Let’s start with the basics. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. 💁♂️
When you conduct a SWOT analysis, you’re performing a competitive analysis through the lens of these four criteria. This lens gives you context from the start, helping you identify relevant data as you collect it, which makes the data collection process faster and more efficient.
A competitor SWOT analysis is all about understanding your competitor. But how do you conduct one to help you identify opportunities in the market, raise awareness of potential threats, and construct a solid strategic plan?
In this article, we show you how, covering everything from:
- The best times to use SWOT analysis.
- The five steps to completing a great SWOT.
- Some common pitfalls to watch out for.
- What to do with your final analysis.
When should you use SWOT analysis?
In our upcoming State of SWOT report, we identified the key factors that motivate practitioners to turn to SWOT analysis. The three most common factors were:
- To understand new and emerging competitors.
- To get to grips with a new market before launch.
- As part of a competitive landscape analysis or opportunity analysis.
If a new competitor has come on the scene, a SWOT analysis will unveil where they might pose a threat (or even an opportunity) to you as a result of their strengths and weaknesses.
If your leadership team is considering a foray into a new market, SWOT can help you determine how your own strengths and weaknesses set you up for success or failure in that market.
And general analyses of the competitive landscape and its opportunities lend themselves well to SWOT analysis for the same reasons.
5 steps to completing your best ever competitive SWOT analysis
SWOT’s all about understanding the interplay between the external and internal factors that can affect success.
Typically, SWOT is focused on the entire market landscape and every competitor within it. When you pare things down to a single competitor, things get easier, since you reduce the number of players involved.
Here’s the five-step process to completing a successful SWOT analysis.
- Identify your target competitor
- Collate information about them from them.
- Gather external data information about how the market sees you and your competitor (preferably with some direct comparison thrown in).
- Analyze and structure this data using the four SWOT quadrants.
- Identify next steps and action points.
As you can see, not much of the process involves staring at a worksheet with S-W-O-T splayed across it. It’s much more about gathering the most objective data possible about both yourself and your target competitor – in the eyes of your target audience.
Step one – Identify your target competitor
This step almost goes without saying, but you need to consider carefully which competitor(s) you’re going to examine.
Thorough SWOT analysis is time-consuming, so you have to make sure it’ll be worth your time. Pick the competitor which makes most sense to study. Perhaps winning market share from them would convey more value to your business than winning market share from other competitors.
Step two – Gather information from the competitor itself
Once you’ve picked ‘em, it’s time to learn all you can about your target competitor.
We recommend starting with their own material:
- Read their blog,
- Read their product manuals,
- Read their social media posts,
- Read their press announcements…
When you do this, you learn a lot about how your competitor sees themselves, and how they want the market to see them. This information on their intended positioning is crucial, as it’ll help guide your research in the next step to determine how successful they are at getting the market to see them how they want.
Don’t just gather information about your competitor as a company, though. Collect as much info as you can on the product or service itself.
Even if you feel you know much of this already, it pays to take the time to sense check what you already know. You’ll feel more confident in your data as a starting point, and you’ll learn even more along the way.
Step three – Collate data about how the market sees you and your competitor
Now it’s all about performing market research. But remember the elements of the framework you’re collecting this data for. Internal strengths and weaknesses are great, but it’s super helpful to collect information on your competitors’ strengths and weaknesses too. By pitting your strengths and weaknesses against your competitor’s, opportunities and threats make themselves much more clear. 💁♂️
This info can (and should) be gathered both internally and externally. If you don’t have the resources for it, you don’t necessarily have to conduct a whole new batch of customer research, either. You can always just pull whatever you have on file (so long as it was collected within a reasonable time frame, perhaps the last six or 12 months). This will save you time but still give you a great sense of what the market objectively thinks your product does well, and what it does poorly.
Step four – Analyze and structure this data using the four SWOT quadrants
Collected a bunch of data? Good. Time to make order out of chaos. 🧹
Begin with the strengths and weaknesses. Both your own and your competitor’s. This should make it clear where your competitor has you beat. It doesn’t make sense to compete with them where they’re strong and you’re weak.
This should also make it clear where you’re the victor. With enough thought, opportunities and threats should begin making themselves apparent. Bear in mind, though, that the strengths and weaknesses you’ve uncovered are static. Opportunities and threats, on the other hand, are transient and situational. 🍃
For example, you might get the sense your competitive advantage is under threat. There’s a growing trend of your competitor rolling out and updating new features more frequently than you, and adoption is starting to edge in their favor. If your feature set is your advantage, your competitor will be able to close the gap rapidly.
Step five – Identify next steps and action points
SWOT isn’t actionable by itself. It leaves you with a bunch of opportunities and threats, but no guidance on what to do.
You’ll need to use your critical thinking skills one last time to get to a set of actionable next steps.
Don’t neglect this step – it’s critical. If you leave things as they are, nothing will get done. You might have learned a lot, but by next week you’ll be swept up in the next big task and all those insights will be lost.
What to watch out for while performing your SWOT analysis
SWOT isn’t a perfect framework. It’s simple and effective, especially for getting to grips with new and emerging competitors, but it has its disadvantages. Here are the ones to watch out for:
Problems and disadvantages with SWOT analysis
1 – Internal bias
SWOT analysis is often biased. Especially if you don’t use enough external data from customer research. If you do a SWOT analysis on a product and only collect internal opinions, you’re bound to overstate the strengths of the product.
Another very real danger is being biased against competing solutions. If by the end of your SWOT you’re looking at your competitor and laughing that they pose absolutely no threat to you, you either chose the wrong competitor to study or you’re blinded by bias.
This is especially true if the market clearly values your competitor as a solution to their problems.
But internal bias can infiltrate your SWOT analysis in another way, too.
People are prone to believing the work they’ve invested the most time and energy into is the stuff that’s objectively the best. In this case, the features or products your teams have toiled on most are what they’re likely to believe the market values the most. This may not be the case!
Again, external data and objective opinions from buyers are crucial for sidestepping the danger here. Buyers can help set you straight about the things they really value, and you might be surprised. 😯
You could, for example, find a surprising percentage of customers choose you over a competitor due to a throwaway feature you spun up in an afternoon. Don’t be tempted to dismiss this because someone tells you “it doesn’t make sense”. The data is the data. If you collected it honestly, and you’ve enough of it for it to be statistically significant, you should trust it and use it to form your conclusions.
Surprises are exciting, because they’re opportunities to learn more about something you might have missed. They’re not always evidence your data is inaccurate.
2 – Limited information and blind spots
Don’t be fooled into thinking that all the information you’ve collected is all the information there is. 🙅♂️
Survivorship bias rears its ugly head here, since people won’t want to give you honest feedback if they think it’ll hurt your feelings. Often, only the most mild criticisms make it to the other side of the ‘good manners’ filter, when what you really need to move forward is the brutal truth.
Win/loss analysis is prone to this problem if you’re conducting the interviews yourself. People might not feel comfortable telling you the harsh truth of why they didn’t pick your product.
This is why so many choose to use third-party services for their win/loss programs. Lost prospects don’t feel as bad being brutally honest with people they know had nothing to do with the creation of the product. That means more truthful feedback which, while more difficult to hear, tells you exactly what’s broken.
So what can you do to avoid these SWOT analysis pitfalls? 🕳️
First, make the most of your external data. Do your utmost to get data that’s as accurate and objective as possible. If that means interviewing customers and lost prospects through a third party, do that. If it means investing in training courses for internal staff conducting the interviews, do that. It’s worth your time to get accurate data that’s free from bias.
Second, you can combine SWOT with other frameworks and analysis techniques that focus specifically on external factors and data sources to balance out any internal bias. The aforementioned win/loss analysis, as well as other frameworks like PESTLE, and Porter’s Five Forces, were the three most popular among respondents of our State of SWOT report. These ensure you’re collecting a range of data, which can offset the potential for skewed final results.
What to do with your SWOT results
So you’ve completed your SWOT analysis. What now?
We’re going to reiterate the final step of the SWOT process: make it actionable. But what does it look like to take your SWOT analysis further?
Try pulling your findings into a battle card to enable sales and impact revenue.
Or pivot into another framework, like SOAR (strengths, opportunities, aspirations, response), that helps align your found opportunities with the overarching goals of your organization, before directing you to figure out a “response”, or set of next steps.
Neglect this step, and you’ll have invested a lot of time and energy for nothing. Successfully translate your findings into an action plan, though, and you’ll understand why SWOT has had a place in business textbooks since the 1960s. 🤝
In a hurry? Need a quick summary of what we’ve learned? Here are the key takeaways from this article:
- Use a SWOT analysis when you want to get to grips with an emerging competitor or unknown market.
- Gather data on your competitor and yourself from both internal and external sources.
- Watch out for biases and blind spots. Guard against them by making the most of external data sources.
- Use additional frameworks, like SOAR or PESTLE, to help incorporate an external focus, and to pivot into action once your SWOT’s complete.