How to Identify Your Business Competitors
Your competitors aren’t always who you think they are. That’s why it’s important to learn how to identify business competitors properly…
In the business world, everyone is trying to provide the best product for the best price. Each business seeks to improve its marketing, design, and customer satisfaction, but one team can only generate and test so many strategies. In the current environment, half of all new businesses close in the first five years.
Why does one business thrive while another withers?
Why does one SEO strategy seem to outpace another dramatically?
What inspires customer brand loyalty between directly comparable products?
What you can learn from the successes and failures of your business competitors can provide value across the board. Understanding everything from the success of an SEO competitor to the reasons a nearly identical business went under can equip you with essential data. But more than that, it can give you inspiration on how your business can win customer loyalty, build awareness, and achieve longevity.
Why Identifying Business Competitors Is Important
Being in business is about establishing your share of the market and defending or growing it.
For example, one neighborhood can only support so many doughnut shops because there is limited local demand. Knowing who the other doughnut shops are and how many of the available customers they are getting becomes important. If one of the shops goes out of business, the others absorb their market share—but not always evenly. If one expands to bagels, they may get a larger market share and access a new customer base, changing the playing field.
Every business, from doughnuts to software design, has competitors. That’s why learning how to identify business competitors is essential.
What your competitors are doing and who they are selling to should always be of acute interest, both to inform your own strategy and to hone your tactics in winning a larger market share. Knowing who your competitors are allows you to analyze what they are doing to respond accordingly and gain a competitive advantage.
Types of Competitors to Keep in Mind
As you learn how to identify business competitors, you must keep in mind that there’s more than one type. There may be several other establishments competing with your business in various ways.
Here are a few examples…
- Offer the same product, in the same sector, to the same target audience
- Draw from the same pool for market shares
- Example: Two local hardware stores in the same neighborhood directly compete.
Your direct competitors are those whose market shares you could absorb directly. You share a very similar business model, product, and availability, so you are in direct competition for the pool of available customers. Customers will, typically, either shop with your brand or with your direct competitors to fulfill the same need.
- Offer similar products but have a different business model
- Have an overlapping but not identical target audience
- Example: A craft store indirectly competes with an office store’s crafting aisle.
Indirect competitors do not have the same business model, but customers can get some of what you provide from this competitor. Ultimately, you and your indirect competitors fulfill the same need in different ways. You have the opportunity to win some or all of this market share with more focused value.
- Offer different products that serve as alternatives to yours
- Draw from market share, but business models do not overlap
- Example: A bowling alley is a substitute competitor for a mini-golf course.
Substitute (or replacement) competitors are those who absorb your market share but whose business models do not directly compete with yours. A customer can only have one dinner, but the pizza bar and the French restaurant are not in direct competition. A customer might book a chartered boat or tour a museum, but the two are not in direct or even indirect competition.
- Compete for your keywords and online visitors
- May or may not have overlapping business models and market shares
- Example: A local music store competes with a local music instructor.
SEO competitors might or might not threaten your market share, but they do compete for your keywords. You can have SEO competitors across the globe or compete directly with a company many times your size over the same readers and SERP rankings. At the same time, your direct competitors are also likely SEO competitors right down to your regional keywords.
How to Identify Business Competitors
Now that you understand what type of competition your business faces, it’s time to learn how to identify business competitors.
So, how do you know who your business competitors are? While your doughnut shop may be aware of the competitor shop down the road, what about the crepe place that opens across town? How can your online retail brand know when a larger store expands into your niche?
Fortunately, there are many existing tools and processes to help you quickly identify which brands and businesses are forming your market competition.
- Conduct market research.
Market research is critical for gaining insight into your target audience, but it can also shed light on your competition. Once you know who your ideal customers are, you can dig into their pain points and buying behaviors. Then, you can use those factors to determine what other businesses are serving up solutions.
If you want to go direct to the source, you can even send out a survey asking people what brands they’ve heard of for a particular product or service.
- Check chamber of commerce reports.
Checking chamber of commerce reports is another means of identifying business competitors. This is especially helpful if you own a brick-and-mortar establishment that serves the local community. Simply go to the main chamber of commerce directory, find the website for your state and city/territory, then filter your local chamber’s listing by category.
- Read trade and industry publications.
If you aren’t already subscribed to trade and industry publications, you should be. This is one of the most effective ways to identify business competitors, including direct and indirect. Review relevant resources to see what businesses in your niche are being highlighted.
- Check industry event attendance.
No matter what your industry may be, there are likely specialized events hosted for businesses like yours. In that case, you should see who frequently attends or even sponsors those events. Once you have a list, you can do more research to see how their offerings and online presence compare to yours.
- Review local business directories.
There are plenty of local business directories you can use to find competitors. For example, Yelp, Angi, and Yellow Pages have location and category filters. Look through these directories to see what nearby businesses may be competing with your own.
- Watch for offline and online advertisements.
If you’re struggling with how to identify business competitors, don’t underestimate the value of simply keeping your eyes peeled. As you drive down the highway or walk around your city, pay attention to the billboards and other advertisements outside. And do the same as you browse the internet. Chances are you’ll come across an ad for a business competitor or two.
- Conduct SEO and keyword research.
Finally, conduct SEO and keyword research to see what businesses may be competing with you for the same keywords. You can start off by doing a Google search for the keywords you’re trying to rank for. However, you’ll have better results by doing a thorough competitive analysis with a tool like Semrush.
Do You Know Who Your Competitors Are?
If you do not yet know who your direct, indirect, substitute, and SEO business competitors are, it’s time to find out. You will gain insights into what works, what doesn’t, and exactly where your competitors have left a gap you can fill to snag a greater share of the market. Competitor research is an essential part of brand strategy as you angle to become the top brand in your pool of competitors. Business owners should always be aware of who they are actually competing against. This includes the full spectrum of direct, indirect, substitute, and SEO competitors. Learn how to identify your business competitors with the help of Viral Solutions. Start by requesting a free consultation today!