As a business owner, you may have heard of benchmarking. But what are the benefits of benchmarking, and how should you go about it? In this article, we look at what benchmarking is and how to do it well.
What is benchmarking?
According to Shopify, benchmarking is a ‘process of measuring the performance of a company’s products, services or processes against those of another business considered to be the best in the industry’. Essentially, it allows you to work out how your business stacks up against the competition.
Benchmarking is important for small businesses because it helps you identify trends, gaps and opportunities between you and the competition. This doesn’t just involve the best or the big players in your industry; you can benchmark your business against all of your competitors to create insights. And what’s key is that the process and findings are based on data rather than subjectivity or assumptions.
After the benchmarking process is complete, you should be able to ascertain room for improvement in your own business, to help you get closer to the ‘best in class’ position.
How can I do benchmarking well?
Depending on the size of your organisation and your competitors, the process can vary. You may want your departments to complete their own benchmarking (such as marketing vs marketing, customer service vs customer service) or to complete benchmarking on your competitors’ businesses as a whole.
Generally speaking, the following areas should be covered in the process:
- Product or service offering (including scale, price, variations, use cases)
- Target audiences (job titles, demographics, regions)
- Sales and marketing strategies (channels, traditional vs. digital marketing, events, webinars)
- Customer engagement and customer service processes
- Manufacturing or service delivery processes
If you’re completing this for multiple competitors, you may start to see some trends emerge which you might have missed such as complementary product or service offerings, target audiences, frequently used social channels and even key CTAs or brand messaging.
To keep it coherent, you can try using the SWOT Analysis technique to identify specific Strengths, Weaknesses, Opportunities and Threats from the competition.
If you’re struggling to gather accurate information about your competition, there are a few places to look including Companies House, the company website, published white papers, events and even by using tools like SEMrush to gather information about their keywords and marketing strategy. If you’re really strapped for time or resources, Feefo offer competitor benchmarking services that can help.
Once you have your data, it’s important to interpret the results. This part of the process will vary and depend on personal preferences and familiarity with graphs, spreadsheets, documents or lists – anything that allows you to analyse and interpret the data is appropriate.
The next step is to look for trends, and then prioritise your learnings for your own business. For example, based on your findings, should you be looking at more regular blog posts, attending more events, hosting your own webinars or reducing the price of your product?
Once you have analysed, prioritised and implemented your changes based on the benchmarking process, it’s important to check in and update your data regularly. This is not only to monitor the outcome of your shift in strategy, but also to keep an eye on competitor activity for the long-term, rather than as a one-off project.
To conclude, benchmarking is a great way of obtaining a better understanding of where you stand in the market among the competition, and opportunities to seize to get ahead of the pack in the long run.