Understanding Competitive Intelligence and Why It’s Vital to Your Online Success
As Big Data becomes bigger and bigger and more and more businesses decide to build a website, competitive intelligence is becoming a necessity for small and large businesses. Like its name suggests, competitive intelligence allows your business to retain its competitive edge in an ever-expanding online marketplace. However, there’s a lot more to know if you want to understand it fully and why it’s vital to your online success. Continue reading to learn more.
What is Competitive Intelligence?
“Simply and clearly put, CI [Competitive Intelligence] is a perspective on changing market conditions. This means identifying risks and opportunities early enough to allow the company to adapt its strategy or in extreme cases, change it. That simple definition forcefully delineates it from all other information, data, and research services.
Used properly, CI leads to greater strategic agility — the ability to adapt to changing market circumstances.” (Harvard Business Review)
While many business owners would like to think competitive intelligence is simply a thorough review of the competition, competitive intelligence also involves understanding how their business stacks up as a competitive force in the entire marketplace alongside their competitors. Competitive intelligence is the information that once uncovered, can tell them more about how to maintain their competitive edge.
To get started with competitive intelligence, refer to this great list of online resources published by Entrepreneur. It should also be noted that competitive intelligence is different from corporate espionage, which is illegal and highly unethical. Read this Investopedia article to learn more about unlawful and unethical practices.
Types of Competitive Intelligence
There are two major types of competitive intelligence to know about, listed here.
Tactical competitive intelligence is for short-term projects and should be conducted to provide input and insight into issues such as capturing market share or increasing revenues. It’s typically conducted by teams who are working together for the benefit of a business. So, if your sales team is interested in increasing its sales, it will want to conduct tactical competitive intelligence.
Strategic competitive intelligence is typically conducted by executives and business owners. They’re more interested in using competitive intelligence to discover key risks or opportunities for their organization or business as a whole. And they like to use it when detailing their other business strategies. Companies that are new to a marketplace or interested in developing a new product, pricing model, or offerings, will improve their chance of success by conducting strategic competitive intelligence.
Uses for Competitive Intelligence
Typically, businesses will want to conduct competitive intelligence to do one or more of the following:
- Plot corporate or individual business unit strategies.
- Design counter-competitive strategies for one or more direct competitors in their marketplace.
- Develop or launch a new product or service.
- Identify unmet customer needs in a marketplace or niche, or tap into a new market base that hasn’t been tapped into yet by other competitors.
- Enter a marketplace that’s new to them or bring something new to their current marketplace that hasn’t been done before.
- Benchmark other organizations present in their current or desired marketplace.
- Anticipate and plan for future market opportunities and disruptions that may affect their business.
- Evaluate the effectiveness of their competitors’ market positioning, branding, and product messaging.
- Determine potentially lucrative capital investment plans.
- Gauge political and social risks for products, messaging, etc.
- Assess potential suppliers, sponsors, partnerships, mergers, acquisitions, etc.
How to Conduct Competitive Intelligence
While there may be some additional steps you can take when conducting competitive intelligence, here are four basic steps you will always follow.
Step 1 – Determine Business Objectives for Conducting Competitive Intelligence
First and foremost, you’ll need to identify why you need to conduct competitive intelligence by linking it to a business goal or objective. (See “Uses for Competitive Intelligence” section above.) If you never determine this, then you won’t know when your research and analysis is complete, and whether it was successful. This probably means that your research will continue much longer than needed. You also won’t ever know exactly what type of data or information you should be seeking. Or, if you ended up with the right research or data that you need anyway.
Step 2 – Identify Your Collection Strategy
Confirm how you’re going to go about collecting all the competitive intelligence you’ll need to collect. What sources will you consult? Will you need to conduct your own experiments or case studies? Are there any analytics tools, software, or systems that you’ll need to use? Know whether you’ll have to spare some time for integrating or learning how to use any new tools.
Step 3 – Establish a Reporting and Analysis Process
Establish what types of reporting you’ll need and how you’re going to analyze your data and reports. Conducting competitive intelligence research is one thing, but presenting it in a way that’s easy to understand and use is another. Make sure you know what you’re going to do so that you can make sense of all the data and information you collect. This is especially important if you’re conducting your own original research or if you’re collecting and organizing historical data that can span months and years.
Step 4 – Tell a Story with Your Competitive Intelligence, and Act
Did you know that only half of companies who conduct competitive intelligence use and act on the information and data they collect (Harvard Business Review)?
If you’ve completed the first three steps above, then you should definitely keep going until you complete this last step. To truly understand your competitive intelligence research, you’ll need to take it out of spreadsheets and lines of information that don’t mean much siloed and without the overall context of your business. Write summaries and stories with your data and discoveries. Explain what it means in your own words. You can also rely on data visualization tools to tell a story with your data. Capterra published an article with a great list of free data visualization tools, to get you started. Basically, do what you need to do to fully grasp what the research means for your specific business, so you can start to outline action items and what your business will need to do next to retain its competitive edge.
Tools for Competitive Intelligence
Here’s a list of competitive intelligence tools you may want to consider using.
Benefits of Competitive Intelligence
Now that you understand competitive intelligence a little better, don’t forget about the major benefits it offers your business:
- A better outlook on your competition – what they’re good at and what they’re not good at.
- Major gaps in the marketplace – what products or services have market demands that aren’t being met, as well as potential groups that haven’t been marketed to yet.
- Much better business decision – making and product development.
- Allows you to remain agile and relevant in an ever-changing marketplace.
Once you build your ideal business website, don’t let all your hard work go to waste. Understand how to conduct competitive intelligence regularly to learn from the wins and losses of others so you can retain your competitive edge.
Feature image: Pixabay