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Method Spotlight:
The Purpose-driven Competitive Analysis

We love the Feltron Annual Report. Information designer Nicholas Feltron spent the past several years collecting painstaking data about his activities, from miles traveled by rail to milligrams of caffeine consumed. He captures his visualizations in beautiful annual reports that incite the lust of many information-graphics enthusiasts. When I set out to conduct a competitive analysis for a social networking client, visions of similar visuals danced in my head.

I constructed a robust evaluative checklist, listing every bit of potentially-interesting data I could think of, from layout grid choices to number of clicks. I wallpapered a room with printed screenshots representing every possible screen and state of every social networking site out there. As I was standing in this room, the magnitude of the task I'd created for myself caught up with me. At last, I asked what I should have asked in the first place: "What on earth am I doing?"

In Adaptive Path's collaborative fashion, I turned to my colleagues for help. Reminding me that, "the exhaustive is the enemy of the good," a wise colleague asked some vital questions to clarify my purpose. Answering the following questions ensured that every bit of data collected was useful and that the final deliverable was actionable.

1) What is the point?

Competitive analyses come in many flavors. Possible goals of competitive analysis include:

• Keeping up with best practices
• Identifying differentiation opportunities
• Evaluating performance against design principles
• Collecting patterns for inspiration
• Comparing features (ideally with respect to user needs)

Beneath goals lurk motivations, and where there are multiple stakeholders, there are usually multiple motivations. An executive's motivation for comparing features (e.g., to validate an existing design) may differ from a consultant's motivation (e.g., to prove the existing design needs work). Unearthing these motivations and making them explicit ensures that everyone is aware of and honest about any "hidden agendas."

Keep in mind that there's a difference between an agenda and a hypothesis. Say you take a cursory look at competitive sites and draw the conclusion, "Wow, all these banking sites look the same." If you set out to prove that this is the case, your agenda can skew the study and undermine its credibility. If you instead treat this as a hypothesis, you'll be open to proving or disproving it through the research process.

My client didn't need to know how their site ranked against competitors' sites. We all agreed that the current site needed work, particularly in helping users register and get established. Thus, I clarified the goal of the study: To identify an array of interesting solutions for sign-up and ramp-up that will inform the project team in redesign efforts.

2) What will the final deliverable look like?

Before you even start gathering data, get out some paper and a pencil and start sketching. Keeping your goals and motivations in mind, envision the final report or presentation. Picture how it will be used. Is it a reference resource that will sit on a designer's desk? Will it be passed around in workshops to guide strategy decisions? Who is the audience?

Understanding your goals, motivations and audience will drive the rest of the decisions. Should it be organized by competitor, theme, or both? What type of content will be on each page? What purpose will screenshots/illustrations serve? Will you want to reduce certain elements to simplified schematics, for ease of comparison? Do you plan to use a model or chart for comparing competitors (a matrix, value curve, positioning map, alignment diagram, or mental model). What will the points of comparison be?

Populating the sample deliverable with sample data is also helpful. Create a rough template showing the page types and fields you plan to have in your final report, and take a stab at writing sample content. Don't worry about accuracy, just use your intuition to focus on writing the right type of content. Sharing this sample deliverable with stakeholders ensures that you are all on the same page before moving forward.

By understanding and getting buy-in on how the final deliverable would be structured, I was able to ask the right questions about each competitor. I formalized my questions in a spreadsheet that I populated as I analyzed each site.

3) What are your criteria for selecting competitors?

Defining who the competitors are is a complex art that can merit a thorough study of its own. Chances are, your company already has a list, but don't take this list at face value. You must understand how and why these are considered competitors, which begins with understanding the characteristics of the product or service itself.

Try listing your product or service's characteristics, including industry, audience, channel, business model, brand tone, values, role in the user's workflow, and components. Brainstorm other products or services that share one or more of these characteristics. You'll quickly find that "competitors" includes more than direct competitors -- those who are competing in the same industry, for the same audience.

Partial Competitors' offerings overlap with yours, but only in part. Flickr competes with Facebook's photo sharing feature, even though Facebook offers a broader array of social networking features.

Comparators may not be competing for your customers at all, but share similar business models, branding, values, roles or components. AllRecipes.com and Wikipedia are both about sharing useful knowledge, but they are not direct competitors.

Substitutes are potential replacements for your product or service that may exist in an entirely different industry or channel. A classic example is Lexus. They realized they were actually competing with expensive jewelry and major travel: When people got a windfall, they'd either spend it on a Lexus, jewelry, or a big trip. Understanding what makes the alternative experience compelling can inform your experience designs.

Idols are those companies or products that one aspires to be like. Perhaps your company wants to be "The W Hotel" of day care centers. Investigate what that means, and how these idols' offerings might inform your study.

Once you've free-listed or otherwise gathered a broad list of competitors, comparators, substitutes and idols, you'll want to narrow the list down to a justifiable, representative selection, always keeping your goals and motivations in mind. One way to do this is to rate the degree to which each competitor shares the characteristics you listed. Competitors that are highly similar in one characteristic or share many characteristics are likely to be of interest. You can also map the competitive landscape using models like those described in question #2. Select one or two exemplary companies from each segment of the landscape and focus on those.

Since my goal was to discover patterns for sign-up and ramp-up, I determined that I was interested in sites that thrive on user engagement (and wouldn't have much value without it) and exemplify at least one novel user interface pattern.

The Results

While it represents a massive data-collection undertaking, The Feltron Annual Report is essentially a book of trivia. Competitive analysis reports should be useful and actionable.

Although data collection always takes time, answering these questions up front ensures that it doesn't waste time. By clarifying goals, envisioning the final deliverable, and carefully selecting competitors, I was equipped to produce a valuable deliverable that not only served the project team's needs, but became a valuable resource to other project teams at Adaptive Path.

I'm excited to be able to share this resource with you, for reference and inspiration.

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