Business

Customer feedback as competitor analysis

By 25/05/2020 No Comments

Understanding your customers through customer feedback is the best way to get to know what they really think about you.

As well as being a powerful weapon in your CX program, customer feedback is also a great way to find out what customers think about your competitors too. In this blog, we’ll look at using customer feedback for competitor analysis and see how it can link to your overall strategy. Firstly we’ll look at the benefits and a general plan of how to execute a competitor analysis. Then we’ll examine how customer feedback can be used to refine your overall plan of action.

What is competitor analysis? 

Competitor analysis is the identification of the strengths and weaknesses of the competitors’ products, sales, and marketing. It’s vital as a way of understanding the way your brand and your products and services are perceived and how they performed in the marketplace. Used effectively, it can give you everything you need to understand how customers judge your products against your competitor- in other words, how your market works! Careful market analysis provides you with:

  • Knowledge of how your existing and potential customers rate the competition.
  • A tool you can use to develop effective competitive strategies in your target market.
  • A good idea of what your customers need and want.
  • Strategies for how to expand into a new market.
  • An idea of what gives your company an advantage over its competitors. 

In complex, fast-paced markets, customers are often characterized by their disloyalty. Unhappy customers are quick to leave for competitors or, in many markets, expect some sort of loyalty offer. The more information and insights you have, the more you will be able to stay on top of the market and prevent spending on churn when you don’t have to.

Why reviews are a vital part of your competitor analysis

Customer feedback is an essential part of understanding the customer experience. Many organizations will send their structured feedback forms that rely on satisfaction ratings or perhaps a link to a full survey. But unsolicited and unstructured feedback is both more motivated and shaped by the customers around what they think is important, not you. It should be clear that unsolicited feedback is where you may find the most honest and detailed views.

This, of course, makes life hard. Firstly because it is usually unstructured so it won’t fit into your usual categorizations for feedback. Secondly, unsolicited feedback is generally written by motivated customers who, by nature, can either be over-positive or over-negative. This is usually called the ‘J-Curve‘, where what seems to be an average 4-star review has a large number of motivated customers giving one star. This is a level of detail you won’t pick up on NPS, CSAT, or other metrics or surveys. And of course, the same method can be used for yourself as well as your competitors so that you can achieve a measurable like-for-like comparison.

How to carry out a competitor analysis 

Different markets have different boundaries, economics, and their internal subtleties, which may add or subtract steps from the list below. However, it’s worth understanding how competitor analysis generally works and how it links to the bigger picture. Bear in mind this isn’t a one-off project but an ongoing activity. These are the steps you will need to go through:

  • Define your market

This is usually ignored when most people within an organization think they have a good idea of who their nearest competitors are. However, it’s essential to see the world from the customer’s point of view and understand what needs or wants they are trying to satisfy. 

Just as a director of Rolls Royce can say his company competes with fine art and private jets, it’s probable that just because another company makes the same product, they aren’t a direct competitor.

Similarly, if multiple products address different segments in your market, try and understand how they may be grouped and what differentiates the groups. It may be price or different types of functionality. 

  • Determine who your competitors are

Now that you have your categories, you can start listing direct competitors. Try and limit this to geographic areas or reach- you are still working from your customer’s point of view, so you are looking for alternatives your customers could purchase.

  • Think about SWOT and PESTEL 

A SWOT analysis will cover the organizations’ Strengths, Weaknesses, Opportunities, and Threats. SWOT tends to include things from an internal point of view.

A PESTEL analysis should accompany this. This covers the political aspect and the other pressures happening, also linking to what’s happening to customers. PESTEL looks at Political Economic, Social, Technological, Environmental, and Legal factors that can affect the market. PESTEL is an external market analysis.

  • Observe competitor campaigns 

Take a look at your competitors’ marketing campaigns. By understanding how they are attracting new customers, you will be able to improve your pipeline.

This might be tricky as you will need an understanding of how these promotions have evolved. This needs to be mapped against which segment they are targeting from month to month and what the response seems to be.

  • Understand their customer experience

This isn’t a paper exercise- this might mean you have to leave the office! This step almost certainly requires visiting retail outlets and interacting with staff by telephone, as well as websites chatbots and online ordering. It also means trying to respond to promotions, do refunds, start complaints, and the full spectrum of typical customer behavior.

This might require an agency to do it effectively, but for smaller organizations, it can be performed inhouse as long it is structured and managed. You aim to get away from anecdotes and stories and towards some kind of hard causal data.

You’ll also need access to some idea of what the customers think of the company or product- for this public review data is an excellent source- this could be Amazon, Google, and of course, social media.

This is a vital resource as it is unsolicited, unbiased information about what customers think of a product or service. Collecting and analyzing this data can be a complicated affair, but below we will look in more detail how it’s done and what the benefits can be.

How to create a plan based on competitor customer feedback

  • Collect and analyze!

Before you create your plan, you now need to collect and analyze the raw data:

The first step will be the analysis. This is itself a multi-stage process where you will need to collect data into one database. This is tricky as you may be taking this from many websites, and each feedback needs to be geographically located and timestamped if you can. It’s possible to do this in Excel, but it’s just as easy to find an open-source web scraping app that does the same job.

The second step is to prepare and clean the data. Duplicates, irrelevant information, or ‘blank’ data will need to be cleaned out. The data will have typographical errors. Some of the data will be in different languages, and there will be different idioms and figures of speech used. And that’s before we get to dialects, the vast numbers of spoken and written variations of French, Arabic, German, and English dialects globally. To get to this level requires some sophistication, and either intelligent software or human text scanning.

Again this can be done by a human, and you can read our earlier blog about it here. You will need to decide the scope of the analysis, in terms of timespan, products, and geography as well as determine if you’re willing to trade off speed against accuracy. The endpoint of this stage is to get to usable, organized data collected with meaningful scope.

The last step is to analyze! Once you have the data, the information needs to be coded to fit your business requirements. When customers are leaving reviews online, they are not filling your pre-set formats. Actual issues can be buried in the text and may not be written about directly. This requires an understanding of subtlety within the language.

It’s possible to run this process manually and then add on a text analysis solution. This alone can work, but by its nature is a shallow solution- it will only look for what you ask it to. Wonderflow uses Natural Language Processing. NLP is a branch of artificial intelligence that helps computers to derive meaning from human language. We’ve written before about how NLP can work for you here with loads of examples.

  • Summarize

The above process should give an enormous amount of information about your product and your competitors.

At this point, you’ll need to overlay your company strategy and product roadmap to see what you need to do. This could be finding gaps in the market to populate, competitor weaknesses you can exploit, or even ways to avoid competition and own your own space.

The simplest way of condensing and communicating your findings is the Value curve model, devised by W. Chan Kim and Renee Mauborgne, authors of the seminal strategy book Blue Ocean Strategy. A value curve (sometimes called a strategic profile) is a graphic depiction of a company’s relative performance across its industry’s factors of competition. Simply make a graph where the x-axis is all the significant factors of competition for a customer group, such as price, shape, performance aspects, availability, and so on. Then plot on the y-axis your rating for each factor against a competitor where the y-axis is attractiveness to the customer.

If you seem to beat the competitor on all factors, you’re missing some (unless you have 100% market share!).

The results

An NLP tool can help you identify clusters of particular language terms so you can see how customer sentiment has evolved. In many instances, this can be segmented according to the product or customer group. For example, you can see how a relaunch with a new design affected how customers feel. You can see the effect of feedback volume when there is a price promotion. You can identify why customers are angry or why they are delighted. You can also establish what they don’t talk about, so, for example, if the development team is focussing on a new feature, you can determine if its of interest to competitor customers in any way.

The analysis will allow you to manage the promotion of your product based on your competitors’ performances, so you know before your product is launched if it is going to work. For instance, if an aspect of your competitors’ product is highly criticized, your promotion could emphasize your products’ superior capabilities along that particular aspect and take an offensive stance to attract disaffected customers directly. 

The approach can also be used to understand how your marketing strategy and product roadmap fit what customers want and what your competitors are doing. You will likely find that you or your competitor fall into one of four categories. 

  1. Market Leader: This is usually the firm with the largest market share. It often leads other firms in price changes, new product introductions, distribution coverage, and promotion spending. In other words, it is the firm that dominates a market. It’s also the most vulnerable as market leaders are often the most conservative- they tend not to change anything which might affect their leadership position.
  2. Market Challengers are the most dangerous. They usually have a demonstrable growth curve in at least one customer group. The challenger might attack the market leader, other firms of its size, or smaller local and regional competitors- this usually becomes clear through your competitor analysis.
  3. Market Followers seek stable market shares and profit by following competitors’ product offers, prices, and marketing programs. In other words, a market follower is a runner-up firm that wants to hold its share without rocking the boat too much. It may be because they see the market as one in decline, or perhaps their energies are focussed elsewhere.
  4. Niche players: This is the most challenging but often most profitable place to be. Apple was famously once just a niche player. Market niche players are often smaller firms in a market, but can even be larger firms that lack established positions. They avoid confrontations with the big companies by specializing along with demand, customer, product, or marketing-mix lines.

Analyzing multi-language customer feedback in large volume from different sources is a complex process. With an AI-based technology and years of experience, Wonderflow is helping global brands to become customer-centric. Find out more about our solution.

Conclusion

Sometimes, competitor analysis is a zero-sum game. You can usually bet that your competitors are likely doing the same kind of analysis on you! Competitors’ feedback on platforms like Amazon is public. Therefore everyone is free to analyze it and understand their market performance and position in the market. For this reason, you want to ensure you’ve got the most sophisticated tool available. 

You can read more about how we work in different sectors here. You can read more about the application of Wonderflow to different use-cases here.

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