Competitive analysis is a principal part of setting up and running a successful business. Especially when it comes to SaaS. It can offer you several actionable insights and intelligence to help your business grow. You can apply these insights to your marketing strategy and product development. It’s crucial to conduct competition analysis in SaaS frequently and regularly. Doing it once is not enough as new styles and technologies keep emerging and can affect your company and products. Plus, with changes in market trends and consumer behavior, keeping abreast with such changes is crucial for a business to stay profitable.
What is competition analysis in SaaS? Why is it conducted?
Businesses conduct competition analysis or research to gain insight into the strategies other companies are using for products, marketing, and sales. It helps you build a better plan of action when you know what your competitors are employing in theirs. Not only can this help in business strategy but also in understanding the market.
Additionally, competition analysis makes it easier to identify areas of opportunity. Competition analysis in SaaS focuses on identifying key metrics and how your products perform compared to other companies. You can conduct competition no matter how big your company is or how much turnover you have. It applies to business in all stages and verticals. You can think of competition analysis in Saas as observing your competition’s game plan. Including their strengths and weaknesses. Then you can identify how your performance compares to theirs. Can you do better? And how can you do better?
There are many advantages of conducting competition analysis in SaaS. This plethora of reasons is why every company invests in competition analysis in SaaS domains.
A few benefits of competition analysis in SaaS:
- It helps you identify your UVP (unique value proposition) and how you can be set apart from others in the same industry.
- You can identify what strategies your competitors are using and what is working for them.
- It helps you stay relevant by generating what’s trending and how your marketing campaigns perform. Also, identify industry and marketing trends.
- It also helps you understand where your competitors are failing and why. It is an area of opportunity that you can optimize.
- Track competitors’ product reviews to identify features you can incorporate into your products. Plus, it helps you work on customer satisfaction.
- Gives you a base where you can improve and grow your products and marketing.
The step is competition analysis in SaaS companies:
Competition analysis in SaaS is a type of research. This means that it follows research methodology and practices more often than not. In any type of research, there are a few steps you can follow to structure your analysis. These steps provide you with a framework, which serves as a set of guidelines for you to work with. You can skip or reiterate a few steps depending on your objective and scope of the study.
Here are a few steps to help you start your competition analysis in SaaS:
- Identify competitors and their products in your industry
- Understand their demographics and consumer segments
- Study your competitors’ marketing and content strategy
- Observes their engagement and check out reviews
- Research your competitors’ sales tactics and strategies, as well as their results
- Compare pricing and additional features
- Conduct swot analysis for your competition analysis in SaaS
- Documentation for future applications
Identify Competitors And Their Products In Your Industry
This step is the first and by far the most crucial. Because you need to compare your data with your competitors’ data, and this data needs to be accurate for the best results. Additionally, you need to understand that what works for one business might not work for you. However, you can use this data to see how certain parameters are affecting your competition.
Once you have a list of your competitors, segregate them into direct and indirect competitors. Direct competitors are the companies whose products are the alternatives to your products. This means that people can replace your products with the products of your direct competitors. Whereas indirect competitors are those companies who have products that are not the same as yours but could solve the same problem.
Direct competitors can take over your demographic segment with certain alterations to their strategy. Since both you and your competitors have the same demographics, you are fighting for conventions and retention. You want to monitor your indirect competitors since they might change their proposition anytime.
Understand Their Demographics And Consumer Segments
This step deals with the background information of a company’s consumer segment. Differentiating between direct and indirect competitors in competition analysis in SaaS is not very easy. On the surface level, a company might seem like a direct competitor. However, once you dive deeper into the user segment and target demographics, you can easily set them apart. You can create a user profile of your competitors to access the data with your data.
Who is your competitors’ target demographic? And for which demographics are the products created? These questions can help you identify your competitors’ ideal audience and the people they reach. You can get this information from their website and social media handles. Additionally, you can use other resources, such as Google and reviews, to find more information on who is using your competitors’ products. Plus, you can use this information in the marketing analysis later.
Study Your Competitors’ Marketing And Content Strategy
Most companies have several demographics that they market to, a primary demographic and a few secondary ones. Their primary and secondary target demographics will dictate their marketing and the employed strategies. It also means that they have many demographic segments they market to. Differentiating between several demographics is pivotal. You can use sources such as social media platforms, websites, and review websites, among a few. You can also check out if your computer is on any Q&A website.
Study their content and emails and all communications you can get your hands on. Check for tone, type of communication, and how they communicate their message. You might also want to invest resources into researching your competitors’ storytelling strategies and how they are connecting with their customers. Moreover, keeping track of their campaigns will give you an insight into recent trends in marketing or otherwise.
Observes Their Engagement and Check Out the Reviews
All companies do not get the same level of engagement for their content. Monitoring social media and content is a process that keeps going on. Since businesses post about their campaigns, products, and features on social media to gather audiences, it is one of the best places to start. Moreover, it provides insight into their tone and communication strategy.
Additionally, you can check out company testimonials to see what people say about the company and its services. Review websites are another great place to see where a carton competitor is lacking in or outperforming. There are many software’s that give you insight into your competitors’ strategies and research, like SEMrush and Ahrefs. This software is not a requirement, but it helps save time and resources. Moreover, they get the job done faster and efficiently.
After you have all the required metrics, you will want to compare your data with this to identify areas of opportunity in your marketing strategy and product development and testing. Another thing to remember is that marketing strategies are unique to a business, so what works for one company will not work for another company. Copying someone else’s marketing strategy will work in the short term, but it is a terrible idea.
Research Your Competitors’ Sales Tactics And Strategies, As Well As Their Results
A big part of sales strategies is creating a foundation for your sales processes. These processes and the result should align with the overall goal for the business to be successful. Moreover, having established guidelines makes it easier for your sales team to pitch and sell. Sales strategies are half math and half intuition. It can make or break a company. And That is why having a strong sales team and a seamless plan is essential.
There are some questions that you can ask yourself when building a sales strategy:
- What are the sales processes? And how do they flow?
- What channels should you use and why?
- How can you expand or scale down the process if required?
- What areas can you improve? And what areas are performing well?
- How are yearly revenues? And how are offers affecting them?
- How can the sales team optimize for a strategy?
It is crucial to have a system that records why a consumer chooses you or your competitor. Where your customer turned to a competitor, find out why and what the factors were. Additionally, this will help you refine your sales funnel and identify factors that can help you improve customer satisfaction.
Read More: SaaS Marketing Strategies: 10 Amazing Tips
Compare Pricing And Additional Features
The factors that affect sales are pricing and over-the-top features. Pricing products is a tricky thing. If you price them too high, you’ll scare off customers. If the price is low, you will lose money. You need to set the price to beat the competition and convert audiences to customers. A great way to fix your pricing is to look at how your competitors price their products. Understanding their pricing strategies will help you develop and improve yours. There are different things different companies consider when pricing products. You need to know what factors you should consider. That will result in the correctly priced products.
However, if your product has aiming top-notch features when customers don’t mind paying a little extra. Your sales representatives need to justify high prices to customers. Your pricing should either reflect the quality or the quantity. People will only invest in your product if they think they get more, if not equal, than what they put in. It leads us to the additional features you can include with your product. Such perks or features can include referral discounts, loyalty program discounts, free trials, and add-on features.
Read More: 5 SaaS Pricing Models for a Balanced Revenue
Conduct SWOT Analysis For Your Competition Analysis In Saas
SWOT stands for strengths, weaknesses, opportunities, and threats. People favor this type of analysis in making and business. In addition, it becomes easier to compare your business’ SWOT with a competitor’s. Moreover, the SWOT analysis provides an overall grade of a company that lets you know its performance across the entire organization. Plus, it can help you strategically plan your strengths and work on your weaknesses.
Here, strengths and weakness are internal factors, whereas opportunities and threats are external factors. With the help of this knowledge, you can easily plan, brainstorm, and improve the quality of your decisions. You should always conduct a SWOT analysis with an aim or objective in mind. Having a purpose will help you frame relevant questions and filter data.
The advantages of conducting a SWOT analysis are:
- Identify business opportunities
- Find new trends in the industry
- Identify areas where you can apply new technologies
- Address weaknesses and work on them
- Understand your overall business better
- Identify and plan for threats
- Low cost and simple procedure to carry out
Even though SWOT analysis is an exceptional tool for understanding a business, it can have some limitations. Remember that it provides insight into the overall business performance, not specific departments or teams. Hence, it becomes essential to know the restrictions and why SWOT is not an answer to all questions.
Limitations of SWOT:
- Does not prioritize issues or tasks
- Can not directly offer actionable plans or solutions to a problem
- Brainstorming can generate many ideas. However, it does not show which one is the best
- Not all information generated by it is useful
- The analysis is subjective and not objective
Documentation For Future Applications
Research has to be a flexible process to keep the flow of ideas and thoughts free. However, with flexibility comes deviation from the standard. And it is crucial to record this, mainly because it becomes easier to backtrack to see what process you conducted and how. Documentation of any research conducted is a must. These documents serve as a record of all steps taken and the results. But it also helps assess quality and process control. It helps keep track of all research and findings. It also proves to be important in future research as a basis.
Documentation also encourages sharing of knowledge and processes with others. That can help your team understand what transpired and the tasks you should complete. Moreover, you can use the document in future analysis or research as a reference. Additionally, it cuts down on replicates if people already know what research you conducted in the past. Plus, the dominant can act as a second or tertiary source in future research or competition analysis in SaaS.
In research and analysis, documentation will be a hectic and complex job. All data that goes into the document will have to be accurate and verified, as far as the research conducted is concerned. However, it can also be your best friend in times of need.