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How to Conduct a Competitive Audit HERO

How to Conduct a Competitive Audit: A Helpful, Quick-Turnaround Research Activity

Competitive audits aren’t just for market research. They’re an easy “between sprint” way to provide insights to your stakeholders. 

Competitive research can help you better understand what other similar products/services are on the market.

Like heuristic evaluations, you can do forms of competitive analysis on your own, without the need for users. Competitive research can give you an understanding of the landscape, and also more domain knowledge.

You can relate more to what the users say when they explain different tools. This understanding leads to more productive conversations with a deeper level of insight.

What is competitive research?

Competitive research and analysis allows you to identify all current competitors, evaluate their strategies and determine their strengths and weaknesses relative to those of your organization’s product.

When you conduct competitive research and analysis, you are investigating your competition. Like a detective, you observe them, make notes, talk to people who might use them, and assess them. You are trying to figure out:

  • What is the competition doing right?
  • What is the competition doing wrong?
  • Why should customers come to you instead?

The last question is the most important. When you can identify why customers should come to your product/service instead of the competition, you have a considerable advantage.

By uncovering and investigating these competitors, you know the landscape of different product’s strengths and weaknesses. Overall, having this information can give your company an advantage.

You can build or change your product to get your audience’s attention away from your competitors and on to your product.

How to conduct competitive research

Competitive audits are a great way to build and share knowledge around your company. They can also lead to actionable steps at a strategic level. For a competitive audit, you are doing a deep-dive into different competitors to find out:

  • Strengths
  • Weaknesses
  • Unique features
  • User ratings/Satisfaction
  • Key features
  • Mission and value

Let’s take a look at it through a concrete example: I will pretend I am working at a travel company, like Expedia, and looking to conduct a competitive audit.

Steps to a competitive audit

Here is the process I generally go through when conducting a competitive audit:

Step 1: Define the purpose.

What are you trying to accomplish with the competitive audit? If you have a plan and an expected outcome for the review, it will be more useful and actionable for you and the team. The goals you right may be simple, but they allow you to focus on the right areas in the competitive audit matrix. Some example goals are:

    1. Find out how competitors’ products/services work to identify the pros and cons
    2. Identify user loyalty and engagement in the products/services
    3. Uncover similar functionalities/features to see how they exist in current products/services

Step 2: Choose competitors, both direct and indirect

    1. A competitor is a person, team, or company that shares your goals, mission, and vision. If you are entering a new market, there might be no actual “direct competitors.” However, there is likely a company doing something similar to what you are thinking. Think deeply about this, as the answer might be more obvious than you think. For example, an online tax company realized that other online tax companies weren’t their biggest competitors, but instead, the pencil was.
    2. Direct competitors are companies that offer the same or very similar, value proposition to your current or future customers. They are trying to get the attention of the same audience you are. Likely, customers use the direct competitor’s product to solve similar problems to what your product/service is aiming to solve. You want to pick 2-3 direct competitors to examine.
    3. Indirect competitors offer a similar value proposition to a different customer segment or a different value proposition to the same customers. It is also possible that your customers are using an aspect of an indirect competitor’s interface product to solve a problem. You want to pick 1-2 indirect competitors to review.

Step 3: Find competitors

There are a few ways to find out who your competitors are:

    1. During user research interviews (or in surveys), users might share the names of products they’re using
    2. During internal stakeholder interviews, the client, investors, and other product owners might also mention a product that they’ve heard is similar to what your team is proposing actionable
    3. Googling related keywords to your company or product/service will often yield a long list of direct or indirect competitors

Let’s pause here and take a look at the Expedia example.

Goals:

    1. Discover the strengths and weaknesses of each competitor
    2. Identify user loyalty and engagement of each competitor
    3. Uncover any unique features of competitors and how they work

Finding competitors:

To find competitors, I did a few different searches on Google, such as “Expedia competitors,” “similar sites to Expedia,” and “cheap flights.” This search yielded many results, including statements from the CEO about the prominent competitors. I made a list based on this search:

  • Booking.com
  • Hotels.com
  • Kayak.com
  • Travelocity.com
  • Trivago.com
  • Skyscanner.net
  • Google.com
  • Airbnb.com
  • Orbitz.com

As mentioned, I want two to three direct competitors and one to two indirect competitors, so I would have to prioritize. To do that, I would speak with internal stakeholders to gauge who they believe our most significant competitors are. I would show them this list to vote on the top two direct competitors and top indirect competitors. I would also refer to any previous user research, where users mentioned these tools and figure out the frequency. With this information, I can properly prioritize.

Direct competitors:

Based on the conversations and desk research, these are the top two direct competitors. The following websites provide the same functionality for almost the same type of user base.

  • Kayak.com
  • Hotels.com

Indirect competitors:

For the indirect competitor, we will focus on Airbnb, as it is not the same value proposition, but targets a very similar customer base.

Step 4: Create a matrix (with template)

A competitive analysis matrix is not complicated, just a simple spreadsheet. You can follow along with my template here. I suggest making a separate tab for direct and indirect competitors. I will use Expedia as an example throughout these steps.

I use the following data in the spreadsheet:

  1. Company name (with URL). Put each of the companies you will be analyzing on a separate row. For ease, I always include the URL so you can access the website easily. If you are looking at apps, you can link to the app store or the mobile site of the product/service. Additionally, in this column, you can include any login details if you created a screen name and password for access.
  2. Value proposition. The value proposition is the site’s purpose and what people would expect to find on the website.

    Expedia example: A place where you can plan your entire trip, from hotels, flights, and car rentals. Allows for bundling of offers to make the trip more affordable, and includes cheap flights/hotels/car rentals. Expedia aggregates many different options to offer the most competitive pricing and availability.

  3. Target audience. The primary audience the company is targetting. This information can include demographics such as age, gender, income, geographical location, marital status. It can also incorporate more specific criteria, such as the goals people want to accomplish when on the website. You can find this information through stalking companies on Google.

    Expedia example: Ages 25-54, all genders, global demographic, families. Focus more on leisure and luxury rather than business travel. Income levels range from lower-income to high income. Expedia can help a multitude of customers with cheap offers, vacation bundling, and luxury accommodation

  4. Strengths. List the advantages of the product/service by answering the question, what do they do well?

    Expedia example: Expedia is an all-in-one platform where you can plan your entire trip in one place. They offer attractive vacation packages for all different types of travel, such as family trips, romantic getaways, and solo trips.
  5. Weaknesses. List the disadvantages of the product/service. What is it that the company does poorly on?

    Expedia example: Since Expedia aggregates a lot of its content, users have to click-through to other websites to book travel, confusing and annoying for users.
  6. Key differentiators. This section includes anything that the company does differently (or better) than others in the space. It can consist of unique features, compelling marketing, different use of social media to target audiences, unparalleled customer service, or fantastic user experience.

    Expedia example: Fantastic price guarantee where you know you are getting the best price. It is also nice to see everything (hotels, flights, cars) to compare prices easily.
  7. Rating. In this section, list out the different overall reviews each company has, and link to the source, when possible.

    Expedia example: App store: 4.6 stars from 36K reviews; Trustpilot: 1.3 stars from 3.6K reviews.
  8. Optional feature deep-dives. This section is optional and depends on whether you want to do a deep-dive into some of the company’s unique features.

These sections are my favorite to look into, as they provide a clear assessment of the products/services. Feel free to add your own and adapt the information for whatever your organization needs to know. For instance, if you are interested in a particular area, such as personalization, include that in the audit. Some other fields I have seen are:

  • Funding rounds
  • Revenue streams
  • Monthly traffic (or other analytics numbers)
  • Social media presence

Step 5: Write a summary and action points to share

Once you finish the analysis matrix spreadsheet, create a summary of your findings. The most important part of the review is to tie the results back to your initial goals.

When you tie the findings back to the goals, you make the competitive audit actionable for your team. With this information, they can make better decisions moving forward and uncover new opportunities.

For example, with the Expedia competitive analysis, I would want to address:

    1. The strengths and weaknesses of each competitor
    2. User loyalty and engagement of each competitor
    3. Unique features of competitors and how they work

I would also include high-level takeaways, which are pieces of information I found surprising or exciting. For example, I found it very interesting that Expedia’s Trustpilot review was 1.3 stars. I would highlight this and pull some quotes from the reviews.

Another great way to make this summary even stronger is by including visuals (screenshots or videos) of unique features or strengths.

A final note

Always take competitive research, specifically competitive auditing, with a grain of salt. We will never know the exact internal workings of competitors and how they chose to prioritize features. You won’t always know how much user research they put into roadmaps or feature prioritization.

Some users may hate certain functionalities or experiences within your competitor’s products/services. In this case, don’t use competitive research to copy your competitors, use it as a benchmark and way to establish advantages over weaker spots in the competitor’s products/services.

Nikki Anderson

Nikki Anderson is a qualitative user experience researcher with about 5 years in the field. She loves solving human problems and petting all the dogs. Read more of her work on Medium.

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