10 minute read
Running a business and finding success is all about making informed decisions. For this, you need to research the market, your customer’s expectations, your competitors, their strengths and weaknesses, and how your brand compares to them. The average business spends more than 25% of its annual marketing budget on research – that’s how important this is.
To know your audience and your competitors, you need to answer questions like – what’s available in the market? What does the customer expect? Who are your competitors? And so on. Answering these will help you create the best strategies for growth and take the competitive advantage.
The answers aren’t very hard to find. The truth is, customers aren’t shy about sharing their opinions. If they like or dislike your product, they’ll say so on online platforms. A survey found that 85% of customers share feedback for good experiences and 81% give feedback when they are upset with the experience.
If you ask, they’ll even give you direct feedback as a review. Analyzing the sentiments of these reviews and interactions or Sentiment Analysis as it is better known plays an instrumental role in researching the market and the existing competition.
Let’s take two statements for example;
“The dress fits excellently”
“I found a cheaper option”
The first tells you that your customer is happy. It also tells you that ‘fit’ is an important purchasing consideration. The second not only says that the customer is unhappy with your service but also that your competitors are offering better prices.
Let’s take a closer look at what Sentiment Analysis is and how it can help with your marketing and competitor analysis.
What Is Sentiment Analysis?
As the name suggests, Sentiment Analysis refers to understanding and analyzing your customer's sentiments. Relying only on traditional metrics like the number of views, shares, clicks and comments is no longer enough. They give you an incomplete picture. You need to read each comment and understand what your customers are saying and why to improve your business strategies.
While you can read 20 reviews a day and analyze them manually, you cannot track brand mentions in real-time or make sure you know everything your customers are saying by relying on your efforts alone. Sentiment Analysis automates this analysis with Artificial Intelligence (AI) like that provided by Lettria which uses Natural Language Processing (NLP) and Machine Learning (ML).
It starts by analyzing text to understand whether the basic emotion expressed is positive, negative or neutral by giving it a score from -1 to 1. Here -1 to 0 represents negative emotions, 0 reflects a neutral opinion and 0 to +1 represents a positive emotion. Depending on the tool you use, it can further break down the expression into other emotions such as surprise, frustration, confidence, excitement, embarrassment, love, etc. It also grades the intensity of these emotions to help you prioritize actions.
Sentiment Analysis not only makes you aware of what more customers are saying about your brand, but it also gives you a real-time view of your relationships with them.
How To Perform Sentiment Analysis For Market And Competitor Research?
AI platforms for Sentiment Analysis automate information extraction and analysis for market and competitor research. The overall process followed is fairly straightforward.
The first step is to scan the world wide web for instances where you and your competitor companies are mentioned. This could be on social media pages, blogs, discussion boards, online forums, review sites, e-commerce websites, etc.
The phrases giving the customer’s comments and opinions about you and your competitors and data must then be cleaned and structured. All irrelevant information, noise and non-contextual content are identified and removed.
Initial Sentiment Detection
The algorithm then scores the relevant adjectives and adverbs as positive, neutral or negative according to a graded sentiment analysis. For example, “I ordered Chinese food” will get a neutral score. “The food is good” and “the food is excellent” will both be graded as positive sentiments with the latter getting a higher score. Similarly, “the food is not worth the price” and “my meal had a fly in it” will both be evaluated as negative with the latter getting a lower score.
The grading of scores allows brands to prioritize responses. In the above example, a customer’s viewpoint about pricing is secondary when someone else talks of food not meeting basic quality standards.
Having these scores for both you, and your competitors’ companies helps you identify in which areas you are stronger or weaker than each competitor. You can then easily perform a SWOT analysis, where you identify your strengths, weaknesses, opportunities, and threats. You can identify how to improve your services, how to adjust your pricing, how to improve features and strategy, to ultimately boost your sales. Here’s more information on SWOT analysis along with template examples.
Customers don’t always make clear, short statements. They may use slang or be sarcastic. They may have had a good experience overall but some parts of it may be unsatisfactory. Hence, the emotions identified must be put in context. Let’s take a few examples.
“This was my second visit but I’m never coming back”
“We had a smashing time!”
“Paid for dinner, got a stomach ache for free”
The first statement starts on a positive note but the second half contradicts the statement to leave it with an overall negative grade. In the second case, ‘smashing’ which seems like a negative word is actually slang for the opposite.
The third statement is probably the most complex. It looks like the customer had a positive experience but, the sarcastic tone gives the statement a negative grade.
Thus, contextual analysis is an important part of identifying the right sentiment. Imagine the beating your reputation would take, if the company responded by saying, “Thank you. We hope to see you again” to the first or third statement!
Sentiment Analysis And Market Research
When you talk of market research, quantitative metrics such as web traffic, number of visitors, social media statistics, market share, etc. are the usual focal points. These numbers are direct indicators of growth and are relatively easy to understand.
However, relying only on these metrics may leave you with gaps in customer understanding and your business strategies. You know that a product was bought by 500 people but what made them choose your brand over others – was it the price? The ingredients? the latest marketing campaign?
You can understand the ‘Why’ when you have qualitative metrics. These metrics are typically not listed in the form of clear-cut numbers and they’re harder to measure. It doesn’t mean the information is inaccessible. You can find raw data for qualitative metrics in the form of customer-generated content on online forums, social media pages and even on your own website.
With sentiment analysis, you can search for these opinions and derive insights that help you understand your customers and the market.
Whether you’re an entrepreneur launching a new product or a company with an established product, you need to know who your competition is. Business as you know it is constantly evolving along multiple verticals and there’s no telling when or where a new competitor could emerge from.
Sentiment Analysis gives you inputs into the social buzzwords that have the most value to you. Let’s say your brand markets soaps. Sentiment Analysis can help you find brands associated with keywords like ‘cleansing’, ‘organic’, ‘hand-poured’, ‘rich lathering’, etc.
Along with the known labels, you could discover smaller, local brands that can grow and challenge your products. And new competitors crop up every day. According to the US Business Formation Statistics (BFS), 2021 alone saw 5.4 million new business applications.
Now, you can track small brands too and the effect their campaigns may have on your audience. Ignoring their presence may cost you in the long run.
Get Inspired By What Your Competitors Are Doing Right
Sentiment Analysis shows you how customers feel about your competitors by doing an analysis over their social media and reviews. A spike in positive sentiment toward a competitor indicates that they have done something the audience approves of.
You should know what this is (or what they have stopped doing). The information could trigger a change in your own processes. In turn, this could help maintain brand loyalty and attract more customers.
For example, let’s say a restaurant saw a sudden spike in positive sentiments after extending its service hours. With this change, they can now cater to customers up to 11 pm while your restaurant serves dinner only till 10 pm. The surge in positive sentiment indicates that this action has made the restaurant accessible to a wider audience. These are customers your restaurant is missing out on. Taking other factors into consideration, you may want to look at changing your restaurant timings too.
Know What Not To Do
Every change you make to your product, your customer service, your branding, etc. costs money. So, before making a major change, you would probably conduct a series of tests. Let’s say you’re introducing a new flavor of ice cream. You can see how your competitors have fared with similar flavors. If there’s a negative customer sentiment associated with the flavor, maybe, your money is better spent exploring something else. With Sentiment Analysis, you lower your risk and increase your ROI.
Discover What Matters To Your Market
Whether it’s shoes or flight tickets, your customer will take many factors into consideration before swiping their card. Your brand’s success depends on how well you know your customers and the way they search and compare their options. Is price the most important consideration? Would your customer be willing to pay more for better quality? How much is their purchase influenced by the people endorsing your product?
Your customers have already given you the answers in their reviews and posts. With Sentiment Analysis, you can extract the relevant information and find your answers. Let’s say a customer said, “the dress fits well but it’s too expensive” – price is definitely a key consideration here and offering discounts may help you attract more customers.
One more way to understand what matters to your market is by conducting surveys among your customers. The good news is that you can analyse survey data easily using NLP too.
Setting Your Brand Apart From The Rest
Today, maintaining the uniqueness of your product is a challenge all brands face. A product you spent years researching and developing can be copied in weeks. What matters more today is the way you treat your customers and how you position your brand.
Let’s take women's empowerment as an example. Sentiment Analysis will show that this is a keyword all brands need to pay attention to. Just saying that you are an equal-opportunities brand doesn’t do much. You need to prove it by being at the forefront of conversations around it.
Anyone can market “products made by women” but can they all claim to market “products made by differently-abled women”? This could gain more traction by sharing part of the revenue earned with NGOs working towards women's empowerment, for example. Sentiment Analysis can help you monitor conversations about buzzwords like women's empowerment and tell you the direction they’re headed in. You can then look at incorporating it into future marketing campaigns and positioning your brand accordingly.
Summing It Up
Thorough market research and competitor analysis are crucial to giving your brand a shot at winning over the audience. Along with quantitative metrics, you can start understanding sentiments around your product, brand, competition, etc. and get a more complete view of what matters to your customers. By doing this and prioritizing customer experiences, company revenue can grow by 4-8%.
A top Sentiment Analysis platform like Lettria makes this information accessible and puts it in a form that’s easy to understand. Rather than stop at positive and negative grading, it exacts a value for sentiments and helps you prioritize them. On top of that, it can be used in any industry.
Lettria follows a 2-step analysis process that takes into account 8 primary emotions and the context in which they are expressed. It offers all the benefits of a standard Natural Language Processing model as well as the ability to customize multilingual models according to your business.
Meeting customer expectations and setting yourself apart from your competitors is the only way you will be able to get a competitive advantage and meet your sales target. Explore how Lettria can help your market research team start competitive analysis right away.