3 Ways to Learn Secrets from your Competitors

Any businessperson knows the importance of research. Market research is critical for business planning. Imagine how much insight it would give you if you had a copy of your competitor’s business plan, for instance. Or, perhaps financial reports, units sold per month, website traffic per month, the number of employees a business has, and more.

Fortunately, a lot of this market data is floating around out there ready to be seized and analyzed- if you know where to look. Sometimes it takes creativity and extra effort to learn secrets about your competitors, but this endeavor is quite worthwhile.

I would like to share the 3 useful ways to glean information from your competitors. This mostly applies to internet businesses, but can be a source of inspiration for any general business, as well.

1. Estimate a competitor’s web traffic

Use tools like compete.com, alexa.com, and quantcast.com as general guides for traffic. You can also see any competitor’s page count in Google or Yahoo by typing in a search ‘site:domain.com’. The higher the page count, the better. You can also see exactly how optimized their site is and how many incoming links it has from tools like websitegrader.com. You can logically figure that a website with x pages with only x% optimized will yield about x visitors per month. If your competitor is lacking in optimization for certain keywords, but is fairly successful in traffic from a low quantity of incoming links, you can make predictions of how much more traffic you can get with your own similar site, but better optimized.

2. Acquire competitor information through a ‘business for sale’

Pursue a possible purchase of another business like yours- perhaps even a direct competitor- and learn a lot of critically important information about a business’ health. Use websites like bizbuysell.com.

The idea here is not to manipulate the seller, but to be genuinely interested and open minded about a potential purchase while enjoying the informational benefits. You will likely sign a non-disclosure agreement and perhaps even write a letter of intent. The time invested is worth it to learn about another business’ strategy, financials, strengths and weaknesses. This information can be invaluable to help you operate your own business, and who knows, you might actually choose to buy it.

3. Calculate competitor’s Ebay sales

For Ebay businesses, you have it made. Ebay is fairly transparent and allows you enough information to calculate units sold per month and monthly sales revenue of any competitor. How? First you can estimate units sold by feedback. If you figure about 85% leave feedback, you can take the feedback from the last 30 days, divide by .85 and you should get a rough idea of a business’ monthly customers, which may correspond to the units sold, then just multiply their average selling price by the units sold to get their estimated monthly revenue.

Even if you don’t sell on Ebay, it may still be interesting for you to compare prices of someone selling similar products/services as you in the Ebay marketplace. Ebay may also be used for test-market new products, such as to estimate demand. You can test pricing, for example, by listing something at $1 and see what it bids up to. You aren’t obligated to sell the item if you simply put the hidden reserve price high enough that no one will ever buy it. Craigslist is another place you can test interest in a particular product/service.

BONUS TIP: Estimate retail sales

This is the single most useful piece of information I learned in my graduate school MBA program.

If you’re interested in buying a brick-and-mortar retail store, here’s a very useful way to gauge sales. Let’s say you’re thinking about buying a Taco Bell franchise…

1. Walk into the store as the first customer at the beginning the day and buy the cheapest thing they sell- a Coke or something.
2. Keep the receipt and notice the customer number on it
3. Return at the end of the day and order something as they close, trying to be the last customer of the day. Try to order from the same cash register.
4. Subtract the customer # at the end of the day from the one at the beginning. Now, you have a good record of how many customers came to that particular cash register. You could also ask whether that register was used most of the day or what % it was used in order to estimate more precisely how many customers they served.
5. Finally, estimate an average cost per customer (you can even ask them) and multiply by the # of customers. Now, you have a rough estimate of daily gross sales. Very cool.

I hope this competitor research information helps equip you with more tools to make better business decisions.