SaaS Competitive Analysis: Understanding Your Competitive Landscape
Since SaaS came into the scene decades ago, it has grown dramatically. SaaS solutions emerged like mushrooms after rain.
You can find a SaaS product for almost any problem. It can be as simple as an appointment setting software. Or it can be as big as a whole project management solution.
In fact, the SaaS market has become so saturated that it can be challenging to enter.
A study by McKinsey & Company says that SaaS companies that have an annual growth of 20% or below have more than a 90% chance of going under in just a few years.
So if you are in the SaaS space or still planning to enter it, you better prepare to earn a spot on top of the food chain. Or at least, occupy a space with a healthy number of customers.
One of the ways you can do that is by doing a thorough competitive analysis. This blog will cover how you can perform it and prepare for your battles ahead.
What is a Competitive Analysis?
Competitive analysis (or competitor analysis) is a tool that enables you to see how your company stacks against your competitions.
You would have to divide these competitors into two categories: direct and indirect competitors.
Direct competitors are those that offer essentially the same products as yours. They address the same pain points and may offer the same key features as yours.
Meanwhile, indirect competitors offer different kinds of products but are reaching the same target market. You may also want to keep an eye out for companies that are not your competitors at the moment but could become one in the future. For example, let’s say you have a B2B team project management solution. And you hear there are startups offering task management solutions geared towards consumers. They may not be your competitors now. But if they want to expand or switch to B2B, it wouldn’t be much of a leap for them.
Importance Of Competitive Analysis
Competitive analysis is like scoping your playing field. Not only does it give you information about your competitors. It also gives you an evaluation of your own business.
Knowing your playing field is essential to seeing a favorable S-curve and long-term growth for your SaaS company.
Some benefits that competitor analysis provides are:
- Showing your strengths and weaknesses.
- Discovering potential opportunities in the market.
- Helping to build your value proposition.
- A way to learn from other companies’ mistakes.
How to do a SaaS Competitive Analysis?
A SaaS competitive analysis template identifies your competitors, shows the data on their performance, and compares that data to yours.
Let’s talk about these points in detail:
1. Identify Your Competitors
The first step in competitive analysis is listing your direct and indirect competitors.
The best way to do this is by Googling what your product is.
For example, if you’re selling a project management solution for businesses, you could simply type that in the search bar. Chances are you’ve already heard some of the companies that would pop out.
Some review or blog sites may already have a list of your competitors. Keep an eye out for listicle articles with headlines like “10 Best Project Management Software” or something similar.
2. Gather Data
When you have identified who your competitors are, it’s time to get some competitive intelligence. Some can be measured with numbers, some cannot.
You can use many different sources for this, either by visiting their websites or browsing third-party review platforms.
The following types of data will help your competitive analysis:
Company highlights: This includes your competitor’s background. Their company mission will say a lot about their priorities and direction when it comes to their products and services.
You may also want to dive deeper into their competitive advantage. What makes them successful? This will give you an idea of what strategy works in your chosen market.
Products and pricing: The product is the core of any SaaS business. As you gather data about your competitors’ products, find out what features they include.
But don’t just focus on the offerings themselves. You also need to assess the quality of the product.
Is it user-friendly?
Does it have an aesthetically pleasing interface?
Does it experience downtimes?
Aside from the product, you also need to look at your competitors’ pricing strategy. The price ranges will vary depending on the scale of their product and target buyer personas.
Their pricing models are also worth looking into.
Are they offering tiered plans? Do they use a credit-based pricing model? Or usage-based pricing?
This may give you a clue about what pricing models work in your target market.
One more thing to consider is the distribution model. SaaS is not like traditional businesses that have a lot of possible distribution options like retailers and wholesalers. But there can still be some variety.
Most SaaS providers sell directly from their websites. But there are also some that take advantage of resellers. In fact, some do both. Comprehensive SaaS products like ActiveCampaign and SocialPilot offer white label solutions for resellers.
Sales and marketing strategy: This is one of the most important pieces of data that you could get from your competitor analysis. Your competitors’ sales and marketing strategies explain why they have the market share that they have.
Each competitor’s value proposition would be a good start. It would tell you what kind of value or benefit that company tries to deliver to its customers. It also says something about what that company prioritizes when it comes to the direction of its products.
Your competitors’ marketing and sales processes will tell you what works in your target market and what doesn’t.
Start asking these questions:
- What marketing channels do they use?
- Do they send cold emails?
- Cold calls? Social media?
- Paid ads?
- What kind of content are they publishing?
- What SaaS solutions are they using for their day-to-day marketing needs?
- Do they have behavioral marketing strategies?
- How well are these marketing efforts performing?
When it comes to their sales strategy, what approach are they using? Do they have a solid sales team winning over new customers? Or do they have a product-led growth model? Again, what kind of SaaS products are they using for these needs?
You may also want to look at your competitors’ content marketing performance. Knowing what keywords they are trying to rank for can tell you a lot about what opportunities they see in the market.
Find out what keywords they use and how their pages are ranking in Google. There are tools you can use for that. We’ll discuss more of that later.
SWOT analysis data: Strengths, weaknesses, opportunities, and threats (SWOT) analysis is primarily a tool for examining the internal environment of an organization. But doing one for your competitors is a good way to assess how you stack up against them.
Let’s take them one by one.
What are your competitors’ strengths? What aspects of their business work well for them in the market? You can learn from these strengths and see if you can apply the same principles to your business.
Don’t get it twisted.
You’re not going to copy every single strategy that they’re doing well. Every business is different.
What may work well for them might not necessarily work well for you. The best you can do is get the principle behind it and see how it translates to your company.
Weaknesses. Ever heard of the saying “One man’s weakness is another man’s strength”?
Your competitors’ weaknesses present pain points for their customers and your target market. This can be a good opportunity for you to build a strong product that addresses those pain points.
Opportunities are events or market trends that may benefit your competitor. It can be favorable government policies, new technology, changes in social patterns, and more.
Opportunities can also be internal. These can be new partnerships, moving upmarket, or a major product update.
Knowing your competitors’ opportunities helps you anticipate their next move. Or maybe even beat them to it, if you have the same opportunity. That will often be the case since you operate in the same market.
Now let’s talk about threats. These are things that could potentially harm your competitor’s business. One of the external sources of threats in SaaS is security issues, such as data breaches and malware. It could also be macroeconomic factors that disrupt the demand for SaaS solutions.
Like opportunities, threats can also come from within your competitor’s company. It can be a change of personnel or structure. It can be an unfavorable merger or a popular executive leaving.
Threats can also be from your other competitors or even your own business. Other companies may be introducing new products, lowering their prices, or boosting their marketing efforts.
3. Compare Their Data With Your Own
This has been implied as we discussed data gathering. But it is important to have a separate sitdown for examining how your performance stacks up against your competitors.
Here’s a competitive analysis example in the form of a comparison table:
Competitive Analysis Tools
Now there are many different tools that you can use for competitive analysis. After all, the data isn’t going to send itself to you. You have to actively look for it. And most of the time, you’re going to need some tools to do that.
Below are a few of them:
When it comes to researching your competitors, you can’t go wrong with the world’s largest professional networking platform. Through LinkedIn, you can see their company background and composition.
However, you may need a premium account to view specific details on company profiles. It may be worth it since it lets you see their current company composition.
It’s also helpful to know how many people they have in marketing, sales, development, and other departments. Which department are they focusing their manpower on? That says something about what they value as a company.
You may also want to visit your competitors’ CEOs’ pages. How active are they on the platform? Who are they connected to? That information would be crucial in gathering SWOT data on your competitors.
It’s unsurprising that the most popular social media platform in the world is a great tool for competitive analysis. It is one of the most prevalent marketing and sales channels today, especially for SaaS.
What’s more, it works for both organic reach and paid advertisements.
There are two things about your competitor that you can view on Facebook: social media engagement and ads.
Social media engagement: Monitoring your competitors’ social media presence is crucial, especially if you are in the B2C space. How many followers do they have? How often do they post? How many likes and comments do their posts get?
Facebook ads: Aside from your competitors’ pages, you can also look them up on the Facebook Ad Library. This is an ad transparency tool that shows you all the active ads that your competitor currently has on Facebook and Instagram. It also shows you what countries or regions they are targeting.
Ahrefs
Remember when I said something about checking your competitor’s keywords and content marketing performance? Ahrefs is an SEO tool that enables you to do that.
Like Facebook, Ahrefs enables you to view both organic and paid traffic coming into your competitor’s web pages.
Ahref’s Top Pages section shows you your competitor’s top-performing pages. You can run their domain through the site explorer.
And the platform will show you a list of their most ranking pages. Among the data it shows are the amount of traffic each page is getting, their value, and the top keywords.
This is a great tool for learning what keywords they are trying to rank for.
But let’s take it further. Aside from just knowing their target keywords, you can try to outrank them or even learn if that keyword is worth it.
To do that, you need to run those keywords on the platform’s Keyword Explorer. This tool shows you each keyword’s search volume, keyword difficulty, traffic potential, and more. From there, you can decide which keywords to target.
As for viewing their paid traffic, you can also view their pay-per-click (PPC) keywords. Ahrefs shows you what keywords their ads are targeting, how much traffic it’s bringing in, and other key metrics.
Winning A Healthy Competition
In SaaS, competition can be two things: an indicator of demand and a motivation to improve.
Competition verifies the problem that you’re trying to solve. If there are a lot of other SaaS companies trying to solve a problem, then it is a legit pain point in your market.
If no one is trying to create a particular SaaS solution, that probably means there isn’t much demand for it.
Still, there are cases where you can have no competitor for a high-demand product. If you’re lucky enough to find yourself in that position, you can take the opportunity for a blue ocean strategy.
Ultimately, the customer benefits the most from the competition. After all, it motivates businesses to improve the quality of their products and lower their prices.
As a SaaS company in a healthy competition, you should aim to get ahead of your competitors not just for the sake of getting ahead. But your focus should be on delivering the best value and experience to your customers.
For more strategies on growing your SaaS business, visit our blog here.
