In business, it typically pays to understand what your competition is doing and how well they’re performing.
One of the primary metrics companies use to determine their place in a market is conversion rate. Without a strong sense of market context, it’s nearly impossible to determine what a good conversion rate for your own lead generation campaign is, which makes it difficult to predict your company’s next steps.
By benchmarking your business against your competitors — their conversion rate, marketing strategy and where in the funnel they lose their customers — you can supercharge your strategy and improve your marketing performance.
So, how do you get that information? And what do you do with it once you’ve got it? There are a number of ways to research your competitors and benchmark your business against them.
Determine your place in the industry
Before looking at your competition, you need to properly prepare yourself for the task ahead.
Understand the lay of the land, such as the tools everyone is using and where your own strengths lie.
Where are you?
It’s important to know what industry you operate in. Do you sell marketing automation software? Perhaps you specialize in enterprise resource planning (ERP) software. Digital marketing software is a broad topic, but if you offer marketing automation, you can take advantage of a more focused market.
The more specific you can get with identifying your niche, the more accurate your benchmark will be.
Who else is there?
Now that you know your category, it’s much easier to determine who is there with you, i.e., your competition.
It’s important to note not just who they are, but all of the tools and tactics they’re using to get their results, which includes any and all channels. Remember that average B2B conversion rates differ by channel. Different consumers prefer different channels at different times. So pay attention to who is buying — and when.
How well does your business perform?
For information on your competitors and their conversion rates to be effective, you need to record your company’s data as well. Without it, you won’t be able to make comparisons and strategic adjustments to your lead nurturing.
First, figure out which metrics you want to observe. For our example, let’s look at conversion rates from leads to sales.
In your own plan, try to find where there might be gaps or weaknesses. What tools or channels aren’t you using? How frequently do you engage your buyers there? Is your ad copy effective? How do you market yourself?
Collecting all of this data is vital before you move on to the main set of your benchmarking workout: Understanding your competitors’ conversion rates.
Scope out the competition: How to approach your research
Before we go into what you should observe in your competition, let’s review the different ways you can collect relevant data.
Much like someone at the gym would be unreceptive to your studying their every move, so too are most businesses unreceptive to you conducting unsolicited deep-dive research on them.
While you can’t expect your competition to answer such questions directly, you can find out what you need on your own. Here are a few ways to do that:
Do a walk-through. There’s a finite amount of information on your competitors online, including employee salary and accomplishment information. While that isn’t a lot to go on, online research/information can offer a cursory understanding of how your competitors perform in terms of conversions and their overall profit margins.
Find a friend. Local trade associations are invaluable in helping you identify an appropriate benchmarking partner. Having only one partner limits the data you can collect but gives you a specific scope in terms of measuring your own comparative success. You can also select a partner based on the metrics most important to your business.
Use online workout tutorials. A number of free tools will provide insight into your competitors. Retail amplification tools provide reports comparing your business with other small and midsize businesses (SMBs). You can pay for premium services, or invest in industry analyst reports for a more cohesive service. It’s worth noting that these services can be expensive.
If a combination of one or more of the above doesn’t sound appealing, you can:
Hire more specialized help. This is the costliest option, but can ultimately yield the best results, as it combines all of the previously detailed options. External benchmarking consultants compare your performance with industry leaders as well as your closest competitors, and generate reports with actionable next steps. (This isn’t always a feasible suggestion for smaller companies with finite resources.)
Determine an average B2B conversion rate
At this point, you have a plan of attack in place for researching your competition. Look at each channel they’re using, whether PPC, email marketing campaigns or something else. Take a look at the conversion rate for each channel.
For the successful conversions, look at how many sales per team member there are, and the average amount of each of those sales. Look at the demographic each channel is hitting.
For the unsuccessful conversions, look at where in the funnel your competition lost them. Again, pay attention to the demographics.
If you’re looking at multiple companies, you should have enough information now to create an average B2B conversion rate for your competitors.
Tap more data to achieve efficiencies
Try, also, to collect some core information about the companies around you, such as the average salary for their sales team, their customer service standards, their overhead and profit margins. You can even check out their sales literature, content and how they present themselves.
All of that will enhance your deeper understanding of your competition and why their business performs as well (or as poorly) as it does compared to yours. Whether qualitative or quantitative information, it all feeds the analytics beast.
Make a solid plan for next steps
If you’ve paid for external benchmarking consultants, they’ve probably already provided a path forward. If not, you can start your own analysis by answering the following questions:
Look through all of the information: What tools or channels aren’t you leveraging as well as your competition?
Does your competitor use channels to reach buyers or demographics you’ve ignored?
Has your competitor succeeded at sales to larger companies?
The quantitative data you gather should show the simple facts: Where you fall in terms of average conversion rate, how your clients stack up against your competition’s and fractures in your funnel.
The qualitative data you gather should offer a few reasons why, and can inform future course corrections, including the quality of your landing pages, calls to action (CTAs) on your website, the types of content you produce, your marketing strategies and lead nurturing techniques.
Use all of that information as you focus in on your closest competitors and where they tend to beat you. Adapt their strategies and incorporate them into future planning. Only after you make adjustments will you start to max out your conversion potential.