When I was a product manager, I tended to focus only on the product features, user experience, design and technology during my competitive analysis of a company.
That’s usually what most CEO’s do – after all product is the #1 thing that most customers see, touch and feel that matters to the most.
Turns out that’s an incomplete view of competition. I had a chance to see a complete view when we did a comprehensive audit of the top 2 competitors before we sold our company.
It is pretty obvious now, but you can get so much information from external sources such as social networks, email newsletters and blogs that to get a comprehensive 360 degree view of the competition, you can clearly understand where they came from, and where they are headed.
I put a partial list of sources that you might want to consider to get competitive information from in the chart above.
Here are the top questions you might want to consider getting answers to understand your competitors strategy overall.
What events are they attending? Speaking? Presenting?
What are they announcing? Investors? Management? Customers?
What are their open job positions? Who have their hired?
What is the segment of customers they are going after?
Who have their hired? What’s their background likely to tell you about their plan?
How do they price? What are the tiers?
What have they learned about their customer needs?
What are they sharing about their company?
Where are they looking to start new offices?
Where are they looking for talent / customers?
Who reports to who? How many people in the company? Background?
Promotional Plans? Who is following them?
Who likes their page? Who are their customers?
What questions come up? What are customers complaining about?
What messages are they pushing?
What keywords do they rank for? What are they bidding for?
While these are tactical questions, the key parts of your competitors strategy you are trying to understand are:
1. Who are their customers – what segment of the market are they going after?
2. How are they targeting customers?
3. What is the problem for their customers they are solving?
4. How are they solving the problem? What features in the product support that?
5. How do they plan to scale and grow?
Typically after this detailed analysis you will get a clear idea of what your competitor is doing beyond their product to help differentiate from others.
Depending on the audience you will be asked to show a “competitive landscape chart” of your domain and the major players in the market. The main purpose of the competitive landscape chart is to position your company or product against others in the market. You need not to go into details, but, will be required to provide enough clarity for the audience to make out the differences between you and others in the market.
There are 2 important things you need to consider when putting together the competitive landscape analysis chart –
What you show (Features, Customer Segments, Market Requirements, etc.) and
How you show it (Visualizations such as Venn Diagrams, Harvey Ball Table, Process Map, etc.)
I follow a 3 step process to come up with the competitive analysis landscape:
Step 1: Identify: List all potential and possible competitors on a spreadsheet – one for each row
Step 2: Analyze (What you show): Start putting a list of features that you can claim you have they don’t, or segments of market which are market determined or a list of capabilities you intend to build which your customers care about or any other set of capabilities you can distinctly and objectively bucket each offering by.
Step 3: Visualize (How you show it): Look for patterns to showcase a small subset, (2-3) of the key dimensions you can differentiate and then choose the right visualization.
From the many hundreds of competitive analysis charts I have seen, here are the 7 most frequent.
Market Size – Dimensional Bubble
Market size analysis is typically good for early stage investors (institutional). The size of market tends to be a big determinant for many investors, so if you can show the potential size on a chart featuring bottoms up numbers in the X and Y axis and the cumulative size of the market as the size of the ball, you will end up giving them a sense for the potential of your company. In the example below I have shown the # of users and Price per user in the X and Y axis. The size of the bubble is (not to size) will then indicate size of the market.
Customer Segments – Multi Tier Axes
A good way to differentiate if you don’t have a different product is to differentiate by segment of market. You can segment markets by any number of ways, and the type of company / user / customer you are going after is a good way to show your competitive landscape. Most consumer companies tend to do this. As an example, Twitter is good for 30-45 year old males, Pinterest is good for 25-40 year-old women, Snapchat is for 20-30 year olds, etc.
It is okay to have an overlap of companies across multiple segments and the other twist I have seen is to show the value proposition to your customer on the other axis. In this example the key 3 capabilities of Price, Ease of Use and Integration is what I have showcased.
Customers Process and Systems – Process Map
The Process map is best used when you have a lot of companies in the “space” but they all do different things for the customer in terms of their usage and solve different portions of the same larger problem. For example, when I was starting BuzzGain, the listening solutions were good to get an understanding of what was being talked about a brand on social media, but engagement products were used by customers to interact and respond and analysis solutions were used for market research.
This chart could be a double-edged sword. One on hand a customer or investor could see this as clear positioning of where you stand in the process map, but on the other hand they could see the other products wanting to build the different capabilities across the process, which leads to consolidation, which to them indicates, they should wait until the market settles, or buy from a “large vendor, who has a significant but not best of breed products across the spectrum of their process”.
Feature Capability – Venn Diagram
Best used when you want to convey that customers need the best of 3 (or 2/4/5) different capabilities or features which all make the product unique. For example the fact that you have not he lowest price or the easiest to use product or integration alone will not rule your product out in the customers’ mind, but the fact that you have all 3 covered in the perfect blend makes it appealing to customers or investors.
The Venn diagram is best used when you can show that you have the capability to showcase you in the center and competitors on other intersections.
Key Features – Quadrant by axis
The simple McKinsey quadrant is actually the most used in investor presentations. This shows 2 axes with opposite ends of the axis values for e.g. simple vs. complex and fast vs. slow on the implementation speed.
You want your company to be on the top right ideally and others to be at the other quadrants. The way this sometimes backfires is that investors believe that the person in the center will win because they have the “perfect blend”.
Feature Spectrum – Silo Systems
Silos are best when you have a short list of 3-5 features alone to compare competitors with, and you have more than 3-5 competitors to show. That means a market where there are many competitors but few things to differentiate them by. Most used in rapidly growing markets, they tend to show why and how you can build a product or company quickly if you focus on a set of features that spans multiple silos.
Feature spectrum Silos are also very useful if you expect the number of competitors to increase. That way your investors don’t get alarmed when a new post shows up on a tech blog which has them sending you emails asking if we have a good plan “to compete against this new startup”.
Feature details – Harvey Ball analysis
Customers prefer this landscape analysis best on the website. Sometimes if you are talking to corporate venture teams, they tend to like this level of detail as well. The Harvey balls indicate the “feature completeness” of each of your competitors versus your feature set. Typically you want to highlight features where you will be “complete” and those where others are “less complete”. I have found though, that if you do a more objective analysis and focus on which features your customers really want and show a ball or two where you are less complete than others, it will give you more credibility.
The other way to do Harvey Ball analysis is to provide a list of key scenarios where the customer has to choose one product vs. another. In this situation, you will find customers self-selecting one product because of their own situation.
The table format is the most detailed and most useful only if your audience is potential customers. Most investors prefer a high level analysis of direct competitors, potential threats and incumbents. Your customers are currently using some solution (even if it is manual) or an incumbent (old dinosaur company) as a solution possibly, but they are competitors as well, which you must acknowledge.