Competitive Analysis For Product Managers: The 4-Step Method

How do I improve in my role as a product manager? How do I make the best products possible for my users?

The most important lessons I’ve learned as a product manager came from times when I lost major deals. Whenever it happens, I try not to take it personally, and to learn from the situation — to learn from my competitors. In my opinion, the best way to improve is to learn from the competition.

By doing a proper competitive analysis, we can make sure that our product is relevant to our target audience, build our roadmap and business model in the right way.

In this article, I’ll showcase the main types of competitive analysis and present some best practices for how to use it to drive business decisions.

A short disclaimer: Competitive analysis for B2B (business-to-business) companies is very different than it is for B2C (business-to-customer) companies.

In the B2C world, changing a small feature is super critical as it can easily have a direct impact on sales revenue. This industry is very sensitive to changes, whereas in B2B, changes are seen slower and may not directly affect sales and revenue at all.

Instead, we rely on the sales teams. For B2B companies, the results of the competitive analysis, in many cases, are used by sales and business teams, so they’ll know how to defeat competitors in a deal.

Before You Start — What’s your end goal?

So, as you probably understood by now, competitive analysis has a few goals. Here I’ve organized them into 4 central objectives:

Helping the business or sales team:

The goal of the analysis is not to create an 80-page comparison document, but rather to identify the strengths and weaknesses of your product in the existing market. When sales teams speak to a prospect, they should highlight your product’s strengths and be able to answer tough questions regarding its weaknesses.

In my organization, we use ‘’Battle Cards” to make the content more accessible and easy to digest. These are one-pager cards that include the highlight of our product, divided into three sections: strengths, weaknesses, and answering tough questions. We created a battle card for each of our main competitors.

Image source: https://blog.hubspot.com/sales/battle-cards

Researching a new product offering:

This type of analysis is a lot more focused and is helpful when you are about to launch a new feature, a new integration, or a new complete product. Your competition may be your “native” market (i.e. competitors you’re already familiar with) or you may be entering an entirely new market.

For example, Waze may want to add a new feature to the existing map, such as a Google Assistant feature, the analysis will probably include Google Maps and others. Whereas when adding the Carpool product offering, the competitors are public transportation, or even walking by foot.

A comparison matrix is a great tool for this kind of analysis. It’s mainly used to visualize similarities and differences between products and services. The matrix helps to organize and classify the categories or features that you’re looking at.

Image source: https://buscreative.blogspot.com/2016/09/feature-comparison-matrix.html

Building your roadmap:

Planning your strategy one, two or three years ahead is mandatory, even in our constantly changing startup environment. When you plan your roadmap, build it based on internal innovation, existing features and potential client requests. In addition, there’s a need to observe the existing market, and plan your product’s strategy with input based on what the competition is doing.

Image source: https://livingroomanalytics.com/roadmap/

Research for a new startup or initiative:

In this kind of analysis, we will check whether there’s a relevant market for our idea. We will understand the size of the market, the business models of our competitors, what kind of technologies are currently in use and the demographics of potential customers. One of the first questions you are going to get when pitching to investors will be about the market you operate in and your competitors. And no, “we don’t have any competition’’ is not a good answer. It shows lack of market understanding, or even worse, that there’s no real market for your product.

The 4-step method:

Step 1: Find your competitors:

• Win/Loss Analysis — This is a way of understanding your strengths and weaknesses based on the sales process. In my company, we do this by gathering the history of sales activity: calls, email, meetings, and the sales person’s assessment once a deal is closed (whether it was closed-won or closed-lost).
  In addition, we ask our clients for their feedback once there’s a closed deal (“Why did you choose our product and not the competitor’s?”) or a lost deal (“What was the main reason for our loss? What could have the product or company do to win the deal?”).
  By asking these kinds of questions, we get an idea of the market, our competition, and our strengths and weaknesses.
• Analysts Reports (Forrester/Gartner) — There are companies that conduct market research and can give us a clue about the size of the market and who the key players are. It may not include all of them, and not all large markets are covered, but it can give us a good idea of where to start.
• Conferences and webinars — A good way to learn about who your competitors are and what they offer is by attending professional conferences (there are virtual ones now, during the Covid-19 period). You can visit your competitors’ booths and see how they interact with customers, have a look at their product marketing material, and even ask general questions about their product.

Step 2: Categorize

How do you compare? You’ll need to choose the main parameters by which you’ll make the analysis. It’s recommended to have as many measurable parameters as you can and to be specific (“We have 4 view options and they have 1” as opposed to “Our UI is more flexible”).

These categories need to cover the parameters that you know the clients are looking at, that are important to them, and that you are being judged by. This would be a good time to go back to your Win/Loss analysis from step one, and see why you won or lost in the past, it may give you a hint for these categories.

Step 3: Make the information accessible to your stakeholders

Who are the stakeholders interested in the analysis? If these are business teams, sales teams, or executives, a short and precise summary of the information is a good choice. On the other hand, if you want to share it with fellow product managers in order to decide on next year’s roadmap, a longer version may be more suitable.

Step 4: Repeat

Competitive analysis is never done. While a specific research project may have an endpoint, it’s important to reiterate on what your existing and known competitors are up to, or whether there’s a new company worth looking at.

A good way to make sure you are always up to date is to use news monitoring services, such as Google alerts, subscribing to industry newsletters, and following your competitors on social media.

To conclude, competitive analysis can provide important input for almost anything you do as a product manager. It’s critical to do deep dives throughout the year, especially while building the roadmap and feature planning, but also have a weekly or monthly update for the product, sales and business teams.