Competitor Analysis: How to Stay Customer-Focused While Keeping an Eye on Competitors

I may sound like a broken record by now but when it comes to succeeding in today’s competitive landscape, there’s one golden rule: Focus on your customers. Don't just take it from me, it’s advice famously championed by Jeff Bezos: “Focus on what customers want, not what your competitors are doing.”

But does this mean you should completely ignore the competition? Not at all. As they say "sleep with one eye open": staying vigilant is crucial for identifying threats and opportunities while keeping your energy directed where it matters most—your customers.

Amazon obsesses over solving customer problems but keeps an eye on the market, which has allowed them to adapt quickly, innovate boldly, and consistently deliver exceptional buyer experiences.

Customers are your north star, but being aware of competitors can help you navigate the journey more effectively.

Having a differentiator can help you stand out in a competitive market.

Why Ignoring Competitors Completely is a Mistake

While obsessing over competition can be a distraction, ignoring it entirely can leave you blind to potential challenges. No business operates in a vacuum, and competition comes in many forms.

Rather than fearing competition, use it to sharpen your approach. Competitors provide valuable clues about customer behavior, market trends, and potential gaps in the market.

The presence of competitors proves that the problem you are solving is real and that people are willing to pay for a solution.

It might be a bit of a cliche, but frameworks like SWOT are an effective first step when doing competitor analysis.

How to Conduct Competitor Analysis Effectively

Step 1: Start with self-reflection

Before looking outward, assess your own business using tools like SWOT (Strengths, Weaknesses, Opportunities, Threats) or SOAR (Strengths, Opportunities, Aspirations, Results). Questions to ask include:

• What are our unique strengths?

• Where do we need to improve?

• What opportunities can we capitalise on?

• What external threats could derail us?

  
  

Step 2: Identify your competitors

Competitors fall into different categories:

• Incumbents & direct competitors: Established players solving similar problems and other businesses offering comparable products or services.

• Indirect competitors or the status quo: DIY solutions, outdated tools, manual processes, and very often, MS Office, specifically Excel.

  
  

Step 3: List out the attributes for comparison

Establish criteria to evaluate competitors effectively, such as:

• Product features

• Service offerings

• Pricing, packaging & promotions

• Value proposition & messaging

• Distribution (channels & partnerships)

• Customer reviews and rankings

  
  

Step 4: Gather insights

Research competitors using multiple sources:

• Their websites, product pages, and marketing materials

• Partner intel and customer feedback 

• Industry reports and analyst commentary

• External consultants

  
  

What to Do with Competitor Insights

Great! You’ve done a competitor analysis. Now, what do you do with it?

1. Use it to supplement the findings from your customer interviews when creating the MVP, or determining your product roadmap. It's still best to focus on customer pain points but knowing what competitors are doing can help you strategise what your differentiators are.

   
   

2. Help you refine your messaging to highlight what makes your product unique. Effective marketing should address common customer frustrations and emphasise your value proposition without directly calling out competitors. Just ensure all claims are accurate and compliant with local regulations.

   
   

3. Equip your sales team with battlecards. These are cheat sheets that summarise competitors’ strengths and weaknesses. They help your sales team address customer objections and position your product as the superior choice.

The Bigger Picture: Internal and External Factors

Competitor analysis is only one piece of the puzzle. To make sound decisions, you need to consider both internal and external factors.

Internal Analysis

Beyond SWOT or SOAR frameworks, examine gaps in your product offerings, operational processes, technology and infrastructure.

External Analysis

Broaden your perspective with PESTLE (Political, Economic, Social, Technological, Legal, Environmental) analysis to uncover regulatory risks, economic trends impacting customer behavior and technological shifts that could disrupt your industry.