Identify competitors

The first step to doing a competitive analysis is identifying your competitors. There are two types of competitors: direct and indirect.

A direct competitor is one that is offering the same product or service and targeting the same customer base as your business. An indirect competitor is one that sells similar products but targets a different customer sector, or sells different products and services but shares your customer base. Identifying and researching your indirect competition is important, as it gives you a different perspective on your business or customer base.

To find these businesses, simply do a web search or use websites such as Product Hunt and Crunchbase to help you find similar products and services and conduct market research. Find as many direct and indirect competitors as possible to better understand who you're up against.

Analyze competitors' online presence

Once you've identified and organized your competitors, assess their online presence by evaluating how functional their websites are, how easy it is to shop on their site and how frequently they’re engaging with their audience. With good digital marketing and e-commerce strategies at the forefront of most businesses today, a great opportunity to stand out amongst your competition is by having an easy-to-use, robust website and engaging with your customers on social media.

Find as many direct and indirect competitors as possible to better understand who you're up against.

Check online reviews

Visit sites such as Google, Yelp and Facebook to read customer reviews for your competitors’ services. If they have Twitter or Instagram accounts, consider how they're replying to customer queries and negative comments.

Online reviews give insight into the customer experience a company is providing. By reading negative reviews, you can better understand where these businesses have gone wrong and determine what you can do to prevent similar situations. And by reading positive reviews, you can focus on where the company excelled and determine how you can offer even better customer service.

Talk to competitors’ customers

As you're reading online reviews and comments, make a note of people you'd like to learn more from and reach out to them. Talk to them directly and see who they are, what they want and need, and why they had a bad experience with your competitor. Not only are you learning about the customer experience, you’re also giving them direct attention that could lead to business down the road. Think of it as a relationship: If something is lacking in their relationship with your competitor, make it known that you will fulfill those unmet business needs. At the conclusion of your conversation, thank them for their time and offer them better customer service through your business.

Identify their strengths and weaknesses

Once you've concluded all your research, compile it in one place and evaluate your competitors’ strengths and weaknesses. Use this information to improve your own business and focus on specific areas you can capitalize on. As no business is perfect, keep this research on hand to look back on and compare against when you do another round of competitive analysis.

[Read: 5 Expert Business-Planning Strategies to Help You Reach Your Goals]

Use research tools

Conducting a competitive analysis is essential to growing your business. However, it can be incredibly tedious and time-consuming — especially if you’re looking at multiple competitors. Luckily, there are many online research tools to make the process easier and more efficient. These tools can help you identify competitors, track their content and analyze the results. Some of the most popular tools are SEMrush, SpyFu, BuzzSumo and Owletter. Using research software saves you time while reporting the best results for your business.