of the starups partners or is bought by competition.
    2. I used to watch events/speaking calendar of competition as a big PR event or activity will get them market attention momentarily, so better to watch out for it and arm your PR and sales teams accordingly. I usually like to do this via social media monitoring to track competition as pr and events increase their volume of chatter.

  5. Good advice, but where I’ve seen competitive analysis go wrong is when a PdM generates a massive list of similar products and then goes into denial about how any of them are really actually competitors because “our” product is too innovative.

    I’ve actually seen decks where a PdM had one slide that declared validation of a market because of the number of players in the space, but then later declared that there was no one else in the space so the market is ripe for the picking.

    Of course, learning from sales is an important validation of the true competitive landscape, but often comes too late to help steer product development decisions. My advice would be to come up with a “why we might lose” list for each of the competitors you identify, mash them together and then develop strategies to counter each item on the list, ranked by the number of times it appears.

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