What is benchmarking in business? The answer is quite straightforward. It’s comparing your company against your competitors to identify best practices in a given industry. The process can benefit your company in multiple ways – it can help generate new ideas to improve operations and sales, identify new technologies that could reduce costs or strengthen customer loyalty and satisfaction. A result of benchmarking process is eliminating gaps in service or acquisition of competitive advantage.
How to Conduct a Successful Benchmarking Analysis?
There are several steps that you have to go through. The first one should be choosing the right benchmarks. One of the most obvious choices is a pre-existing key performance indicator. That is a good starting point as you’ve probably been monitoring it for some time, and you got some reliable data.
But ask yourself this – what exactly do you want to benchmark? If you have a specific goal in mind think about the metrics that accompany that target. If you’re going to benchmark against your competitors in customer service or customer retention, you have to gather performance metrics, such as churn rate or first response time.
You should think about metrics that are early signals for more significant problems or opportunities. Has the number of subscribers to your email newsletter dropped recently? Your competitors might be implementing a new strategy that is much more attractive to your target customers. Or you’ve fallen behind the latest marketing trends. To stay up to date, you have to investigate.
Competitors to Benchmark Against
If your benchmarking study is to be successful, you have to choose the right companies to benchmark against. You can divide the competitors into four groups:
- Similar businesses
That’s pretty straightforward. You have to take a look at companies of similar size and in a similar industry. You can compare products and services and see whether they come up with some groundbreaking ideas.
- Industry leaders
These are the most prominent companies; businesses you’d love to be when you grow up. They already did a lot of work and got the foundations you can base your operations upon. Knowing how they operate will help you become one of them.
- Smaller companies
The problem of almost all small companies that are just starting off is the lack of investment funds. But it’s also one of their most considerable advantages. They have to be creative because sometimes they simply can’t afford big expensive and trusted solutions. Growth hacking was an answer to the tight marketing budget. They can look at a problem from a completely different perspective and deliver fresh solutions.
Moreover, smaller companies might catch up with you one day, and through thorough benchmarking, you won’t be caught off-guard.
- Leaders in a specific niche
Companies from completely different industries can deliver valuable insights as well. They can be leaders in a clearly defined business process. This approach is called strategic benchmarking; looking beyond the firm’s core industry to companies that are known for their world-class performance in a given field.
Need an example? Here’s one! We’ve been recently looking for a way to pimp out our newsletter. Of course, we analysed what leaders in SaaS industry send out, but then it hit us – why limit ourselves to only one branch? We discovered that unquestionable leader in the newsletter games is The New York Times. So we’re currently in the process of analysing their strategy, and who knows, there might be some parts of it we could implement.
Where Can You Find the Data
We’re now at the hardest part of the problem. How exactly do you access all the information you need for benchmarking dossier?
It seems like an extremely difficult task. For starters, companies don’t want to reveal information you’ll use in your performance benchmarking. Fortunately, there are plenty of tools that will help you get the information you need.
Let’s start with SEO metrics. These pieces of information are publicly available and very useful. Tools like SEMrush will analyse your site against main competitors in your industry and deliver all the data in a legible report. The disadvantage of the data is that you have to pay for most of the tools.
The key to successful benchmarking dossier is conducting proper research. There are plenty of information out there, the only problem is to find them. Here the solution is Internet monitoring tool like Brand24. When you set up a project, the tool will collect all the mentions with given keywords. You won’t miss any update like press release, sales report or social media mentions.
I know that the volume of information can be quite intimidating, but we got you covered. In Brand24 you can apply filters to your project and analyse only the data you need.
You can try to do it all on your own as well. Simple solutions are usually the best so why not just… ask? The advantages of this process are that you’ll be able precisely the data you need – you ask precise questions to people you want answers from.
The process is, however, time-consuming and costly. And you may not get enough results to draw valuable conclusions.
Develop a SMART Action Plan and Monitor the Results
After the analysis part comes to the implementation. As always, you need a plan. First, define the SMART actions that you have to take. And by SMART I mean:
- Specific – the more specifically you define your goal, the easier it will be to achieve it;
- Measurable – staying on top of things will certainly be easier if you can measure your progress. Set up mid-term goals to measure your progress;
- Attainable – if you’re planning on building your company within a month and retiring after you most likely will fail. That’s why it’s important to set up goals that you’ll be able to achieve;
- Relevant – the goals should be relevant for you – don’t fulfil someone else’s wishes or desires. It’s also vital to make your goals realistic, so if you’re just implementing brand new strategy don’t expect thousands of new customers within the first week;
- Time-Based – a goal is not a goal if it’s not time-bound. The deadline will motivate you to work harder to accomplish it.
Competitive benchmarking is a continuous process, and it’s vital to monitor the effects of implementation as well as further development of competitors’ strategies.
Benchmarking involves a lot of research work. You have to gather and analyse the information meticulously. But in our fast-paced, always-on world, the process of continuous improvement is inevitable to survive.