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Competitive Analysis: How to Find Out Who's Buying From Your Competitors

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In my previous tutorial, we covered the basics of doing competitive analysis for your business—no matter how small it is. 

For this guide, we’ll go deeper into learning more about your competitors’ customers. You’ll find out the different types of people your small business competitors target, why they buy, and what possible unmet needs they have. Once you’ve done this, you’ll be able to discover the following:

  • Know exactly which types of customers your competitors attract, including different types of customer personas or segments.
  • Find customer segments that your competition is missing out on.
  • Identify the common phrases that customers use to describe their needs, your competition, and which parts of your competitors’ businesses they feel strongly about.

As you go through with your competitive analysis using this guide, continue to fill up the enclosed worksheet, which we began working on in the previous tutorial. This will help you organize all the information you gather and will serve as a quick reference as you come up with your initial business plan or develop your marketing plan with greater depth. Let's get started.

Competitive Analysis and research of small business competitors
How to learn more about your small business competitors. (graphic source)

Your Small Business Competitors: Where to Learn About Their Customers

The tricky part about finding information on a competitor is that you can’t readily see their business from within. Luckily, many online tools can help you get started with competitor analysis. Here are some resources you can work with to find useful information on your competitor’s customers:

1. Social Media

This is where the majority of your research will take place. By looking at your small business competitors’ social media pages, especially in the networks where they are most active, you’ll get to see how they interact with customers—at least online. Here’s what you need to look at:

Step 1 - Check Their List of Followers 

Facebook, Twitter, and Instagram allow you to look at the list of a page’s followers. A quick glance of this list can give you a general idea about the demographics of your competitor’s customers.

Step 2 - Read Their Reviews and Visitor Posts

Facebook Pages allow businesses to receive reviews from customers. Look at a competitor’s Facebook Page, click on their reviews, and you’ll find a section of star ratings and testimonials (see example below).

Example of a Reviews Facebook Page
Example of a Reviews Facebook page. (source)

Some Facebook pages also allow "Visitor Posts", where visitors to the page can leave a publicly visible post that isn't a review or rating. Check if your competitors have these posts (see example below) and look them over to assess customer sentiment and find frequently asked questions.

Facebook Visitor Posts Example
Facebook Visitor Posts example. (source)

Step 3 - Search Social Media for Their Public Posts and Tweets

Do a quick search of your small business competitors’ brand names and you’ll find public posts and Tweets about them. For Twitter, it’s best to use Twitter Advanced Search so you can search for mentions of the brand, limit your search within a location, and limit your search by date. 

You can also use a tool like Social Mention which aggregates results from a variety of sources, including photo sites, as well as Q&A sites like Quora and Reddit.

Step 4 - Analyze Their Use of Facebook Ads

After doing a bit of research, it’s possible that you’ll end up seeing your competitor’s ads on your Facebook newsfeed—if they buy ads. If that’s the case, you can easily gather the demographics of the prospects they’re targeting. 

When you see the ad, it’s usually labeled as “Sponsored” or “Suggested Post”, just like in the example below. Click the downward arrow icon on the right side of the ad and select Why am I seeing this? A new window will pop up showing you exactly the demographics that your competitor is buying the ad for. This can include age range, gender, location, and interests.

Facebook Ad Targeting
Facebook Ads targeting example. (source)

2. Review Sites

Apart from the reviews on Facebook, business review sites like Yelp can help you gather information on how customers feel about your competitors’ products. This is helpful competitor analysis. Also, for competitors with physical stores, you can also check out their reviews on Foursquare

If they have an online store, check if the store contains reviews and testimonials. Etsy shops also have public ratings and review systems that you could browse through to learn more about a shop’s customers, as well as how they feel about your competition. Here's a screenshot showing you an example of where you can find those reviews within an Etsy store:

Example of Where to Find competitor reviews on Etsy
Example of where to locate competitor reviews on Etsy. (source)

If you’re selling services, you can look at online marketplaces for those services and find reviews of similar service providers there. For example, if you’re looking to provide illustration services, look for similar providers in Envato Studio. A quick search for “illustration” shows you these different providers. Clicking on their profiles will allow you to see the reviews and testimonials of their clients.

Illustration services on Envato Studio
Finding illusration service competitors on Envato Studio. 

3. Blogs

Do a quick Google search if blogs have covered your competition’s products and services. Some businesses, no matter how small, will inevitably be reviewed by bloggers. This is especially true if they give out free samples for bloggers to review. If your competitor has these kinds of reviews, you could use them for your research.

Don’t forget to check out the comment sections on the posts relevant to your small business competitors. This is a great way to find some additional reviews, including common questions that potential buyers might have.

Who Buys From Your Competition?

As you go through all the sources above, observe the following small business competitor analysis detail on their customers and note them in your worksheet:

1. Customer Demographics

Be mindful when you’re looking over your competitor’s social media followers and product reviewers. What’s their general age range? Gender? Location? You don’t have to do a full quantitative analysis, but if there are general trends that pop out, note them down.

2. Occupation and Income

What occupation do your competitors’ customers have? Even if knowing their exact jobs might not be relevant to your business, it’s still better to have a general idea about their professions. Are they students, stay-at-home parents, entrepreneurs, retail workers or licensed professionals? 

While there are many products and services that are attractive to a broad range of professionals, you might make the mistake of overlooking potential connections between your target customers’ jobs and your business. For example, if you provide cleaning services for  “busy people”, you have to identify why they might label themselves as “busy” so you can create marketing messages that specifically address their needs.

As for their income, it’s important to note this because it also reflects their spending power. You can be very specific with income levels and cite figures if you think it’s necessary. Still, identifying customer segments as low, middle, or high income will do.

Note: You can also make use of this same type of information to start working on developing your buyer personas: 

3. Life Stage

For many products and services, customers have to be in a specific stage in their personal or professional lives. If a small business makes wedding favors for small ceremonies, then their customers are engaged people who are already planning their wedding. 

If someone is providing resume optimization services, then they are likely targeting customers who are either entering the job market for the first time, switching jobs, or entering the workforce after a long break. As you go through your research, ask yourself this question: “For people to be interested in this competitor’s business, what stage in their lives do they have to be in?”

4. What Customers Like and Dislike

You’ll know better about your competition’s relationship with their customers if you learn the strong feelings they have about that company—whether it’s positive or negative. The best way to find this out is through their reviews, comments, and mentions in social media and review sites. You can also a search in Google for blog posts that may contain reviews of their products (example search term you can use: “[competitor name] [product name] review”.

When you read through all these reviews, list in your worksheet both the positive and negative things that people mention. Add more pages of research if needed. Also, Highlight the items that tend to be repeated most often. 

The things that customers dislike will help you spot opportunities where you can do better than your competition. The things that customers like will highlight your competitor’s advantage over you. Knowing both, you can now determine in your business plan whether you’re equipped to beat them at both their strengths and their weaknesses. Learn more about how to write your business plan:

5. Other Brands or Products Customers Like

If possible, look at the other products and brands that the customers follow or talk about in social media, review sites, and blogs. You might see these in their posts, “Likes”, or in the list of pages they are following. 

Keep in mind that you won’t be able to see this information for customers with more private social media profiles. For review sites, however, a user's other reviews are usually public. Alternatively, you can check out the other posts of blogs that have reviewed your competitor’s products and see if they’ve purchased other similar brands.

6. Other Customer Segments

Usually, businesses have more than one group of target customers. Can you identify other  customer groups with different demographics, occupations, and life stages than the ones you’ve already listed? Even if they’re not the majority, it’s worth noting them down. These groups could be segments you can reach and sell to better than your competitor does.

Find “Magnet Words” to Capture Customers

As you do your research and fill up your worksheet, you’ll find that there will be many ideas and words that customers tend to repeat over and over. 

For one competitor, you might find that the majority of their testimonials rave about their “fast service”. For another, you might see that most of their customers find their products “pricey but worth it”. Keep an eye out for these repeating phrases and note them in your worksheet. These frequently repeated words will give you an insight about what makes each of your competitors stand out.

More importantly, you can use these exact words to attract the same customer type, much like a magnet would. These “magnet words” will grab your target customers’ attention, since these words address their needs and wants. 

Review these important words when you’re coming up with the text for your marketing materials and use them as a starting point. Your copywriting will be much more effective when you use the actual words that your target customers use.

Here are some other copywriting guides you can refer to as you implement this technique:

Get to Know Your Competitors' Customers

Once you’ve gone through the above competitor analysis exercises for your major competitors, you’ll have an idea about the types of customers they have the most success with. It’s possible that you’ll even drop a few of the competitors on your list, if you find that they’re targeting a completely different customer base than you are. 

You’ll also have a starting point with your marketing plan, since you’re more aware of the types of customers who are buying from small businesses like yours. With this detailed research, you’ll be more equipped to survive—no matter how competitive your industry is.

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