319: How To Do Competitor Analysis
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In today’s episode of The Startup Chat, Steli and Hiten talk about competitor research and how you can do it without talking to another human being.
Understanding the competition and how they do business is a crucial business activity for any startup or business executive. Unfortunately, most startups don’t do this because it can be very complicated and time-consuming. However, this doesn’t have to be the case.
In this week’s episode, Steli and Hiten talk about a very simple and effective way to conduct research on your competition and much more.
Time Stamped Show Notes:
00:39 Why this topic was chosen.
01:24 A simple way to do competitor research without talking to another human being.
02:58 Why review sites are a great way to do competitor research.
04:41 How to do competitor research with review sites.
07:13 When to do competitor research.
09:07 Who should do it and how much time to spend on it.
09:50 The benefits of competitor research.
11:10 One great thing about Hiten.
11:57 Why you should do competitor research especially if you’re resistant to it.
3 Key Points:
- The key to competitor research is understanding with people think about using a competing product.
- Don’t not do it.
- You learn about your competitors to understand your customer.
Steli Efti: Hey everybody, this is Steli Efti.
Hiten Shah: And this is Hiten Shah. Today on the startup chat we’re going to talk about something that’s near and dear to my heart, which is competitors. The specific part around competitor research and even deeper, how you can do it without ever talking to another human being.
Steli Efti: Ooh. All right. So this is an episode that we actually had on the docket for a little while. Hiten brought this up many weeks ago in an email conversation about a topic that we should talk about. I want to dedicate this to and Ryan, two people that help us with various things that are happening on the podcast. They’ve been hounding me on bringing this up so I’m super psyched to talk about this. All right, so we’ve talked about competitor research before, but it always involves … some of the time we talked about how to talk to your competitors directly, to learn from them. We’ve talked about how to talk to your competitors’ customers to learn about your competitors and your customers. Today you say we could do competitive analysis without talking to those competitors. How do we do that?
Hiten Shah: It’s basically online reviews. If you’re a B to B product, there’s a bunch of sites that help you do this. Trust Radius, G2Crowd, Capterra, and there’s a bunch of others. There’s another one I think called Siftery, so there’s a bunch of them. I forget all their names. What they do is they have reviews of basically products and people have reviewed them on there, and some companies have incentivized their customers in some way, just by asking. I don’t mean really incentivize, although some do, to go to G2Crowd or whatever and review. These are review sites. You don’t have to talk to anyone. You don’t have to talk to a customer, you don’t have to talk to the competitor themselves, you don’t have to talk to anyone, and you can go read the reviews of a product on there, which is essentially the key to competitive research. What do people think about that product? That’s a key part of competitive research, because then you can figure out whether to use this thing.
Steli Efti: All right. Let’s unpack this …
Hiten Shah: It’s all simple.
Steli Efti: Well, here’s the funny thing. Most of the things that we teach are the podcasts that talk about, and we’re super light on this. Wasn’t the things that we talk about are simple, but still not so obvious that the majority of people would do it like … This is the type of thing that I know almost nobody does, including myself. I know that increasingly these competitor review sites have been becoming a lot more popular and influential because they’re now occupying or capturing a lot of the organic search traffic around certain categories. They’re this authority to say, “Hey, if you’re looking for a marking automation tool, then here’s our review site. We’re a independent party and we’re going to give you all this information about all these vendors in this space and you’re going to be able to see all these reviews, and should come in. We’re the best place for you to learn about all the options out there and find the right vendor solution for you. Really a powerful proposition and I know that more and more companies, especially in this ad space as well, are having to invest in their strategy of getting reviews and encouraging their customers to get reviews of improving their ranking of these sites. I know that a lot of companies are thinking about it and investing about it, but it’s always mostly from a, let’s make our profile look good perspective and almost never from a, let’s look at the ecosystem, let’s look at our competitors’ profiles and reviews, and let’s learn about them and about the customers that we’re fighting for, through that. So now let me ask you, okay, I go to a site, there’s a rich amount of information, let’s say a vendor at one of my competitors has hundreds and hundreds of reviews. What’s the process? Do I read one review at a time just myself, and see if something pops up, do I use some kind of a tool or use a freelancer or contractor to put these reviews in some kind of a structured format, in a spreadsheet, or something like that? How do you … What’s your process when it comes to doing competitive analysis and research by using these review sites?
Hiten Shah: It’s deep, just like any other research I would do. We go deep. We make sure that we … I do want to mention one thing. If you have a mobile app, you can do this too. Because there’s reviews on every mobile app right in the app stores. If you have a book you can do it on Amazon, or even Goodreads and look at the reviews if they’re going to go write a book and you’re competing other books. If you have a product, like a physical product, guess what? Amazon. Walmart. All those sites, they all have …
Steli Efti: Restaurants. Yelp.
Hiten Shah: Right. So because of that, my thought here is that you treat this like any other research you would do. There’s a reason the word is research. You don’t go look at one review and say I know everything. You do literally spend the time to go in depth and dig in and understand. Literally what I would do, is I would go, let’s say I’m competing with Salesforce. I would go find all the reviews I can of Salesforce, put all of them in a document. Then I would read all of them and categorize them. Then I would find the patterns and write statements, and pull out quotes about those categories of things I learned. That will tell you exactly why people love Salesforce and exactly why people essentially hated it or disliked it, and also what features it’s missing. Some of these sites are really good. They have really fancy categorizations and things like that. Break down exactly the people have, and they ask some really smart questions. They ask users very specific about how it’s really in how satisfied are they with it. It’s a really powerful way to learn about a market I don’t see people doing it. They even asked me which CRM software has the best ROI. Which CRM software have the smoothest implementation. What the most usable CRM software? Which CRM software is the easiest to do business with? That’s crazy. Yet everything’s right there in front of you.
Steli Efti: I love that. So now the next question is, when should I do this? Is this before I launch, is this after a launch, is this once a year, once a month? What’s the cadence, and then what do I do with that information? Let’s talk a little bit about that. When would you advise founders doing this type of competitive research?
Hiten Shah: As soon as possible. Because if you don’t have the sentiment of how your customers think about any potential customer rated the landscape here, then it’s not going to work. For example, for my new product FYI, we’re not building a document creation tool, but we did a lot of research on all the document creation tools in this way. We looked at all the reviews. We wrote, them, put them into a doc, we analyzed them and we figured out the people’s, essentially the way I like to call it, their love and hate relationship with these products. You can do it, and we did that before we even built the product, because we wanted to understand what we’re with, because those are all the tools we’re going to integrate with.
Steli Efti: That makes perfect sense right where you’re in the early days, you’re developing your product, you’re doing customer development, you’re trying to figure out a product market . You’re typically the entire team of the founders in heavy “research” mindset constantly, like reading, learning, researching, talking to people. Accumulating knowledge insights, trying to understand the market the customer better, the competitors, all that. What happens if you’re a year or two out of that early phase. You have a team now, five or 10 people, you have customers, you have a running business. When and how much time do you take for this type of competitive research? Who does it? Is this a founder responsibility, is this a marketing responsibility, is this a product responsibility? How would you do this for the listeners that listen to us and are like, “All right, I already have a company. We do already whatever it is, 100K, or 50K in monthly revenue, I have a small team. I want to do this research, but I don’t know who should do it, and how much time they should spend on it.” How would you advise a kind of up and running small businesses doing this kind of competitive analysis and research? Hey, Hiten, you still there?
Hiten Shah: Can you hear me, I’m here.
Steli Efti: Now I can hear you.
Hiten Shah: Can you hear me now?
Steli Efti: Yeah.
Hiten Shah: Okay, cool. The way I would do this very tactically, is I would focus on competitors that my customers mention. And I’d go research those. I would do this either once a month, once a quarter, or once every six months, depending on how competitive your market is. That’s the tactical, deliberate way to do this. You usually have either your marketing or your product team do it, depending on where the skillset lies, and what you’re trying to learn from the analysis. The main thing I can say is don’t not do this.
Steli Efti: Don’t not do this. I love it. I love it.
Hiten Shah: So fucking do it.
Steli Efti: All right. I think …
Hiten Shah: We’re important. I used to hate doing it. That’s why I’m saying that. I used to hate looking at anything about my competitors used to make me so pissed off. You know what? Now I get excited, because I’m like all right, now we know where we suck, now we know where they’re good, now we know everything. Now we can figure out what decisions to make and it’s a key part of the information that informs the business.
Steli Efti: I love it, and this is one of the things, this is one of the beauties of our relationship now, and this podcast, is that I’ve now known you for such a long time that I remember that when we first started becoming really good friends and talking about business and strategy in the market and all that, we were both completely on the same page of being like, ignore the competitors, focus on the customer. Then I’ve seen your transformation and growth, and I see why you change your mind, and how you apply and use it. Always still to understand your customer better. You learn about your competitors from the stand the customer. Your philosophy … And now you love it, and you’ve influenced me to change our culture generally in the company and be a lot more mindful and do a lot more competitor research that allows us that we used to do. It’s a beautiful thing, especially because when people as successful as you, they tend to be so rigid on their opinions and philosophies, even more so when they have publicly proclaimed it. One of the things I love about you and admire about you is that you are completely in the camp of like, I don’t fucking care what I thought … The idiot version of me thought last year, I’ve grown, I’ve learned and I have a totally new philosophy or an updated one today, and that’s why you keep being ahead of the curve, and so I love learning from you about competitive research, because it’s an area that I myself, I don’t think … I still think I would have been on this old school, my old way of thinking like saying I just ignore all of them and I don’t care about it at all. You’ve influenced me there a lot, so do not not do it, or whatever you said, or just fucking do it, is I think the … Just fucking do it, is the action item that we’re going to leave everybody behind, especially if you listen to us and you have this internal resistance to this idea because you are so bought in and sold on the idea that you should never do any competitive research. Maybe this is the podcast and this is the moment where you should be more open-minded and try something new and see if you’re really right or if maybe a bit of competitive research could go a long way in helping you do better in your business and serve your customers in a better way. All right, I think that’s it from us for this episode.
Hiten Shah: See ya.
Steli Efti: Bye bye.