If you’re applying for a role, wondering about accepting an offer, or doing an industry analysis as part of your job, knowing how to audit a company from the outside is a useful skill.
A thorough competitor analysis or product audit can uncover information about:
- Culture: What it’s like to work at the company, how senior management respond to employee feedback, and what people think of management strategy and capabilities. It can also give you a view on interviewee experience, what senior management talk about as their top concerns and even shed light on internal attitudes to DEI.
- Positioning: How they present themselves online, their value proposition for customers, and their competitive advantage or moat.
- User satisfaction: User feedback on the value they receive from the product, their pain points or moments of delight, and how the product is perceived versus competitor offerings.
- Product: How the product works, it’s main features, UX and onboarding flows. How the company makes money.
- Tech: What the company’s underlying tech stack is.
- Growth: How the company attracts new users and grows. Its Go-To-Market (GTM) strategy, their marketing channel mix, and how it stacks up against competitors.
- Financial health: Whether the company is financially stable. When it last raised money. Who are the investors. Financial results from investor reports and analysis.
You can’t learn everything about a company from this process, but you’ll definitely learn something.
It’s a useful exercise especially when you are considering joining a company or onboarding.
It need not only be a one time exercise. If you’re working in a highly competitive space doing this sort of activity routinely might even be the difference between winning or losing: since keeping tabs on competitors can act as an alarm bell that their pricing strategy is designed to undercut you, that they’ve launched a feature customers are raving about, and that customers are negatively comparing your product to theirs.
Benefits of competitor analysis
Auditing a company has several benefits:
- Avoids complacency: externally auditing a competitor and comparing their products, services, marketing mix, and reviews to your own company is critical to avoiding internal complacency, siloed approaches to roadmaps, groupthink and missing major market movements. You shouldn’t do things just because a competitor does, but you should know what they are doing, what customers think of it versus your services and whether they’re ahead of you. You don’t want to wake up and realise they launched a killer service a year ago and have since cornered the market.
- Additional data sources: you shouldn’t assume that your company has complete data coverage or a perfect view of the landscape. You don’t, for example, have access to your competitor’s NPS or their site traffic data. But you can get a feel for these on public ratings and reviews sites, or public traffic monitoring sites.
- Customer focus: Often customers talk about your company on other platforms, and often they say things that they wouldn’t say directly to members of your company. Sentiment and WOM around your competitor matters if you’re deep diving your customer base.
- Education: If you’re relatively new to technology or looking to expand your knowledge base outside a functional or industry remit, this can be a fantastic way to upskill on understanding tech companies. The longer people spend in the industry, the more knowledge they accumulate about the landscape. Typically it’s by performing this sort of activity routinely.
- People or career purposes: if you’re interviewing for roles or considering an offer, doing as thorough an audit as possible can only help you in the process or with making a decision. If you’re a hiring manager, it can be good to review the org structure and roles of your competitors, and you can even consider approaching top performers for roles in your team if you have gaps.
- Risk management: If you’re interviewing somewhere, especially in times of scarcer funding, understanding the financial runway of a company is key. It’s also a good hygiene check to see if there is turbulence among senior management or anger among current employees.
Times not to audit a company:
- Things are great: This can be a lengthy process, so if you’re growing fast, doing well and have a high NPS, it can just be a distraction. Companies can spend too much time obsessing over competitors and forgetting to lean into their existing strengths.
- Time: This can turn into a real rabbit hole. If you have a compressed schedule to write a product strategy or similar, it may not be an effective use of that slot. Alternatively as a manager you might want to devolve this task to your team but if you’re simultaneously upskilling them in a number of areas you may find that they’re not ready for this right now.
- Company culture: if you work in a company that sets top down OKRs or where strategy comes from the top, it may be the case that your labour is wasted.
- Stage: The bigger and more established a company is, the more information there is to surface in an audit. It’s unlikely you’ll find a ton of Trustpilot reviews for a company which is under 2 years old, and the traffic base of some companies is too small for them to show up on traffic monitoring sites. There may be times where there just isn’t sufficient available information about competitors to make it worthwhile or where you’ve launched in a new space - and you’re lucky enough not to have any real competitors yet.
When to do an competitor analysis or audit
There are two ways to do it
- Habitual skims: Get into the habit of surfing reviews sites, checking the traffic data and playing around with their website routinely. This is a general good practice but should be mirrored by remembering to do the same on your own site, reviewing your own customer and trading data.
- Annual deep dives: Formalise the process, take screenshots, and keep a log by writing down what you find. If you go down this route, get management buy-in and try to make it a routine item that you circulate to a mailing list with some key bullets of the highlights, or a meeting where you run through the findings with multiple stakeholders.
Example sites we audit throughout the article:
On the B2C(2B) side, we use the site Codecademy as an example as we walk through competitor analysis and audit techniques. They’re an online learning platform that teaches how to code, with a B2C and a B2B business, operating a freemium model. They exited to Skillsoft in April 2022 for $525m.
On the B2B side, we use GoCardless as an example. They are a Fintech company that power bank payments, and surface data to clients to help them manage their customer and risk base more effectively. To date they have raised $540m with the valuation at their last raise being $2.1bn.
This article was published in Oct 2023, so while some numbers or recent findings might change in the examples, the principles remain the same.
Get the Hustle Badger Competitor Analysis / Outside in Audit template here
