Doing a competitor analysis in the modern world is remarkably rewarding. In the pre-Internet era, you had to do manual research on your competition, which could take incredibly long. Now, with all that access to everyone’s victories and failures, it’s pretty effortless to gain insights for your own projects and ensure you won’t make the same mistakes.
Since designing the best SaaS products takes dedication and awareness of your competition, this brings us to the topic of today’s article - how to do Saas competitor analysis and learn how to analyze the market.
Competitor analysis is a crucial aspect of any business, so to stay ahead in a highly competitive market, we’ll show you today how to perform a comprehensive SaaS competitor analysis, including the key areas to focus on, the tools and methods to use, and how to use the information gathered to make informed business decisions.
Whether you're just starting out or looking to stay ahead, this article will provide the insights and guidance you need. Then you’ll just need professional SaaS design services to finish the job.
Why analyze SaaS competitors?
Extensive experience in various product markets and market strategies comes with lots of practice and diligent groundwork. You won’t know what to avoid or what needs more focus until you actually take your time to study your “business rivals.”
Overall, SaaS business owners should analyze their competitors for several reasons:
- It helps you stay ahead of the competition - understanding the competition's strengths and weaknesses enables you to identify opportunities and develop a competitive edge;
- Market intelligence - competitor analysis provides valuable insights into market trends, customer needs, and evolving technologies, allowing you to stay ahead of the curve;
- You can also improve customer experience by identifying ways to differentiate yourself from your market opponents;
- The assessment of market opportunities - competitor analysis helps you identify untapped markets and opportunities for growth, leading to increased revenue and profitability;
- And last but not least - by evaluating the competition, you can make more informed and data-driven decisions for your company regarding product development, pricing, marketing, and sales strategies.
In short, competitor analysis is essential for SaaS businesses to stay ahead in the highly competitive market and make informed decisions that drive growth and success.
Researching your competitor’s strategy
If you check Statista, you can learn that there were around 17,000 Software-as-a-Service companies in the United States alone in 2022. Together, they had about 59 billion customers worldwide. Pretty impressive, isn’t it? That’s why you have to differentiate yourself. The best way of doing that is to research your competitor’s strategy and learn from it. But what does that mean?
Studying your competitor's strategy involves gathering information about your competitors’ methods and tactics to succeed in the market. The primary purpose of such research is to gain a deeper understanding of their strengths and weaknesses and to identify areas where you can potentially gain an advantage.
One way to begin is by analyzing their marketing materials and website to get an idea of the products and services they offer, as well as their target audience. You can also look at your competition’s social media presence to see how they engage with customers and what kind of content they share.
Additionally, you can research news articles, press releases, and other online resources to learn about any significant business decisions they have made, such as mergers or acquisitions or new products they have launched.
In general, knowing your competitors' marketing strategies allows you to develop a more concrete marketing plan and can also help you with:
- Positioning - analyze your competitors' marketing messages to position your own brand in a way that better differentiates you from the competition;
- Your target audience - by understanding your competitors' target audience, you can better segment your own target market and reach your ideal customers;
- Identifying new and effective channels for reaching your target audience, such as social media, content marketing, or paid advertising.
- Your own campaigns - by analyzing your competitors' marketing campaigns, you can see what's working for them and develop campaigns that outperform theirs;
- Budgeting - you can better determine the resources you need to allocate to your marketing efforts to stay competitive;
- Product development - try to understand your competitors' product offerings and features to improve your own product development and stay ahead of the curve.
How to conduct pricing research beyond the sticker price
Another noteworthy aspect of competitor research is to study their pricing strategies. This includes not only the prices they charge for their products and services but also any discounts or promotions they offer, including seasonal sales, loyalty programs, and referral incentives, and how they compare to your own pricing.
However, it’s crucial for your pricing research to go beyond just looking at the sticker price. It requires a deep understanding of the product or service’s value to customers. It's essential to consider the following factors - value proposition, upsell and cross-sell strategies, promotions, discounts, customer feedback, and cost structure.
For example, by analyzing the value proposition, you determine how your product or service compares to similar offerings in the market. This includes considering factors such as quality, uniqueness, customer support, etc.
Then look at your competitors' upsell and cross-sell strategies to see how they maximize revenue and retain customers. Don’t forget to pay attention to the cost structure of your product or service, including the cost of sold products, labor costs, and overhead costs. This will allow you to maintain profitability while still offering a competitive price.
Meanwhile, work to also understand the needs of your target customers. Identify the key features and benefits customers value most and determine their willingness to pay for them. Then gather customer feedback about your competitors’ pricing to understand their value perception and identify improvement areas.
How to analyze a SaaS business model
As a business owner, when analyzing a SaaS business model, it's important to consider the following factors:
- Revenue model - recurring subscriptions, per-user pricing, usage-based billing, pricing structure, payment terms, and other pricing models;
- Customer acquisition costs - the costs associated with acquiring new customers, including marketing and sales expenses;
- The target market - its size, growth rate, and customer demographics;
- Gross margins, to give you an idea of how much revenue is left after paying for direct costs, such as hosting and support;
- The lifetime value of a customer - estimate the revenue generated over the lifespan of a customer relationship;
- The scalability of the SaaS business model - analyze the ease of adding new customers and expanding into new markets and focus on the company's infrastructure, technology, and processes;
- Customer retention rate to understand how well the SaaS business retains its customers and identify potential red flags.
Finding and listing SaaS features
And finally, when researching SaaS competitors' strategies, don’t forget to find and list SaaS features since it’s an integral part of the process that can help you position your own product in the market and identify areas for improvement and opportunities for product development and innovation.
Finding and listing SaaS features can start with reviewing the product descriptions, user manuals, and FAQs on your competitors' websites. You can also reach out to customers for feedback, attend product demos, and gather information from industry analysts and experts.
Another greatest idea is to keep an eye on the competitor's blog and news section to learn about new features and updates. Monitor social media, analyze their marketing materials and go to industry events to check out the presentations.
Finally, try the product yourself - sign up for a free trial of the competitor's product to get hands-on experience with all the features they offer.
SaaS competitive analysis
What is a SaaS competitor analysis? As you know, competitive analysis is a process of evaluating the strategies, strengths, and weaknesses of your competitors in order to inform and improve your own business strategy. This type of research is vital if you want to stay ahead in a highly competitive market.
The standard method of evaluating strengths and weaknesses is the infamous SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis. Other techniques include Porter’s Five Forces, where you analyze your competitor in 5 steps:
- The likelihood of new competitors entering the market and the impact they would have on existing players.
- The availability of substitute products or services that customers could switch to.
- The ability of suppliers to dictate terms and raise prices on the goods and services they provide.
- The ability of buyers to dictate terms and lower prices on the goods and services they purchase.
- The intensity of competition between existing players in the market.
With SaaS, you need to also focus on the following types of analysis - pricing, features, branding, and customer feedback.
Analyzing SaaS pricing
Evaluate the pricing strategies of your competitors, including the pricing models they are using, the factors that influence their pricing decisions, and how they compare to your own pricing strategy.
It's also beneficial to understand their distribution channels, such as retail partnerships or e-commerce platforms, and to see if there are any opportunities for you to reach new customers through similar channels. Remember to also look for trends in the SaaS market, such as changes in pricing models or new pricing strategies.
Analyze SaaS features
As we mentioned earlier, to analyze SaaS features, you will need to gather information about your competitors' products, including their features, target audience, and the marketing messages they use to promote their products. This information can be obtained through various sources, including their websites, customer reviews, and analyst reports.
Analyze SaaS branding
You will then need to gather information about your competitors' branding strategies, including their brand values, messaging, and visual identity. Then compare them to your own brand. What are your competitors doing differently? Where do they have an advantage in terms of brand recognition and awareness?
Analyze SaaS customer feedback
Take the time to carefully review and understand the comments, suggestions, and opinions provided by customers. In terms of customer satisfaction and product quality, where did your competitors succeed? Categorize the feedback and look for patterns - similar reviews, common issues or praises, most popular features, etc.
Identifying your competitive edge
Identifying your competitive edge involves evaluating your unique strengths and advantages compared to your competitors. Figure out what sets you apart from other competitors in the same industry. Is it a special message or a unique vision? Or perhaps features that no one else has? Maybe it’s the best pricing available?
To determine your competitive edge, you can start by considering your target audience and the specific problem you are trying to solve for them. This can help you determine what your potential customers are looking for and what they value most.
Next, you can assess your own strengths and determine what you do exceptionally well compared to others in your industry. It's important to remember that your competitive edge does not have to be limited to just one area.
You can also look at what sets your company apart from others in terms of its culture and values. Even something so basic as a strong company culture can also help you differentiate yourself from your competitors and attract the right customers.
Strategies to put your findings into action
Ultimately, the goal of researching your competitor's strategy is to gain insights into their business and identify opportunities for growth and improvement in your own business. But you will also need to have strategies to put all of those findings into practice.
Knowing how to gather and interpret the right data is a strong start. Steering off from bias is the next on your agenda since picking up insights based only on your personal opinions can potentially render the whole SaaS competitor analysis completely useless.
So, try to act only on evidence after you have taken the time to carefully interpret all your findings, and, as usual, don’t forget to contact our team if you need help with your projects.