How to Conduct a Competitive Gap Analysis (With Insights You’ll Actually Use)

“Why are we losing so many head-to-head deals to [competitor] in this segment of the market?”

“How can we distance ourselves from the hundreds of competitors writing about [topic]?”

“Customers are still churning. What competitors are we missing?”

The goal of a competitive gap analysis is to understand the “why” behind what’s going on in the company. Once you figure out the root cause of a certain trend, it gets easier to strategize moves that hit the mark. 

Unfortunately, creating an effective analysis is not as straightforward as it looks. In practice, it struggles from challenges, like the ones from above.

In this guide, you’ll learn how to overcome these common issues and conduct a competitive gap analysis that provides valuable strategic direction across the company.

How to Perform a Competitive Gap Analysis in 6 Steps

Poor gap analysis reports are left forgotten in shared drives. Try these six steps to execute your competitive gap analysis successfully.

1. Recognize what you want to improve

Unless you have a specific stage of the customer journey you want to improve on, your competitive gap analysis will get overwhelming fast. 

To start, identify what you want to change, says Tom Lloyd, founder and managing partner at tllo.co. “It will define your approach and cut down on the potential for the program to become unwieldy.”

Aim for a specific metric as the starting point.

For example, if you’re losing new business deals to a specific competitor or competitors, focus on the win rate. On the other hand, if current customers are switching to a competing product, look at churn rate and net new annual recurring revenue. 

2. Make it a company-level program

Competitive analysis is a team sport. 

“Programmatize” the competitor gap analysis at a company level, advises Lloyd, instead of assigning it to the marketing team. 

This ensures not only sufficient resources to conduct ongoing analysis and execute any deliverables resulting from it but also creates a “systematic approach to gathering direct insight from buyers across the customer journey.”

Rally the cross-functional competitive intelligence team to gather data (e.g., review deal loss notes in the CRM, and analyze product usage and adoption data).

Your research should weigh more towards customer interviews, so speak to:

• Current customers who switched from a competitor (or chose you over another) to understand what led to their decision, and what they did and didn’t like about the competing product or company. 
• Prospects who didn’t choose you before closing the opportunity. 
• Churned customers to learn the “why” behind their decision in offboarding interviews 

If customers are concerned about speaking to you, hire a third-party consultant. It will create a more comfortable environment for customers and maintain objectivity in their responses. 

3. Identify all competitors using JTBD

Tracking competitor websites, product updates, and customer review sites are all great ways to stay current in the competitive landscape.

But you shouldn’t rely on the obvious competitors on G2 or Capterra, warns Alan Gleeson, CEO and co-founder of Contento. Doing so risks you “getting blindsided and missing an alternative solution, substitute or otherwise.”

Gleeson’s right. Just look at the tweet below!

Inertia often emerges as a key factor in the decision-making process for software purchases. The co-founder explains, “Many prospects stick to their own way of doing things—be it using a Google Doc or spreadsheet—rather than committing to a software solution.”

A better approach, says Gleeson, is to use the Jobs to be Done (JTBD) methodology in your customer interviews. This framework is a much more useful approach, as it prompts alternative solutions that might not be on your radar. 

Another way of identifying these “hidden” competitors? 

Ask sales reps about the alternatives customers consider in their decision set. If your reps don’t know, have them look into it in future calls.

Further reading: The 4 Types of Competitors You Need to Monitor

4. Audit competitors deeply

If there’s a lack of depth in your past competitive gap analysis, odds are you focused too much on competitor pricing and feature sets.  

“Marketers often focus solely on surface-level metrics like follower count or engagement rates,” observes Suraj Nair, digital marketer at Social Pilot. 

“They miss the bigger picture.” 

To understand the full customer journey for each competitor, use competitive intelligence tools to evaluate their:

(i) Content strategies

Story time.

A UK-based renewable energy company specializing in sustainable heating and cooling for the B2C market kept receiving customer inquiries about geothermal heat pumps. 

Now that’s odd.

Because geothermal heat pumps are industrial solutions and unsuitable for residential properties. And yet, that’s the language prospective customers use to describe its product. 

Instead of avoiding these category keywords like their direct competitors, the energy company decided to rank for them.

The team went after these inaccurate category descriptions, explaining what their B2C customers really need and pitching their products organically. There wasn’t a lot of competition for the keywords, so the strategy worked out in its favor.

In the end, this strategy contributed to an overall 8x growth in conversions in organic traffic in over two years.

The moral of the story?

The goal of researching your competitors’ content isn’t to copy their strategy.

Rather, it’s attempting to understand customer search behavior and leveraging it before it’s too late. As Jason Smit, the CEO of Contentellect, puts it, you want to “out-research and out-create.”

Research your competitors’ different content types, topics, quality, originality, and relevancy. Identify the keywords and content they’re winning. Look into their traction and authority.

In the renewable energy company’s case, it doubled down on an opportunity competitors missed and won big.

Further readings: 

• How to Conduct an SEO Competitor Analysis: The Complete Guide (Step-by-Step Process with Checklist)
• How to Get Started Monitoring Competitors for SaaS Brands

(ii) Customer reviews

After discovering his competitors were more visible on review sites—which caused customers to choose them over his business for that reason—Alister Wood decided to reach out to these sites to improve his brand reputation. The owner of VisitUs shares, “We found customers tend to make decisions based on scores from these sites. Once the platforms reviewed our product, we shared our rankings in our marketing campaigns.

He shares with us, “It worked. We learned a competitive gap analysis needs to focus on the competition, but also, more importantly, on the customer’s experience when interacting with your company and others. It’s the best way to get a quick return on investment.”

Reviews also offer invaluable insights into what your customers like and dislike about the competition. Jot down common pain points, popular features, and other areas of improvement.

“This user-centric approach not only informs your marketing strategy,” says John Pennypacker, the VP of sales and marketing at Deep Cognition. “It also refines your product to better meet customer needs and expectations.”

(iii) User Journey

When the Social Pilot team went through their competitors’ onboarding process, they noticed many of these companies required users to click through multiple pages if they wanted to request a new feature. 

Sensing an opportunity, the team integrated a ‘request a feature’ button directly on its app. 

“This shortens the user journey and allows them to request what they want,” shares Nair. “It proved to be beneficial, as we now know exactly what our customers want. We can now provide updates at a faster rate.”Thanks to this quick-thinking tactic, the team was able to develop their AI Assistant and LinkedIn document features miles ahead.

Sign up for your competitors’ products for a first-hand experience. Go through their onboarding process and track how they nurture and support their users.

“This hands-on approach reveals hidden opportunities to improve your own SaaS product and customer journey,” explains Nair.

“You can pinpoint ‘what your customer wants’ rather than looking at ‘what we think they want’.”

5. Consider the broader market trends

Customers set the tone.

And companies that quickly respond to market trends in consumer behavior outperform competitors.

When Luciano Colos discovered his target customers were struggling to improve their pitch decks, he created a review tool to provide high-quality feedback at scale.

Speaking about the early process with DivByZero, Colos shares, “Many entrepreneurs were looking to improve their pitch decks, but they didn’t have the time or resources.”

Whilst researching the market, the founder and CEO discovered a gap: Most pitch deck tools focus on design, not copy.

“This is a problem because the copy is just as important as the design,” explains Colos. “A well-written pitch deck helps entrepreneurs communicate their ideas clearly and persuasively to investors.”

These two unmet needs inspired him to create PitchGrade, an AI-powered tool that uses LLM AI models to address copy blind spots within minutes.

Don’t know what market trends you can capitalize on? Colos recommends these questions to poke around your industry:

• “What are the new technologies and innovations disrupting your market?”
• “What are the changing customer needs and behaviors you need to be aware of?”
• “What unmet customer needs can you address?”

6. Determine what gives you an edge 

Competitive intelligence teams that fixate on copying competitors gradually end up with a narrow perspective and lose sight of what makes them unique.

Now that you’ve researched the market, competitors, and customers, distill everything you learned into a report. This document helps you better understand the current landscape and areas you excel in.

There’s no hard-and-fast rule in terms of format, but as a general rule, make sure it includes the competitors’ top features, pricing, strengths, weaknesses, differentiators, and positioning. 

Many of the marketers we spoke to expand to a full SWOT analysis, so consider adding opportunities and threats for a complete picture.

If you’re submitting the report to C-suites, include a high-level overview of the latest opportunities, recent wins and losses, financial summary, key hires, and recent company news. 

The higher the executive is, the more data-driven and revenue-focused it needs to be.

More importantly, treat the competitive gap analysis report as a tool for learning and adaptation, not a blueprint for imitation.

“By analyzing competitors and conducting a thorough self-assessment,” says Pennypacker. “You develop a more comprehensive strategy to bridge the gaps and stay competitive in your industry.” 

“This balanced approach ensures you’re not only chasing the competition but also actively working to differentiate and improve your offerings.”

Further reading: Messaging Map: A Guide for Startups That Want to Own Their Space

Final Thoughts

A successful competitive gap analysis provides valuable strategic direction across the company—the product and engineering roadmap, marketing messaging, and sales enablement that increases the competitive win rate. 

To overcome the common issues listed in this post, you need to strike the right balance between competitors, your company, and customers. 

Tom Lloyd, founder, and managing partner at tllo.co, serves an important reminder when digging into the emotional and rational reasons behind purchase decisions: 

“Incorporating qualitative nuance from real-life buyers means differentiation doesn’t always have to resort to race-to-the-bottom pricing or feature parity wars. 

“It also means your competitive gap analysis doesn’t gather cobwebs in a shared drive and can be used to drive real strategic change.”

FAQs

1. What is a competitive gap analysis?

A competitive gap analysis is a company-wide program that compares your company with competitors, with the end goal of identifying growth opportunities and winning the market.

2. What is the main objective of gap analysis?

The main objective of a gap analysis is to evaluate the current performance and identify improvements so that the company can strategize the next move and outperform competitors.

3. What’s included in a competitive gap analysis?

There’s no hard-and-fast rule, but in general, it should include the competitors’ top features, pricing, strengths, weaknesses, differentiators, and positioning.

If you’re submitting the competitive intelligence report to C-suite executives, include a:

• Visual growth comparison
• High-level financial summary
• Key hires/people
• Recent company news (e.g., funding, mergers and acquisitions)
• Latest opportunities
• Recent wins and losses