Why competition analysis should informall your strategic decision-making

BDC Consulting helps Web3 projects grow their business and make data-driven strategic decisions. To obtain that data, we conduct global market research, using information from public sources, personal interactions with the target audience, and competition analysis. 

It’s the latter — competitor analysis — that we’ll talk about in this article, looking at some practical challenges that it can solve. 

Who is this case study for?

For companies that face strong competitors and want to stay a step ahead of them.

The challenge: identifying growth opportunities for a payment provider

Our client in this case study was a leading crypto payment processing company. As we were working on a growth strategy for the upcoming year, we identified the key growth vectors that could help the client to increase revenue and profit by hundreds of percentage points. 

The list of growth vectors included:

• Developing a network of partner resellers;
• Optimizing the customer onboarding process;
• Expanding into new market segments;
• Improving brand awareness. 

For each of these growth opportunities, we came up with a list of questions and hypotheses; below are a few examples.

Developing a partner network:

• Which GEOs should be prioritized?
• How to increase the conversion from a potential candidate to a reseller;
• How to increase each reseller’s sales conversion rate. 

Customer onboarding optimization:

• How to improve the conversion rate on each level of the funnel;
• How to shorten the sales cycle;
• Should the client offer educational content — and if yes, what should it be about?
• How to make the offer more competitive;
• Do we need a testing environment for the funnel’s entry levels?

Expansion into new market segments

• Which GEOs hold the most potential?
• Which segments should be prioritized?

We drew up a final list of questions that needed answers, together with several tools for collecting data for each — including competitor analysis.

There are multiple ways to gain information about one’s competitors. In this case study, we used publicly available sources and the mystery shopper method. 

Public sources analysis

As the name implies, the method consists of gathering information from publicly available internet sources.

We used the following types of resources:

• Competitors’ websites;
• Registered user dashboards;
• Social media accounts;
• Top-ranked articles for branded search queries;
• Financial license registries. 

We selected a total of 25 competing providers and analyzed them according to 4 major criteria (product, marketing, sales, partnerships) and 86 parameters. 

Some of the parameters we used:

• Number of steps to payment confirmation
• Transaction speed
• Client funds storage system
• Possibilities of integration with other solutions
• Documents for tax reporting
• Difficulty of integrating the payment solution
• SaaS business model
• Commercial offers
• Pricing policy
• Loyalty program
• Partner program terms
• Priority industries
• Positioning and USP
• Traffic sources by channel and GEO
• Content types and popularity

Some of the insights revealed by the data we collected:

• Most of our client’s competitors prioritized eCommerce businesses, offering them specialized solutions like plugins for eCommerce CMS platforms.
• One potential growth point is integrating the processing solution with POS terminals.
• The competitors’ partnership programs are aimed at 3 audiences: existing customers, resellers, and opinion leaders. The programs feature ready promo materials that make it easier to resell a provider’s services. A few of the competitors offer transparent partner performance reports, which greatly increases trust in such programs. All major competitors have a referral program and a loyalty program for existing customers. 
• Apart from the classic priority GEOs (the US, UK, Canada, France, Netherlands, Turkey, Russia), we identified several more countries with a significant interest in crypto payment solutions: Brazil, Venezuela, Pakistan, India, Poland, Iran, and a few African countries. 
• Most competitors have a DIY test dashboard where potential customers can register, which also simplifies the KYC procedure. This increases conversion in the early stages of the sales cycle and makes it shorter. 
• Almost none of the competitors monetizes the opportunity to add new payment tokens for an extra fee. 
• Competitors make ample use of educational content. It serves to resolve potential customers’ doubts about the legality of crypto payments, taxation and reporting, as well as answers frequently asked questions: how payment solutions work, integration  stages, use cases, testimonials, etc.

These and other insights gained from the publicly available sources answered most of the questions on our list. However, some of the information was impossible to find online, calling for a deeper analysis.

The mystery shopper experiment

To obtain information directly from the competitors, you need a convincing legend. It’s worth stressing that the mystery shopper method is legal, as the competitor can share the information with any business that fits its target audience profile.

First, we completed a few preparatory steps:

1. Asked one of our client’s loyal merchant permission to introduce ourselves as their representative.
2. Registered a corporate email account for a new employee — a „representative“ of the merchant. 
3. Prepared a detailed description of the circumstances and the request that we would address to the client’s competitors. 
4. Selected 10 priority competitors out of a list of 25 rival providers.
5. Compiled a list of questions that we wanted answers to. 

For each of the 10 competing providers, we completed all the stages that an actual potential customer needs to complete: from filling out an application and registering a dashboard to being ready to integrate the payment solution.

The mystery shopper analysis helped us answer 3 major questions:

1. How competitive is our client’s product?
2. How can we improve the sales process?
3. Which monetization tools or opportunities to increase profits can we implement?

Key insights

1) Our client’s pricing corresponded to the median values for the market. However, the pricing model wasn’t transparent enough: a potential customer would find out the exact fees while talking to a manager. This can have a negative impact on conversion, as some merchants first research and compare the costs of different solutions. 

2) The competitors provide as much information as possible through publicly available sources: a separate website page, a wiki-style resource, or a section in a merchant dashboard. This helps optimize the work of the sales team and improves user experience. 

3) Most competitors use an automated onboarding system with a user dashboard, which opens up several growth opportunities:

• Cuts the costs of employing sales specialists;
• Increases the conversion rate at different stages of the sales cycle;
• Dramatically reduces the sales cycle’s duration;
• Improves the unit economy and makes it possible to increase the marketing and development budgets. 

4) Automated onboarding allows the competitors’ customers to start using the solution the very next day without KYC/KYB checks, unless they need to convert cryptocurrency revenue into fiat. This, in turn, opens up additional market segments that our client doesn’t work with.

On top of these strategic insights, we drew up a detailed list of what could be improved — and how. For example, we now had a detailed backlog of features that should be included in the merchant dashboard. 

BDC Consulting’s preliminary calculations show that by implementing 80% of these improvements, the client will be able to boost the business line’s net profit by 200-250% within a single year. The implementation process should take between 4 and 6 months. 

If you would like to conduct a deep analysis of your company’s competition, contact BDC Consulting using the form on the site. We’ll be pleased to share our experience and assist you with organizing the necessary research.