The method of comparing a business to its competitor using a set of criteria is known as competitor benchmarking. Benchmarking is used to equate the company’s success to that of its rival over time. Companies utilise this data to figure out what constitutes “best” practise for specific criteria and then compare it to their own strategy. It’s also a crucial part of competitive analysis.
Benchmarking makes it easy to see whether a competitor is improving or failing, which proves to be a great thing to evaluate the company’s strategy and make any necessary changes. In today’s digital world, there are many data and methods available for competitive benchmarking analysis.
Not only can business owners obtain a comprehensive perspective of companies and how they work on various levels using competitor benchmarking, but they can also stay competitive. Benchmarking allows companies to quickly see when a competitor is succeeding or struggling, which are both excellent moments to examine the strategy.
Benefits of Performing Competitor Benchmarking:
You can spot trends early and change your marketing targets by comparing your results to your competitors. Even better, you’ll be able to see what your rivals are up to. You will find out what they’re doing and incorporate it into your marketing mix if they consistently outperform you in one of your benchmark KPIs.
Companies that perform competitive benchmarking analyzes will easily enhance their functions while still meeting industry standards. They can also publicize their improvements through company brochures and sales pitches to increase sales among their core customers. Companies that frequently perform competitive benchmarking research will dramatically reduce their costs and contribute to better sales results.
Companies must strike the right balance to thrive in the long run. They don’t want to overpay or underpay their workers to the point that they lose motivation to work. Companies should evaluate every aspect of the payment packages using industry benchmarking analysis. This research aids businesses in determining the amount of money they can spend on workers and developing plans to do so.
4. Areas of Improvement:
Companies may use benchmarking to find areas for improvement and incorporate new concepts for more efficient working. It also aids companies in gaining a greater understanding of their rivals’ winning strategies. Companies may also create a benchmarking analysis template and use it to assess the scope of change based on the company’s previous results or current competitor strategies.
Competitor Benchmarking and Competitor Analysis; How different are they?
Although the terms competitive benchmarking and competitive analysis are frequently used interchangeably, they serve distinct purposes.
Consider competitive analysis (or competitive research) as a close examination of the competitors. You can look at it in as much detail as you want. Examine their product’s features one by one, or investigate their brand messaging strategy to see how they place themselves in the market.
On the other hand, competitive benchmarking is analogous to tracking a moving goal with a GPS tracker; it’s a way to keep track of competitor movement and long-term strategies. You can monitor how others perform over time and search for trends in this section. What creative ideas do they implement every month? Is seasonality a factor in their company as it is in yours?
Competitive Benchmarking in the Times of Covid-19
Benchmarking during COVID-19 can be challenging because expectations in most companies and sectors are drastically different from before the pandemic. Competitor benchmarking will help businesses steer their growth trajectory in meaningful ways, whether it’s starting a new company or simply getting the old one back on its feet.
Here is why Competitive Benchmarking has stood as an effective growth strategy during and Post-Covid by helping in areas such as:
1. HR Management:
In this type of competitive benchmarking, an individual employee output is compared to that of other, similar workers, whether internal or external. The workforce of all organizations has suffered a lot due to the pandemic, and benchmarking has helped companies develop strategies for dealing with the caused adversities.
Sales Quota Attainment, Calls Handled, Number of New Customers Acquired, Lead-to-Close rates are examples of competitive benchmarks. HR professionals should equate their company’s human capital metrics to those of similar companies by competitor benchmarking.
2. Evaluating Recovery Rate:
The term “recovery rate” is widely used in risk management to describe how quickly a company recovers from a crisis. In other words, an organization’s recovery rate is a deciding factor in its ability to deal with adversity and problems.
Because of the industry disruptions created by COVID-19, it’s more important than ever to use competitor benchmarking based on a company’s recovery rate in terms of sales KPI benchmarks and other relevant metrics.
3. Preparation for Crisis:
When it comes to a company’s readiness to deal with a catastrophic pandemic, preparation is vital. A company can model preventive steps taken by organizations that have risen since the pandemic better than predicted by performing competitor benchmarking. This type of benchmarking will assist a company in obtaining an unbiased perspective on how well it performs compared to other enterprises in crisis like the recent pandemic. It also aids in identifying areas for progress in the planning phase by digging down into performance gaps.
The Critical Question: With so much flexibility in what can be included, how will you choose the right competitive benchmarks for your business?
Here are some major competitive benchmarks businesses can use, based on both internal and external factors:
1. Performance Benchmarking: The focus of this method of benchmarking is on the results. Performance benchmarking may include evaluating everything from sales growth to social media activity. It may also apply to practical performance benchmarking, such as assessing a particular team’s performance.Process Benchmarking: It’s all about getting a better understanding of the processes and figuring out how to improve them. By evaluating how your competitors conduct a process, you might uncover methods to enhance your own.
2. Strategic Benchmarking: Companies use benchmarking to compare business models and methods to improve their strategies. The goal is to find out how to replicate what makes those businesses successful in becoming more competitive.
Here is how Competitor Benchmarking can go wrong: the don’ts of benchmarking
1. Being unsure about what you’re benchmarking and why – you need a reason for benchmarking, a reason for investing the time and money into it.
2. The biggest roadblock is possibly not knowing what tools and services are available for benchmarking.
3. There is no actionable correlation. Just like any other business review, if a benchmarking report sits on your virtual shelf, it was a waste of time.
A noteworthy point to remember:
Be careful not to become too concerned with your competition; although it is necessary, not all of your answers will be found among your competitors. Leaders should consider that looking beyond the market can be just as helpful in generating ideas and creativity, as well as a source of motivation for new questions.
We hope that this piece of information provides you with enough value to perform constructive competitive benchmarking that will assist you in increasing your productivity. We’d appreciate it if you could give us your valuable input.
Feel free to check out our other valuable articles and posts on our website related to MarTech, HR-Tech, FinTech, and EmergeTech.