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Oct. 7, 2021

Four Key Steps to Analyze Local Competition in Your Marketplace

Four Key Steps to Analyze Local Competition in Your Marketplace

On a recent episode of the Remote Local Podcast, fellow host David Lahav asked a key question for anyone interested in market research on local competition: “What are my odds of leading the market and how hard will it be?”  David and I have both built businesses in different sectors but started by doing some of this research ourselves and have simplified our methods into four basic steps.

What Size Marketplace Are You Targeting?

I happen to live in Los Angeles, which has a population of around 4 million people.  NYC, by comparison, is at 8.4M and Chicago is at 2.71M.  I think of these as “Tier 1” cities and they are likely to have well-established and fairly competent competition.

One step down would be cities like:

  • San Antonio 1.5M
  • Dallas 1.3M
  • Austin ~1M

These cities are still likely to have some established competition, but not as cutthroat as in the Tier 1 cities.  I think of them as “Tier 2” cities.

The last group would be developing marketplaces.  Don’t get me wrong, these aren’t “small towns” by any stretch of the imagination, but they often contain a lot of opportunity when it comes to service businesses.  Examples include:

  • Denver (~700k)
  • Nashville (~700k)
  • Kansas City (~500k)
  • Saint Louis (~300k)

These cities are surrounded by many suburbs which could be part of a service area as well.  For example, if you include all that population (and hundreds of square miles of service area) to Kansas City and Saint Louis, you would get populations of 2M and 2.8M, respectively.

The point is that in these smaller cities you have a real shot of finding perhaps only one or two (or no) serious competitors.  That means OPPORTUNITY.

Google Is Your Friend

You can’t fly to each of these places, so do the next best thing.  Google appropriately.  For example, “plumber San Antonio” or “locksmith Nashville.”  You will then get something known as the Map Pack, which lists all relevant keyword matches, ranked in order of popularity and reviews, among other things.

You now know the top three service providers in that area, at least according to Google.  Take a look at their Google My Business profiles and see how well positioned they are.

Check Websites

Once I’ve gotten a free list of the competition via Google, I am now free to check their websites and see if they’ve got their digital strategy together.  What you find is often tragic: no calls to action, no SEO, and graphics that the 1990s would be embarrassed to see.

Pro tip: I’ve said before that in service businesses, picking up the phone is a competitive advantage: call and see if people are actually answering the phone.  That’s another way to get a good read on the competition.

Check Reviews and Directories

While Google Reviews is dominant in many places in the US, in some markets, Yelp really matters too.  David has mentioned that a key factor that led him to buy a business was a high number of positive Yelp reviews.

In the example above of plumbers in Austin you can see that the leader has thousands of reviews, while the 2nd and 3rd ranked only have hundreds.  That doesn’t mean they are impoverished: you don’t even need 1% of the TAM (total addressable market) in an area to carve out a really solid and profitable business.  

Overlay that same thinking in an opportunity city and there might not even be enough results to generate a Map Pack from Google, or you might see that the top three listed don’t even have 100 reviews among them combined.

Pro tip: While Google and Yelp are big deals, keep in mind that service businesses are also listed on many national and local directories as well.  Angi (formerly Angie’s List) is an example of a large national directory that also carries its own reviews.  

Get Started!

With these steps in hand, all you need to do is set aside some time.  You don’t need any expensive or proprietary software: just some elbow grease and the willingness to do the work.  You’ll also find what David and I have found many times: the excitement of opportunities when they start staring you in the face!  Good luck!

This article was written by Neel from MaidThis Franchise, a remote-local franchise opportunity for people looking to escape the rate race and reach financial freedom. Learn more here.