How to create Competitor Benchmarking document

Introduction to competitive benchmarking

Does your business or start-up truly understand its competitors? With competitive benchmarking, you can make impactful decisions and gain market share.

Our blog post aims to help your business gain a deeper understanding to accelerate growth. We will explain the difference between direct and secondary competitors and the different types of competitor analysis your business or service can conduct. We will use our streaming project as an example, where appropriate, to give much-needed context.

What is competitive market research?

Competitive market research is essential to collect data about your competitors and niche. It helps your business or service gain a competitive advantage and understand the market landscape.

If you have a marketing team, allow them to gather insights from surveys, private data, trends,marketing reports, and public information to inform your business. 

We suggest setting up a process to watch and monitor your competitors over time. This task should always be live within your company, allowing you to pivot and change strategy. 

You can then create marketing tactics based on your findings and take market share away from your competitors.

Allow for market shifts as the landscape can change overnight. Therefore, be adaptable and flexible with your market position.

Types of competitor benchmarking

When conducting competitive benchmarking analysis, you generally consider two different types of competitors, direct and indirect. It is essential to analyze both competitors to understand the market landscape and make informed decisions about your own business and projects.

Direct competitors

Direct competitors are those that offer a similar service or product to the same target market as your own. For example, with our project of redesigning a streaming platform, we aimed our competitive research at the existing leading streaming platforms, Netflix, Amazon Prime and Disney.

 These directly compete, having similar value propositions and targeting the exact user needs and preferences. With some strategic benchmarking, we can quickly identify strengths and weaknesses.

Secondary competitors

Businesses and organizations that offer a different product or service but have a similar target audience. For example with our streaming project, secondary competitor to Netflix could be social media channels such as Youtube. 

YouTube is a popular platform for user-generated videos as well as professional content, including movies, TV Shows and series. This platform competes with Netflix by providing free or ad-supported content and attracting a similar target audience.

How to identify competitors' websites

You can identify competitors' websites using different methods. To begin with, start with an initial Google or Internet search. Search using relevant keywords and phrases to your own company, service, or products about your project. 

You can then look through search engine results for companies offering similar products or services.

Look at social media platforms, such as Linkedin, Facebook and Instagram, for companies in your related field. Industry competitors usually have links to their websites on their social media profiles. 

In addition to looking on social media, you should pay attention to customer referrals and recommendations users often will compare and mention specific competitors. Take note of those mentioned and explore competitors' websites.

Key performance indicators or competitive benchmarking metrics can be identified, such as how fast the site loads are accessible or not in terms of colours. You can complete this type of performance benchmarking by using the dev tools on Chrome. 

Investigate industry directories online with your niche. They will include website links and other details of your direct competition.

What are the types of competitor analysis?

Product analysis

Product analysis is the process of examining how the competitors sell their products or services. It involves researching the various aspects of the product or service, including its design, content, usability and capabilities. It focuses on assessing the strengths and weaknesses of the product or service and identifying opportunities for improvement.

We looked at Netflix and its closest competitors, Disney and Amazon, to look into each platform's specific features and content. This includes evaluating the user interfaces, controls, reliability and overall product user experience.

Service analysis

Service analysis involves examining the various aspects of the service. For example, with Netflix and its immediate competitors, we looked at which business strategy they use: a subscription or pay-as-you-go. Look into each competitor's service quality, delivery process and value proposition to better understand how well the service meets the customer's needs.

Pricing analysis

Pricing analysis focuses on evaluating the pricing strategy within the product or service. It involves looking at factors such as price points, competitors' pricing, price positioning and discounts. 

With our streaming project, we investigated the brands to see what prices they offered for their different subscriptions and. Understanding their market position and what's included in the price is essential. We also looked into any additional fees you could incur, for example, Amazon, where you can rent or buy content. This differs from the competitors due to Amazons e-commerce legacy. 

A cheeky, unethical strategy is to pose yourself as the customer and contact your industry competitors with a project to determine how much they would charge. 

Social media analysis

Social media analysis involves investigating your competitor's social media metrics across various platforms. It includes their profiles, audience demographics, content and social media engagement levels. Furthermore, the analysis can help you understand your competitor's social media strategy. Capture competitive benchmark metrics such as likes, shares and followers to reveal engagement opportunities.

Marketing analysis

Marketing analysis is the process of evaluating the overall marketing approaches and strategies your competitors offer. It involves examining their branding, advertising, target audience, customer engagement and more. This helps you understand each of your competitor's marketing efforts.

Information architecture competitor analysis

Information architecture analysis focuses on the structure, organization and usability of digital information systems, such as apps or websites. It involves evaluating the user flows, accessibility, navigation and content categorization.

With our streaming project, we looked at the user's entire journey from logging in to browsing and finding content to watch. This allows us to optimize the information architecture which will enhance the user experience of our platform.

SEO analysis

SEO analysis involves assessing the visibility of your competitor's site on the search engine results page. This often includes understanding theirs page optimization and search rankings. By examining competitor's SEO, you can gain insights into any competitive benchmarks and identify strengths and weaknesses in their strategies.

How to create a competitive benchmarking document

Screenshots of competitors' products or services

A good place to start when creating your competitor benchmarking document, is via screenshots or photos of your competitor’s product or service. Consequently the screenshots will allow your team to paint a picture of the current user experience. Therefore increasing your understanding of how the product or service works. 

With our streaming project we took screenshots from each of our competitors capturing different stages of the user journey.

The software you can use

You can use any software you are comfortable with to create a competitive benchmarking document. Here are a few options: Google Docs, Indesign, Figma and more. We used Figma for our competitor benchmarking because, for us at UX Cambridge, it's easy to use, and we already have our design software and templates set up. 

Create a key

It is vital to create a key and implement a colour code. Having this helps traceability. If you cannot trace the origin of these perspectives, then later down the road, you will find the insights hard to identify.

With our streaming project, we used a three-colour key to identify the strengths and weaknesses of each competitor's user journey. We also use Balloons with numbers in for each finding.

Outline strengths and weaknesses

Take screenshots or photos of your competitor's product. Go through each frame and outline the strengths and weaknesses.

Within our streaming project, analogous to the Netflix context, we investigate the active user base and their browsing activities on the interface. Through this exploration, we've identified strengths and weaknesses, aligning them with our color-coded evaluation criteria: poor, expected, and great. Here are a few examples of our insights:

1. Great: The ‘Who’s watching page, is clear to identify and navigate to each user profile. The order of profiles stays the same each time you log in. There is a straightforward option to add a new user, and in the top right-hand corner, the user can edit the existing profiles.
2. Expected: Once logged in, the opening screen changes quite often. It is a marketing banner highlighting specific video clips and often shows what’s trending on Netflix to entice you to watch.
3. Poor: The selection screen gives you many options and choices but it is not tailored to the individual user, it has a carousel which scrolls to the left allowing users to search for content. 

The layout changes every time you login, which makes it difficult to locate what you want to watch. In addition the UI makes it complex to discover new content , and programs you would like to continue watching.

Following a logical sequence is invaluable for comprehending the strengths and weaknesses within the competitive landscape. 

This, in turn, empowers you to make informed decisions regarding your project. You can capitalize on opportunities by discerning what functions effectively and what doesn't and recognizing avenues for elevating user experience.

Identify trends & patterns

Once you have got a good detailed overview of your competitors product or service you can begin to identify any trends and patterns between them. 

For example, our steaming project analysis identified the marketing banner as a trend. All the platforms use the space to advertise and promote content trending on the site, enticing users to click and watch content. 

Identifying trends and patterns among your competitors is beneficial to identify areas where competitors are succeeding or not. It allows you to understand customer behaviours and expectations, providing valuable insights into competitor strategies. As a business owner, you can use this information strategically to position yourself within the market.

Compare product features

Comparing product features allows you to view product features that align with customer expectations and identify areas for improvement. 

For example with our streaming project we compared the product feature of the search bar amongst our competitors. Netflix, Amazon and Disney all have this component on their platform in order to search for content. We compared each one looking at positioning, location and wether they use a label, a search bar, or the magnify symbol to identify the search product feature.

Comparing product features in competitive benchmarking helps you to differentiate the product, identifying any gaps, and customer preferences. This enables you to create and position your product features in a way that is more valuable to your customers.

Pricing strategy

During competitive benchmarking it is important to look into your competitor's pricing strategies. Dive into your competitors' different methods and approaches to determine what they charge for their product or service.

Our competitive analysis highlights how they position themselves within the market. It's essential to understand your competition's marketing tactics. Do they offer incentives, offers, memberships and discounts? 

Let's look at Netflix, for example, banning password sharing. This pricing strategy forced users to pay extra to share across multiple households. Netflix's strategy sure frustrated thousands of users! But did they pay or walk away?

It’s crucial to analyze the impact of pricing decisions and gain customer feedback; doing so will enable you to price your product or service strategically.

Strategic benchmarking

Analyzing your competitors' customers' demographics provides valuable insights into identifying target audiences. This allows businesses to refine their marketing goals to address specific customers.

During the competitive benchmarking, we researched the demographics of Netflix, Amazon and Disney. With this particular example, we are looking at worldwide streaming platforms with a diverse and range of demographics. 

Among these primary competitors, Disney targets a more specific audience, being overly popular with families, children and viewers of all ages who have a love for Disney's content.

Personas

A persona is like a profile on Facebook or Instagram, apart from they are fictional characters. A persona aims to identify a person's goals and habits so that your business can make strategic decisions that empathise with the target audience, which enables your product or services to target customers with that need.

Personas must be built upon facts and can act as a supporting document to your competitor analysis. The persona is a fantastic way of telling a story, which can help small business owners create a marketing strategy that will help them gain a competitive advantage.

We will cover how to create a persona in another blog post.

Competitive benchmarking spreadsheet

Another great way to do competitor analysis is a method called tagging. Use Google Sheets or excel to list all your direct competitors into columns and then list the features/services they offer on the rows. You can then set up a filter to see which competitors provide the same services or to identify gaps in their online store.

Data without action is useless

Companies like Netflix, Disney, and Amazon Video sit on a mountain of data. However, this data is only helpful with analysis! They use data on their streaming platforms to monitor their target audience carefully.

Once they have gathered all the data, they develop new content marketing strategies to bolster their product or service.

Netflix will be tracking its industry trends, for example, its top 10 movies. The software will know usage statistics, and based on that information, it will bucket the content automatically. Consequently, this gives the target audience content which is popular.

Competitive advantage

How to create a USP

Every business owner needs a unique selling point. If your business can identify which competitor holds the largest market share, it will allow you to position yourself within the market correctly.

Your business can then assess the market gaps to offer something unique. For example, our streaming platform needs a USP to stand out. An example of this could be that we only have films or series that meet an IMDB standard of a seven plus. Another example is that we have an AI-powered search that learns our behaviours and buckets content automatically. USP can be endless, but standing out and choosing wisely is essential. 

Ask yourself, Is my USP strong enough that users will switch from one platform to join ours? If the answer is no, then do some more competitive benchmarking. You can’t spend too much time understanding your target audience.

Research your competitors' sales tactics and results

How are your competitors selling their products? For example, let's use our streaming project. Amazon Prime not only has a subscription model, but it also has an eCommerce platform attached to the Prime service. 

Understanding how and why your competitors market themselves is essential. Amazon Prime has a massive offering allows you to receive parcels for free, watch movies and listen to music. However, Amazon's Prime strategy is rare in the streaming world. Why is it different? 

Amazon has a clever plan because you receive various services with the prime business model, not just streaming. They cannot include as much content as Netflix or Disney Plus. So they allow you to rent or buy. To complement the Prime offering, you can pay for Prime Video.

For Amazon, this method works well because of its overarching strategy. This strategy is appropriate as the company's legacy is eCommerce and product sales. However, if you are setting up a new streaming service, you're not building a pre-existing legacy of eCommerce, so the likelihood of you setting up a rent or buy service is unlikely.

Set benchmarks for future growth

Work out your business's market share percentage; if it's low, you must aim to improve this figure. You can create a plan to grow your market share by outlining some clear key performance indicators. Here are five strategies to grow your business:

1. Create a brilliant lead generation funnel—Turd in, turd out. If your funnel is rubbish, you'll struggle to grow your business exponentially. Spend as much time developing your lead generation programme as possible, get those juicy leads and grow.
2. Set revenue targets with your sales team.
3. Focus on how to convert more customers at checkout.
4. Return on investment (ROI): For every penny you invest in equipment or software automation, how much will that save you in the long-term, and what does it do to your business bottom line?
5. Customer lifetime value (CLV): Represents a customer's total estimated net profit over a lifetime. We suggest your sales team consider CLV when working with a client for the first time. Accept a lower profit margin to get your foot in the door only if you think their CLV is high.

I hate to say this! But 90% of business problems can be solved with money. So, focus on lead generation and sales to boost your market share.

Social media performance

Following your competitors on social media allows you to understand their marketing tactics. How do they sell their product to their target market? Take the streaming project, for example. Are they promoting a new series on Netflix or lowering their prices? Setting up a competitor watch not only allows you to track their performance it also enables you to gain insight into customer satisfaction rates. Let's use Netflix as a primary example; they introduced a new rule of no sharing between households. 

Their customers were furious! So Disney made a statement such as, We want Disney in every home. Think about how powerful this information would be to your business. As a consequence of knowing this, you can take a strong position and gain market share from your competitors by playing on their customer's dissatisfaction.  

What is SWOT analysis?

SWOT is an acronym for strengths, weaknesses, opportunities and threats. The diagram is used to gain an understanding of areas for improvement. Consequently, this allows your business to gain a competitive advantage. We have a simple SWOT analysis template which you can follow to help your business strategy:

Strengths

Highlighting your company's strengths is a strategic approach. This could encompass robust branding, a highly skilled workforce, a devoted customer base, and substantial intellectual property rights. Celebrating strength in the diagram truly reflects your business's prowess.

Weaknesses

Take a long, hard look at your business and identify internal areas for improvement. Weaknesses can take many forms, such as a bad reputation, lack of skilled employees, outdated technology, and poor conversion rates. Spotting weaknesses is good, and it means you have something to focus on.

Opportunities

Opportunities are external factors that can help your business grow. Opportunities can arise from market trends, collaboration with other companies, technological improvements and market fluctuations. Use the power of opportunities to create leverage within the market landscape.

Threats

Threats are usually external factors which are risks to your business. These risks could come from direct and indirect competitors, technological changes, or user behaviour changes. That is why swot analysis is a great way to give your business a goal to mitigate these factors.

Swot analysis helps with decision-making, identifying opportunities, and mitigating risks. The beauty of this process is that it can be done quickly in a meeting room with two or three key people with your business.

Creating a marketing strategy document from competitive benchmarking

Once your company has completed your competitive analysis, you can move on to your strategy document. It would help if you gained insight into your competitor's strengths and weaknesses from your competitive analysis. Now it's time to collect your thouths into something tangible. We recommend starting with the following:

Step one: Outline your four biggest competitors and explain shortly and concisely their market strategy. We suggest adding charts, figures, and primary findings to this document. Remember that a strategy document has to tell a story to achieve stakeholder buy-in.

Step two: Set business goals for your company. They could be small or big. It depends on how aggressive your marketing tactics are. You can create a table for business goals, user benefits and associated risks.

Step 3: Score your goals using a prioritization matrix diagram see this article by nngroup. It's a great way to work user value vs. effort for the business. The method helps your company pick low-hanging fruit to begin with. 

Step 4: Once you have decided on the goals with your team. Create a plan with your CRM to execute your vision.

Conclusion

Competitive benchmarking can be daunting; don’t be scared and jump right in. It can take weeks and even months to do your homework. However, once you have completed the competitive analysis, you should be able to keep it updated quarterly or half a year.  Use your competitive benchmarking study to your advantage and create competitive benchmarking metrics to enable your company to grow and scale uniformly. Most importantly, understand your competitor's business models and inform the digital marketing team of any new strategies.