Who’s your competition?
Do you check out your competitors before you embark on an SEO campaign? Do you check in on competitors as you work through your campaign? It’s a good idea!
But you first have to be sure you have an accurate and realistic view of who your competitors are.
If you sell jewelry, Cartier or Tiffany are likely not your true competitors. If you sell dresses, you aren’t competing with a custom couture house.
You true competition is of equal size, product offering, location, business style etc.
For example if you sell beads in an online shop, you aren’t competing with Swarovski for high end crystals. You are competing with beading sites that are coming up for similar keywords and sites that have similar inventory and pricing. If you also own a local shop, your biggest competitor is the other local shop down the road from you.
Figure out who is ranking well and offering the same or similar products or services and then reverse engineer what they are doing.
Check out their Meta tags to get a feel for the keywords they are targeting and what approach they are using in writing up the tags – many sites list their key selling points in their Title tag [cheapest, free shipping, most inventory etc].
You could choose to take the same approach, both in keywords and style/approach for tags. OR you could look at what they are doing and figure out how to vary it a little bit. If they are well ranked and have good history, it may be hard to quickly beat them out on the exact same keywords, so use a variation 
of the phrases (maybe even a longtail variation) to try gain momentum from a “side door” approach.
You should also check out what links they have. You can then evaluate their links and determine which are the juicy ones and then try to earn a link from that site yourself. Don’t stop there though, also try to get links that they don’t have. The goal is to beat them out, so you don’t want to settle for just getting what they already have.
Remember, sometimes it’s not always clear why a site is holding on to a great ranking and when that happens, it can become frustrating. You can become consumed with trying to understand what they are doing and why they are ranking well when they don’t appear to truly deserve that positioning.
Use competitor analysis to get data and ideas but don’t get so hung up that it ends up holding you back. Your time is better spent enhancing your own site rather than launching a full scale in-depth investigation. Some sites just rank well for now and they’ll get busted and lose their position at some point if they are black hat.
In addition to looking at the SEO elements, I like to get a feel for their marketing style and approach. Again, not so you can copy them, but so you can set yourself apart from them. See what you can learn about your competitors and then identify what you are doing better and let site visitors know you offer a better experience because…
What are you doing in the way of competitor analysis right now? Any tips you want to share?