Out of the many ways used by companies to review their existing processes and excel in their future operations, competitive benchmarking often loses its place due to the lack of knowledge and resources to perform it. This article will explain the concept of competitive benchmarking and the ways to carry it out.
The process of comparing a company with its competitors with the help of a collection of metrics is known as competitive benchmarking. It is usually used to measure the performance of a company and perfect its processes, strategies and techniques to outpace the competition. It also allows companies to observe the best practices followed by its competitors and inculcate them within the organisation to reach its business goals.
Apart from getting an overview of your company, competitive benchmarking also keeps you informed about your competitor’s accomplishments and failures. This is helpful while predicting the market reaction before planning a new strategy to fulfill the needs of your customers.
Although competitive benchmarking is a tedious process performed by most of the large companies, with the help of easily available online tools even small businesses can take its advantage. In simple words, all you need is some reliable outside data to measure the success of your business. We have listed 6 easy ways with which any business can successfully do competitive benchmarking:
#1. Analyse Your Internal Processes
The first step to competitive benchmarking is to know your competition and understand your position. Knowing where you stand and how you can advance is like getting a map to reach your destination. The earlier you understand your shortcomings, the earlier you can start your journey and evolve your perfection.
Start analysing your internal processes by questioning your capabilities to acquire new customers, nurture leads, retain customers and encourage customers to try out your new products. This is helpful in narrowing the funnel of your target audience and in finding ways to reach them. Also, a thorough understanding of your methods in creating new products, the time taken to create a product and your product’s market reviews will help you in setting a benchmark for your current methods and technologies.
As benchmarking lets you draw a starting line, spend adequate time knowing which measurement tools can give you accurate results of your target audience and competitors. Google offers a lot of free and paid tools to gather this information. For example, Google Keyword Planner can be used for understanding consumer behaviour, the latest search trends, how people are searching online, preferred search language, date, location and volume of the searches. Whereas Google Analytics gives you an idea of your industry and the competition in it. Its benchmarking option allows users to compare their data with combined industry data shared by its competitors.
#2. Understand Your Competitor and Market Behaviour
Once you are familiar with the tools and have decided which tools to use, you need to come up with an idea how you will proceed with your benchmarking study. Identify your competitors and companies of a similar niche. Choose strategies to approach each benchmark by reading case studies and interviews of owners and executives of similar businesses or conduct an online research to study their web traffic and digital marketing metrics.
After studying your competitors, understand the behaviour of your consumers. Focus more on their preferences, expectations, overall market trends, how you can take advantage of the consumer needs and look for hidden opportunities. As you know the exact need of the market and the developments made to fulfill those needs, you can think outside the box and develop something which is both innovative and advantageous.
#3. Uncover your Competitor’s Strengths and Weaknesses
Before gathering your competitor’s information, make sure the companies you select exhibit excellence and are relevant to your business location, industry, size and product category. As soon as you have gathered enough information about your competitors, you can analyse them to crack the hidden strengths and weakness. Comparing your data with minimum three competitors within the same domain will give you insights about your brand power. As competition is a constant process in all businesses, comparing your business to the ongoing activities of your competitors will help you extract the most useful information.
#4. Take a Look Outside your Industry
Apart from benchmarking within your own industry, comparing your practices with identical practices outside your immediate industry can also be useful in learning and adapting new strategies and processes. This can be done by understanding your loopholes and looking for industries with the similar weaknesses and studying their response to overcome these weaknesses. This kind of benchmarking is also known as functional benchmarking as it is used for identifying practices which are superior in similar functional areas.
#5. Identify New Market Opportunities
As soon as you gather the market information, the next step is to find ways to get ahead in your game by implementing strategies that can fulfill the new market opportunities. This can be done by finding new search keywords undiscovered by your competitors, new ways to reach your audience, innovative ways to engage consumers or by designing products different from your competitors. You can even try to find what your competitors have been neglecting but if introduced innovatively will be hugely applauded by the market.
#6. Interpret the Results and Improve your Processes
Benchmarking against the large players can give you an understanding of the processes used behind their success. At the same time, benchmarking against the small players will give you details about their performance in their small facilities. Whether you are benchmarking against a large player or a small player, you can get to know some common approaches to lay foundations of future projects and works. As soon as you have completed the process of competitive benchmarking you can use the data gathered to apply to your processes. Once you visualise the data and draw conclusions, you can determine your ways to improve your processes, strategies and technologies.
Although the process of competitive benchmarking is time-consuming and tedious, once implemented successfully, the benefits reaped will be invaluable.
Anna Clarke is the owner of online writing company 15 Writers. She is a successful entrepreneur with over 20 years’ experience in freelancing, academic dissertation writing consulting, specialising in Business, Economics, Finance, Marketing and Management.