The first self-assessment process I wrote about was Strengths, Weaknesses, Opportunities, and Threats (SWOT) Analysis. The second process was Features, Benefits, and Value (FBV) mapping, (Both articles are available at Dixon Management Services).
Why do these assessments processes, and make them standard operating procedure? Too often we assume our beliefs or conclusions about our businesses are accurate or true, and well understood by employees, contractors, and other stakeholders. But often they’re not. Perhaps they were, but even then they become outdated in the face-paced world we live in. It’s understandable why that happens. We’re so close to our businesses that we lose objectivity. But we continue to make decisions, plan, execute, and evaluate performance and results with these misperceptions and incorrect or irrelevant information. The consequences can trap a business in struggling mediocrity, or drag it into decline.
Know you competition well to better know yourself.
This third installment of Assess for Success 6 Ways To Evaluate & Improve Your Business, we continue analyzing our business and your assumptions and beliefs. The third process is Competitive Analysis. It is very important to fully understand our customer and competitive marketplace to so we can fully understand the context of our business. Day-to-day we may be striving to achieve our most important objectives, meet and exceed our highest expectations and standards, and realize our potential to achieve our success. I believe it is critically important to make that our focus and priority. But Competitive Analysis can provide invaluable perspective and insight in creating our objectives, standards, expectations, and optimizing our offer and position.
There is a wealth of information commonly available about Competitive Analysis. The purpose of this piece is not to detail how to do it, but to explain the purpose and importance of doing it on a regular, ongoing basis. And to remind, motivate, inspire us, to do it.
With that done, I think it makes sense to provide some basics on how to execute a Competitive Analysis. First, we must identify our competitors. There are several readily available sources for meaningful competitive information:
- Social media
- Trade/industry reports, media, and publications
- Annual reports
- Seminars & trade shows
Next, we must know what do we want to know? We can start with this list of questions?
- Who are our direct competitors?
- Who are our indirect competitors?
- What substitute products or services exist in the market?
- What are their strengths and weaknesses?
- What are their prices?
- Where are they located?
- What are their value propositions?
- How is their quality?
- What is their reputation?
- What distinctive competencies and experiences do they have?
With this data, we can create a comparative analysis, creating specific, relevant industry or market criteria and then evaluating, grading, and ranking each competitor along with our company. To fuel that process, here is a list of commonly used Key Competitive Factors (KCF) or Critical Success Factors (CSF). Both can be described as those things a company has to do well to succeed.
- Customer Service & Support
- Experience within the industry
- Financial Stability
- Image & Reputation
- Market share
- Payment Terms
- Total Pricing
- Project Management
- Quality of Partners/Allies/Providers
- Range of Services/Products
- Sales Process
- Size of Company/Capacity
- Staff Expertise, Talent, Proficiency
- Thought Leadership Content
Every market has its own relevant KCF, so we can add, delete, revise, and re-order to make our KCFs as relevant and productive as possible. At this point we can execute grading and ranking. But each KCF is not of equal value. To accommodate the relative value of each of each KCF, we can do a weighted value analysis. There is plenty of commonly available information on using weighted values. This brief description is intended to encourage us to use it for our competitive analysis as it provides more accurate, productive results.
After creating our list of relevant KCF’s, assign each its own relative value as a percent, making sure the total value equals 100%. Create a grade scale, for example “1 to 5” or “1 to 10,” with one being “Worst” and 5 or 10 being “Best.” For your company and each competitor, assign an initial grade for each KCF. To apply weighted value, multiply the grade for each KCF by the weight or relative value. For example, if we give Company A a initial grade of 3 on a scale of 5 (with 1 being Poor and 5 being Best) on Pricing, and Pricing is 33% of total customer value, we would multiply 3 by 33% and Company A would get a final grade of “1” for pricing KCF.
As with the first two assessments in this series, the results of Competitive Analysis often reveal that we hold outdated, incorrect, inaccurate beliefs, thoughts, and assumptions about our competition and our companies, both in fact and in scale. And once we realize we are not where we want or intend to be, we empower and motivate ourselves to act and improve it.
A customizable MS Excel-formatted Competitive Analysis Template is also available on my website at Dixon Management Services. Access this post and click on the link to download. Please contact me with any questions or other feedback about this article. And of course, I am eager and willing to connect with you and explore if and how I can help you, your team, and your business with this process or in any other way that will help you realize your success.
To download or print this article, go to: assess-for-success-6-ways-to-evaluate-improve-your-business-part-3-competitive-analysis
To download customizable Excel formatted Competitive Analysis Template, go to: dms-competitive-analysis-template