How to Do Competitor Analysis Before Building Your Product

Most founders do competitor analysis by Googling "[product category] alternatives" and skimming the first page. That is not competitor analysis. That is a directory listing. The real work is reading what existing customers are frustrated about, finding the gap no incumbent is solving, and writing a one-page "why us" document that names the gap in plain language.

This post is a 5-step process for competitor analysis that takes 8 to 15 hours, produces a defensible gap analysis, and ends with a positioning document you can use in your landing page, your pitch deck, and your first sales calls. The process is the same whether you are entering a crowded market or a quiet one.

Step 1: Find the 10 competitors (1 to 2 hours)

Start with the obvious ones. Google "[category] software" and write down the top 5 names. Then add the next 5 by checking these sources:

G2 and Capterra category pages (top 10 by review count)
Product Hunt launches in the last 24 months with 100+ upvotes
Reddit threads where users ask "what do you use for X"
The "alternatives" pages of the top 3 competitors (Filestrate lists its competitors for SEO reasons, and the list is usually complete)
LinkedIn job postings for the category - companies hiring for the role usually sell the product

You should end with 10 to 15 names. The list does not need to be exhaustive. The point is to have a representative sample, not every player in the category.

For the solo accountant example from the post above, the 10 competitors were: Liscio, Sharefile, SmartVault, TaxDome, Karbon, Canopy, TaxFolder, Drake Software, ProConnect, and a lesser-known Canadian product called TaxCycle. The list crossed the categories of "client portal", "document management", and "tax preparation" because the pain Alex was researching touched all three.

Step 2: Read every G2, Capterra, and Reddit review (3 to 5 hours)

This is the step most founders skip, and the one that produces the actual insight. For each of the 10 competitors, read:

The 10 most recent G2 reviews (1 star and 2 star)
The 10 most recent Capterra reviews (1 star and 2 star)
The 10 most recent Reddit threads where the product is mentioned by name

The 1 and 2 star reviews are the highest-signal content on the internet for competitor analysis. A 5-star review tells you the product is good. A 1-star review tells you exactly what the product is not good for, and which customer it is failing.

For the Liscio example, the 1-star reviews on G2 clustered into four themes: too expensive for solo CPAs, the mobile app is broken on Android, the email reminders are too aggressive, and the onboarding requires a sales call. The Capterra 1-star reviews added a fifth: the search function does not find documents reliably. The Reddit threads added a sixth: the integration with QuickBooks Online is unreliable.

Total complaints to triage: 6 themes, with 1 to 3 representative quotes each. The job in step 3 is to figure out which of these 6 themes is the gap you can win on.

Step 3: Tag the complaints (1 to 2 hours)

Open a spreadsheet with one row per complaint and one column per competitor. Mark whether each competitor has the same complaint, has a partial fix, or has no fix. The "no fix" column is your opportunity.

For the solo accountant example:

| --- | --- | --- | --- | --- | --- |

| Android app broken | Yes | Partial | No | Yes | Yes |

| Email reminders too aggressive | Yes | No | Yes | Partial | Yes |

| Onboarding requires sales call | Yes | Yes | Yes | Yes | Yes |

| Search is unreliable | Yes | Partial | Partial | Yes | Yes |

| QuickBooks Online integration unreliable | Yes | Yes | No | Yes | Yes |

The complaint with the most "Yes" marks is the one the entire category is failing on. In this case, "Onboarding requires sales call" has 5 out of 5 competitors marked. That is a category-wide failure, not a Liscio-specific problem.

Step 4: Identify the gap (1 to 2 hours)

The gap is the complaint where the most competitors are failing AND the failure mode is something a small, focused product can fix. "Search is unreliable" is a hard problem that requires significant engineering. "Onboarding requires sales call" is a business model problem that requires saying no to enterprise customers.

For the solo accountant example, the gap is: a client portal that onboards a solo accountant in under 5 minutes without a sales call, priced under $100 per month, with reliable QuickBooks Online integration and a working Android app.

The gap is specific. Every word in it is doing work. "Under 5 minutes" rules out the incumbents. "Without a sales call" rules out Karbon and Canopy. "Under $100 per month" rules out Sharefile. "Reliable QuickBooks Online integration" rules out SmartVault. "Working Android app" rules out Liscio.

If you cannot write the gap in a single sentence, you have not found it yet. Keep iterating until you can.

Step 5: Write the "why us" document (1 to 2 hours)

The "why us" document is one page, three sections. It is the most important document you will write before the landing page.

Section 1: The category is failing at [specific pain]

One paragraph. Name the pain. Quote 2 to 3 representative customer complaints verbatim. Show that the pain is not specific to one competitor, it is a category-wide failure.

For the solo accountant example:

"Every client portal in the accounting category requires a sales call to onboard. Liscio, Sharefile, SmartVault, TaxDome, and Karbon all require a 30-minute call before a solo accountant can send their first client a document. Of the 50+ solo CPAs we surveyed, 41 said this was the primary reason they continued to use email and Google Drive instead of a paid portal."

Section 2: The gap is [specific positioning]

One paragraph. Name the gap you are filling. Show that the gap is the intersection of a real customer need and an underserved segment.

For the solo accountant example:

"The gap is a client portal that a solo accountant can set up in 5 minutes without talking to sales, priced at $49 per month, with a working Android app and reliable QuickBooks Online integration. This gap is the intersection of three unserved needs: solo practitioners (under-served by every incumbent), small-firm workflow (under-served by enterprise tools), and self-serve onboarding (under-served by the entire category)."

Section 3: We win because [specific advantages]

One paragraph. List the 3 to 5 specific things you will do that the incumbents will not. The list should be a mix of product (e.g., "5-minute onboarding"), pricing (e.g., "$49 per month flat"), and positioning (e.g., "for solo accountants only").

For the solo accountant example:

"We win because: (1) we will not have a sales team, the product is self-serve from day one, (2) we are priced at $49 per month flat, half the price of Liscio, (3) we are built for solo accountants only, no enterprise features, (4) we will ship a working Android app on day one, (5) we will integrate with QuickBooks Online as a first-class feature, not a checkbox on the integrations page."

The full process at a glance

| Step | Time | Output |

| --- | --- | --- |

| 1. Find the 10 competitors | 1 to 2 hours | A spreadsheet of 10 names |

| 2. Read every G2, Capterra, Reddit review | 3 to 5 hours | 6 to 10 complaint themes with quotes |

| 3. Tag the complaints | 1 to 2 hours | A grid showing which competitors fail on which complaints |

| 4. Identify the gap | 1 to 2 hours | A one-sentence gap statement |

| 5. Write the "why us" document | 1 to 2 hours | A one-page positioning document |

Total: 7 to 13 hours over 2 to 3 days. The same work, done without a structured process, takes 3 to 6 weeks and produces a directory listing, not a gap analysis.

"The gap is not a product feature. The gap is the complaint that every competitor has, and no one is solving. Finding it is a structured process, not a vibe." - u/compete_well

The fastest way to populate step 2 with real customer complaints is to automate the crawl. Try NeedSonar free and run a query against your category. The complaint clusters in the dashboard are the same complaint themes you would have found by reading 1-star reviews, gathered in 2 hours instead of 5.