The thinks look at fundamentals of an ecommerce strategy continues. Yesterday, we looked at setting the right ecommerce goals and today we’re looking at, for me, one of the most fun parts of strategy development: competitive analysis. When else can you spend time going all around the web looking at the best and worst and get paid for it? Plus, it’s like being James Bond, spying for fun and profit. C’mon. How cool is that?
Here are 5 ways to review your competition’s online activities:
- Review their site. OK, this one probably seems obvious. But, take a look at your competition’s websites. Think like a customer trying to solve a problem. What does your competition do well? What are they missing? Take a look into any company information they provide while you’re at it. And make sure you do it for every one of your competitors. If they all do something similar, should you add it to your efforts? Or should you throw a curve and try something different?
- During the site review, note how they’re earning revenues. Is it solely through lead generation or online sales? Or do they monetize traffic in other ways, such as affiliate programs, advertising or sponsored content? One of the best metrics for online business is revenue per visitor and there are many ways to increase that metric that don’t depend on traditional sales.
- Compare their traffic and keywords with yours on sites like Compete, Quantcast and Alexa. [see footnote*]. Since traffic growth should represent a strong leading indicator of sales (and God help you if it doesn’t), tracking how you’re doing relative to the competition will help you set more effective goals for growth, too.
- Knowing your competition’s online marketing mix can be tough. But, here are some things to try:
- Find competitive search terms for search engine optimization and pay-per-click advertising using tools like Wordze, Keyword Discovery and Google AdWords keyword research tool.
- Track how the competition ranks for search terms that you’re also targeting in a spreadsheet or using tools like Advanced Web Ranking. Pay particular attention to how they use title tags, meta-descriptions, URL structure and copy for a given term to improve your ranking
- Read the competition’s public filings. If you compete with any public companies – and, no matter your size, you do – their quarterly and annual reports provide excellent insights into what they’re up to:
- Sell stuff online? Check out eBay’s annual report. Or Amazon’s. For instance, eBay’s most recent annual report notes the company expects “…transaction activity patterns on our websites to increasingly mirror general consumer buying patterns…with the strongest…growth occurring in the fourth quarter.” Obviously, that’s just their way of saying they expect more folks to buy at Christmas time. So, if you’re looking for strong Christmas sales, expect eBay to go after the same customers and plan accordingly.
- CPA? HR Block.
- Run a restaurant? Read Brinker’s (the parent of Chili’s, Macaroni Grill, On the Border, etc.
- Brick and mortar retailer? Wal-mart and Target.
You get the point. Some of the best business education you’ll get – and a host of competitive information – is a click away. It won’t make the best beach read, but it might help you pay for your next vacation.
Competitive analysis represents a key step in developing a sound ecommerce strategy. These 5 steps are just a beginning. What activities do you use to analyze your competition? Tell us about them in the comments.
* – I know that each of these services has their issues, particularly in measuring lower traffic sites. Especially Alexa, which is generally crap. But, as long as you’re only paying attention to relative strengths, they’re OK. And they beat flying blind.
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