How AI is changing the competitor analysis game

By
Neya Abdi
February 23, 2024
min read
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Founding a startup and growing a scale up is exciting. 

Gathering all the data for ongoing competitive analysis is not. 

Competitive intelligence is important in launching a business, developing a new product or feature, or clarifying your messaging. That said, getting the data needed to make this happen is both labor- and time-intensive. 

And if you want to do a good competitive analysis, you need to look at several elements among several competitors. 

That’s hard to do when you’ve got a packed calendar. 

Fortunately, AI can help. But as with any good AI project, it’s important to know exactly what you want to accomplish and have a plan that an AI tool can support. 

Your AI projects are only as good as the intention behind them. 

In this guide, we’ll go over the key questions scale up teams have to answer to develop a meaningful competitive analysis, and how AI can help teams find those answers faster.

Question 1: Who are my competitors?

Simply identifying your competitors isn’t always that straightforward. 

There are different kinds of competitors. You have direct competitors, indirect competitors, and substitutes.

One way to identify your competitors is by using the North American Industry Classification System (NAICS). Of course, the rapid proliferation of startups has made this more difficult than ever. These categories are broad, and the data may not be helpful for startups and scaleups. 

Larger organizations typically ask their sales associates which brands are mentioned most often, or they survey their customers in order to discover which brands are top of mind. 

If you’re a scaleup with limited resources or a small customer base, or you’re just testing a new idea, this isn’t possible. In these cases, teams often start with keyword research. They make a list of keywords associated with their idea and then type them into Google and see which companies come up. Then, based on their idea, they’ll classify these results into direct, indirect, and substitute competitors. 

The challenge with this approach is that it can be time-consuming, and, if you are exploring a new idea, you may not know how to structure your search efforts. You may also have a blind spot and be unaware of a specific way that your idea is being discussed in the market. 

This is where AI tools can help. If you already have a website with your idea, you can use AI tools to scrape your website and then compare the language in your website to others in your space who solve the same problem. 

Heatseeker offers this. You paste your URL into our tool and we crawl the web for competitors in your space and deliver a report with all of your competitors, how they discuss your product, and recommendations on how to improve your messaging in order to increase your brand awareness and reach existing audiences. 

Join the waitlist and you’ll be the first to know when Heatseeker is fully available. 

Question 2: How do I compare my competitors in a systematic way?

It’s helpful to analyze your competitors – and yourself – based on the following elements

  • Product
  • Pricing
  • Place
  • Promotion

You can also add elements like partnerships to this traditional list. 

Of course, researching and understanding all of these elements takes time, and AI can help you speed things up without cutting corners. It can also help you conduct some of the analysis. Depending on the tool you choose, you can speed up the process of: 

  • Gathering market insight
  • Understanding customer sentiment
  • Obtaining strategic guidance
  • Conducting market testing

There are several tools available on the market for the first three activities, but next to none for the final one: market testing. 

Market testing is a traditionally expensive activity that can cost startup founders tens of thousands of dollars during their first year of business. On the other hand, digital tools have made it possible to speed up market testing AND get insight from real-world customers. 

Heatseeker empowers scaleup teams to do this by creating digital ad campaigns based on a scaleup’s existing product and messaging. 

Heatseeker uses its competitive analysis tool to first scan the market and understand how competitors are discussing the product and solution. It then uses this information to automatically generate value propositions. The platform generates ad campaigns that are run in the market to see what real people respond to most. 

This real-world response is key to developing a competitive intelligence report based on the world today, as opposed to data sets from yesterday. 

What you’re getting is a record of people who have actually engaged with your ads and clicked through to a landing page, because they had genuine interest. 

You can use these engagement numbers to:

  1. Determine which positioning of your product or service is most worthwhile
  2. Continue iterating until you are satisfied with the results 

This capability can also be used to test elements other than messaging. You can use it to:

  • Test the best pricing for your customers by running campaigns with different models (e.g., subscription as a service, freemium) or prices
  • Test the best places or channels (e.g., Reddit, Instagram, Facebook)

You can also use it if you are trying to recruit more employees to your organization by testing which platforms lead to applications from suitable candidates.

Question 3: What are my competitors’ strengths and what are their weaknesses?

This can be difficult to assess. Traditionally, businesses will buy the products or services of their competitors where possible to analyze how well their tools work. This is harder in the SaaS space. AI tools can help address this challenge. One way to do this is through sentiment analysis. You can see how customers are talking about your competitors on review channels or on social media and receive a report that tells you:

  • What customers like most about your competitors
  • What customers like least about your competitors
  • What features customers are eager to see your competitors add or launch

This information can help you stand out from your competition, make strategic decisions about how to prioritize development in your product roadmap, and more. 

When you run a “heatseek” you get a grid of information on all of your competitors – including competitors you may not have identified –  including main offerings, unique selling propositions, pricing information, testimonials, and features.

Book a demo to see Heatseeker in action. 

Question 4: What is my competitive advantage?

Next up, you want to identify where you excel. 

Identifying your strengths, relative to your competitors, helps you do two important things: 

  • Identify where you excel overall and what you value above your competitors, so you can develop an authentic brand and messaging strategy
  • Identify where you excel specifically so you can develop specific campaigns around these competitive advantages

Now, this requires discipline and balance. It’s important to be mindful and avoid changing everything about your messaging just to grab some low-hanging fruit. 

Again, an AI-powered tool can help you identify these specific competitive advantages faster and test your theories around these competitive advantages. 

For instance, suppose you have a competitor that has recurring complaints about sizes for their product. Your brand focuses on offering a wide range of inclusive sizes. At first, it may be tempting to launch an entire campaign around this. But before devoting too much of your budget to the idea, you can run a few test campaigns, using a tool like Heatseeker, to understand what specific value propositions to focus on and whether this is compelling to new customers, so you only invest in the angle that resonates most. 

AI can help you focus on the human element of competitive analysis

Competitive analysis is fun when you’ve all the data at your fingertips. Taking time to gather the data can be arduous and time-consuming when you’re a busy scale-up with a million other things on your plate. Just like going to the gym is easier when you’ve laid out your clothes the night before, diving into an effective, meaningful competitive analysis is easier when you’ve got the information you need at hand.

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Neya Abdi
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