Analyze the competition
- Updated On 28 Jan 2020
Your idea is only strong or weak in the context of the competition, so you better know how your customers are currently solving the problem that you are hoping to solve for them. And which companies and what products and services are helping your customers solve their problem today.
There are many ways to find your competition. Ask your potential customers who is helping them today! Imagine that you are your customer, and do a google search using key words and phrases you think your future customers might eventually use to search for your future product or service -- and the companies that show up in the search are competing today for the hearts and minds of your future customers. You can also search for reports about the industry you are interested in and see if any competitors are listed in the reports.
Once you know who they are, then try and learn as much about them as possible:
- How are they solving their customer problems?
- What form does the product/service take?
- How are we different? Can we differentiate our offering and positioning?
- What type of revenues are being generated?
- Where are they selling?
As you do your research, you can plot the results on a competitive matrix to see your relative strengths and weaknesses more clearly. Below is a quick tutorial that shows you how to use our free template to create your own grid.
Step 1. Setup your file
Click here to make a copy of our competitive landscape grid or download it into excel.
Step 2. Setup your grid categories and rating scale
Create the categories you want to compare your startup against. In this case, we're comparing our product's UX, our marketing abilities, the geographies we're targetting, and production capabilities.
Next, choose a scale you want to rate yourself and your competitors against. We chose a scale of 1-5 in this case, with 1 being the worst and 5 being the best. You should base these scores on your customer interviews and the data you find online (e.g. from the Concordia Databases if you're a District 3 startup).
You'll end up with something that looks like this:
Step 3. Generate your chart and highlight the gaps
If you're using our template, a chart should automatically be generated from these scores and it should look like this:
Now highlight the gaps to see where you can strendthen your offering and where you're already out performing the competition.
You can see here that while our startup is performing better in the UX and production capabilities, we have some gaps to fill in the marketing machine and geographical reach.
Below is a detailed example by one of our startups that was selling in the transportation sector, you can also consider for your own work:
Step 4. Do some more discovery!
Now that you've done the desk research to identify the key gaps, you should get out the building one more—are you surprised?—and learn more about those gaps so that you can come up with strategies to fill them.