How to Write Competitive Analysis

Overview

I think competitive analysis is one of the most difficult jobs that most often falls into the realm of responsibility of the product manager.  Getting enough data is always difficult, but presenting it in a way that is useful to sales force is the real challenge. Sales people always want the magic competitive analysis bullet that will let them kill the competition.  But it doesn't work that way.  The sales person has to use the data you give them to build a vision of why your product is superior.

This document covers writing competitive analysis for consumption by sales people.  Competitive analysis for product planning use will require the same research, but will be delivered in a different form.

Target Audience

Your sales staff is the target audience.  If you have a direct sales force, you can provide some detail as they are generally willing to read through more information (depending upon how many products they sell). However, if you sell through channels, your competitive analysis must be very short and to the point. Sales people generally don't have much time to pour over competitive information, but if you use sales engineers to help sell your product, they will need technical details on weaknesses of the competition. They need to quickly understand the weaknesses of a given competitor and how to position your product's strengths against that competitor.  Be sure to outline your target audience before starting so that you can review your materials with them in mind.

Where to get the Information

The most obvious place to get the information on competitors is from their website.  You can always find datasheet type information on the website.  Pay attention to what isn't listed in the datasheet.  If it isn't listed as a feature, it may not be available from the vendor. Some vendors have manuals on their websites with release notes that are rich with strengths and weaknesses of the product.  However, there is no better way to do competitive analysis than to buy the competitors product and try it out yourself.  Depending upon the price of the hardware/software product, this may not be very easy to do.  

In addition to features of the product, you may want to include some information about the health of the competitor's company.  Press releases will tell you if they are venture funded and when they raised the last round.  Job listings will tell you if they are hiring and growing as an organization.

Using a consultant to pose as a prospect will also get you more information.  I hate when this is done to me however, so I don't do it.  I also warn my sales people about this so that they are careful to dig into the background of the prospect and understand the company they are representing.  But a good con-artist can always make it through and waste the sales person's time and get lots of information about strengths and weaknesses.

Format

Over the years I have used very different formats for competitive analysis with varying degrees of success.  Unfortunately, I haven't found a standard that works for every company.  A matrix is best for hardware products and sales channels.  More complex products require an understanding of competitive strategies.  Sales engineers want technical details and sales people want high-level, broad-brush positioning in their competitive analysis.  The list below is very comprehensive.  How much of this information that you include in your competitive analysis is dependent upon your target audience.  The only mandatory items are 1 and 2.

1)      Confidential mark - You do not want this competitive analysis document in the hands of your competitors.  I can't tell you what a bad feeling it is for a CEO to get a phone call from a competitor saying that you are spreading false information about their product.  I highly recommend not putting the information in email form.  It is too easy for a sales rep who is busy to just forward the information, in whole, to a prospect who can just as easily forward it on to a competitor.  Some companies actually print the information with serial numbers and on red paper to avoid duplication.  This is a little extreme, but you do need to take steps to make sure the information is protected.  A confidential mark at the bottom is not enough.  I would suggest a confidential banner in the background of the text.  You may also want to avoid distributing in electronic form.

2)   Summary positioning - This is the bottom line for the sales person.  The competitive analysis should have one paragraph for every competitor that sums up how your product's strengths should be positioned against the competition's weaknesses.  This paragraph should be at the top of any competitive document since it may be the only thing a sales person has time to read before going on a call.

3)      Matrix - A matrix is very helpful for hardware products as well as for software products that are similar to the competition.  A matrix let's you call out, in summary form, the major competitive advantages of your product next to one or more competitors.  You should generally include specifications and pricing.  The matrix does not work well however when you have dissimilar competition.  You need the strategies section below for dissimilar competition.

4)      Strategies - When you find that you are in competition against categories of products (ASP vs. Software for example) you will find that there are broad strategies that are appropriate for multiple competitors.  Outline the strategies using bullets to drive home the important points.

5)      Summary of Strengths and Weaknesses - You may want to include bullet points explaining the strengths and weaknesses of the competition.  Some people don't feel comfortable documenting a competitors strengths and you certainly don't want a customer getting a hold of such a document.  But this documentation will help sales people and systems engineers avoid being blind sighted by a competitor and allow them to be more prepared.  If you include strengths, you may want to include a possible counter argument for the strength to give the sales person something to work from. At the very least this will make them feel like they know what they are talking about.

6)      Other information - There may be more company information that you want to include such as the size and funding history of the company.

I have had some success with using a format for a competitive guide that has all the strategies numbered upfront, followed by a section for each competitor.  In the section for each competitor, the first paragraph is the positioning summary (including strategies by number to use against the competitor), followed by detailed bullets on strengths and weaknesses, and then more general information.  On any type of sales document, never save the best for last.  Always write these documents believing that the first paragraph is the only one that will be read.

Delivery

Any electronic form of competitive analysis is dangerous.  But any paper-based form is difficult to keep updated.  An internal website is one method of delivery that companies use for this information.  The risk is that a sales person may cut and paste directly from the site into an email.  The decision about how this very sensitive information is distributed should be made by the executives in your company.

Process

When I was doing competitive analysis as a consultant, it was quite a luxury.  I would get the top six competitors, do research, order products, install and use the product, then write the documents and wrap them up nicely in a binder for the sales meeting.  Few product managers have that luxury with time.  Often times, the sales people are screaming about some new competitor that they know nothing about.  The product manager does a little web research and whips off an email to the field.  The email gets filed away and no one can ever find it again.  I think it is important to be a little more structured in the presentation of competitive information.  Below is a basic process for this structure:

1)      Identify the top 3-6 competitors.  Even if you have a bunch of competitive information floating around in emails, it is important to have the information on the top competitors in a handy, useful, up-to-date form.

2)      Start the research on the competitors in parallel.  It may take you more time to get information on some competitors than others, so it is easy to start the process for the top competitors at the same time.

3)     Complete your research and build your analysis one competitor at a time.

4)     Review your materials with your target audience in mind.  Have someone from your target audience review the materials before they are distributed.

5)      If you can, roll out the information as it is completed, one competitor at a time.  It is much better for sales to get the information earlier rather than waiting until you present everything together.  It also gives them some insight into what you are working on and they can help your prioritize the competitors as well as suggest additional information that they would like to see included in the analysis.

6)      Put together a reasonable schedule for updating the information.  We tend to want to update the information for each sales meeting, but that is when we are the most busy preparing other materials.  It is better to schedule quarterly updates and work on one competitor at a time so that the information is complete and current.

Format and Delivery Update - 9/28/07

Format and delivery is something that I have always struggled with for competitive analysis. Especially in this day and age of dynamic web content. But I have finally found a wonderful way to present this information - in a LiveBinder. LiveBinders is currently in beta. I use it for all my competitive analysis for my new company. I put a competitor in each tab with my comments on our positioning and differentiation and it is updated dynamically. Using the 'share' feature, I can easily email my competitive binder to a potential investor.

To get a better feel for how this works, check out my Competitive Binder:


Competitive Analysis