What Is Competitive Intelligence and Why Is It Important?

What is competitive intelligence?

Competitive intelligence focuses on collecting and analyzing information about your competition to gain an advantage in the industry. No trench coats, disguises, or undercover agents are needed for this form of research. After all, competitive intelligence isn't the same as corporate espionage. Espionage is shady and secretive, while competitive intelligence is open and honest. However, it's almost like going through a competitor's garbage to look for clues about their plans and activities.

From the company's point of view, the value of competitive intelligence is earned by reducing the time spent deliberating about important decisions. For example, if a business notices a competitor doing something different on its website, the marketing team may decide to imitate the strategy with minimal pushback from stakeholders.

Competitive intelligence research enables strategic decision-making based on informed recommendations. It liberates decision-making from the highest-paid person in the organization (whom competitive intelligence expert Fouad Benyoub terms the HIPPO) and eliminates indecision and guesswork.

The purpose of competitive intelligence

Best-selling author of Superforecasting, Philip Tetlock, writes, "The task of intelligence is speaking truth to power, not telling executives who are temporarily in charge what they want to hear.”

Competitive intelligence analysts have to earn trust, but what they do is fundamental to the continuation of companies in any competitive marketplace.

By leveraging competitive intelligence to your advantage, you can create sales and marketing campaigns that are better and more strategic. As a result, you can drive more traffic than industry competitors.

Organizations can't succeed without competitive intelligence

Some executives say they don't care about competition, but every successful company does.

Even before a new company begins shipping its first Minimally Viable Product (MVP), it faces competition from other businesses vying for funding, talent, and market share. When a company claims it has no competition, it typically doesn't know about it yet.

Companies can't afford to believe that their competitors can't catch up with them. This principle also applies to well-established organizations.

When a company operates at scale, competitors know its strengths and weaknesses. Any business is in danger of being knocked off its pedestal of market leadership.

Competitive intelligence is about moving from data to intelligence

Competitive intelligence makes sense of all the fragmented data in the world that surrounds a business to convert it into actionable intelligence.

Competitive intelligence isn't something you can get from Google. It requires evaluating and integrating information from multiple sources and sorting it into helpful information.

The competitive intelligence cycle

Fouad Benyoub describes the competitive intelligence cycle as a closed loop of 6 steps.

1. Definition. Competitive intelligence begins by defining needs, metrics, and key areas for intelligence research.
2. Research. This is the intelligence-gathering phase. This is the time that competitive intelligence analysts use competitor analysis tools, like Crunchbase, MOAT, SimilarWeb, SpyFu, Talkwalker, Visualping, and Owler.
3. Analysis. Competitive intelligence analyzes data to create information.
4. Recommendations. Competitive intelligence presents information but also makes recommendations.
5. Action. This is the best success metric of any competitive intelligence program. Competitive intelligence only makes a difference in the company's efforts to build brand loyalty, connect with customers, achieve repeat e-commerce sales, or improve client retention when it’s acted upon.
6. Optimization. This is the most frequently overlooked part of any competitive intelligence program. The competitive intelligence analyst must seek and evaluate feedback to continuously improve the quality of recommendations.

Competitive intelligence helps companies isolate and analyze industry trends that affect their planning activities. It allows them secure information about customer expectations and the development of competing technologies. By giving companies the tools to evaluate their strengths and weaknesses, it enables them to allocate resources to boost their technological changes, or ROI. As a result, they can make the right business decisions as they predict the next steps of their competitors.

Types of competitive intelligence

Companies use 2 types of competitive intelligence.

Strategic competitive intelligence helps companies understand and act on long-term challenges, such as technological changes, the marketplace, and environmental shocks.

Tactical competitive intelligence is a short-term process. It contributes to decisions about issues that can be measured in quarterly reports, such as increasing profits or protecting market share.

The real distinction in using competitive intelligence, however, is whether or not the method is used. The overwhelming majority of companies collect competitive intelligence, but only about half of companies use it to make business decisions!

Many companies primarily use competitive intelligence to confirm decisions they have already made. In these companies, competitive intelligence may shield the decision-maker from the results of a bad decision, but it does nothing to help the company make good decisions.

There are several recurring themes in companies where competitive intelligence made a difference in operating results. That said, here are a few competitive intelligence examples:

• The competitive intelligence analyst had a sign-off authority on major business decisions. This means that the focus wasn't on a deck of PowerPoint slides; it was on the analyst presenting the information. This was the one area in which organizations that successfully use competitive intelligence differ the most from those that don't.
• The competitive analysis report was proactive rather than reactive. By the time companies react to their competitors, change may be too late. The most successful companies used competitive intelligence to pre-emptively respond to changing business conditions.
• The company used competitive intelligence in planning product launches. Companies usually consider customers and competitors in their product launches. This form of research can bring insight into reactions from regulators, issues with distributors, and the impact of social influencers.

Ways to gather competitive intelligence

Can you gather competitive intelligence on your own?

Absolutely!

Here are 5 reliable ways of gathering competitive intelligence for your digital marketing campaigns.

• Stay on top of social media. Let your customers gather intelligence for you. Customer comments on your social media pages can tell you a lot about how they regard your products compared to your competitors.
• Read competitor reviews. Customer reviews tell you what customers like about your products and what they don't. They can also tell you about the strengths and gaps of your competitors.
• Use specialized tools. There are many tools available that can help you perform a competitive analysis of your competitors. This way, you can keep up with the changes your competition enacts and become ready to respond proactively if they start to position themselves with your customer base.
• Analyze a competitor’s website. Competitor websites are filled with information about their products and services. They’re the best source for updated information about your competitors.
• Leverage search engine optimization. Use SEO tools to determine how much of your competitor's traffic depends on certain keywords. Many SEO tools can help you monitor changes in their page rankings.

How to use a competitive intelligence strategy in your business

You now have the foundational understanding to begin your competitive intelligence work. Identify your main competitors. Narrow in on key, actionable areas you can gather with your research tools. Collect data and transform it into information by identifying important trends. Make sure every decision-maker in your company has access to the information you collect and use it to make proactive decisions for a competitive edge.

Stay ahead of the game with competitive intelligence

Obtaining competitive intelligence can help you stay one step ahead of the competition. There are several ways you can collect valuable information from competitors in your industry to give you an advantage and increase your profits. For example, you can invest in competitive intelligence tools that conduct the research for you or spend time manually reviewing a competitor's social media and website.

Once you know what your competition is doing, create effective marketing campaigns with Mailchimp. We have an array of tools that can help you build effective emails, websites, targeted ads, and more.