A Look at the Competitive Benchmarking Process
As defined by Survey Monkey in its blog, “How to use competitive benchmarking for market research,” competitive benchmarking is the process of “comparing your business against a number of pre-identified competitors using a set collection of metrics and key performance indicators (KPIs). By tracking changes in these measures over time, you can assess your performance against industry standards, against those you admire and wish to emulate, and even against your own historic performance.”
This can help you evaluate your own performance, and ultimately fromtify best industry practices which can be employed in the future to safeguard the enterprise over the competition. Competitive benchmarking, notes Survey Monkey, is not the same as the in-depth analysis of competitors known as competitor analysis. Benchmarking is to be seen from a higher-level view of the competitive landscape. This is more in-depth research and assessment of the strengths and weaknesses of your competitors. Are you performing better or worse than your competitors?
Survey Monkey notes that there are several different approaches to this type of competitive benchmarking, including:
Process benchmarking: This is used to compare your processes against those of your competitors. This might mean comparing your manufacturing processes, your methods of obtaining supplies, or your distribution strategy. By benchmarking your internal processes against industry standards, and especially against those who are doing well on internal efficiency, you’ll be in a good position to be able to increase your own efficacy, cost effectiveness and competitiveness.
Strategic benchmarking: This is focused on comparing business models and strategic orientations in order to improve business strategies. It often involves looking at how businesses outside of your industry work for inspiration and strategy models.
Performance benchmarking: Process benchmarking and strategic benchmarking both involve looking at the internal processes and business models of competitors and other businesses. In contrast, performance benchmarking is focused on outputs and outcomes. It involves looking at competitors’ performance in areas of interest and using that performance as a standard or goal for future achievement. Performance benchmarking is typically used over the long-term, because industries change, and so too does the performance of industry incumbents. That means regularly assessing who the dominant players are, as well as tracking key metrics against your own historical performance.
Once benchmarks and metrics are established to measure against, Survey Monkey notes that the next stage of the process is to choose competitors to benchmark yourself against. There are several different options, but generally one could identify known, direct competitors; like competitors; best-in-class competitors; and industry disruptors.
This in turn can lead to identifying which benchmarks to measure against. Survey Monkey groups these into several categories, including growth metrics; ranking metrics; brand awareness; product and service performance.
Gaining Insights from Competitive Intelligence
All Things Insights looked further at this topic in “Turning Competitive Intelligence into Insights.” The competitive landscape for many businesses has never been stronger. From small start-ups to large corporate enterprises, the playing field has leveled with such market factors as the rise of the Internet, omnichannel retailing, the growth of delivery services, and even with digital transformation taking place across many organizations. Increasingly, competitive intelligence has become more focused, to keep an eye on competitors in whatever industry or field one is working in. Competitive intelligence is now giving rise to the growth of competitive insights.
Market intelligence can also come into play, as explored in “Turning Data into Market Intelligence.” This valuable data helps determine market segmentation and other variables such as target audience and market penetration. This is an important advantage that a firm can gain from vital intelligence that will help them determine the state of the market. This type of market intelligence should not be mistaken for business intelligence, which focuses on internal factors, or competitor intelligence, which focuses on rivals. Rather, market intelligence is external in nature, providing the enterprise with a holistic view of the entire market.
Weighing Competitive Strengths & Weaknesses
Competitive benchmarking is a process of evaluating performance and identifying key areas of strength and weakness. By analyzing the practices and strategies of competitors, a company can gain valuable insights and best practices that can be applied to improve its own performance. We asked ChatGPT to spotlight some best practices that can be gained from competitive benchmarking:
- Identifying Industry Leaders: By benchmarking against competitors, you can identify companies that are considered leaders in the industry. Studying their strategies, processes, and performance metrics can provide valuable insights into what works best.
- Understanding Market Trends: Competitive benchmarking allows you to stay updated on market trends and emerging practices. By observing what competitors are doing, you can gain insights into new technologies, consumer preferences, and industry shifts that may impact your own business.
- Identifying Strengths and Weaknesses: Analyzing the performance of competitors helps in identifying your own company’s strengths and weaknesses relative to others in the industry. This understanding can guide strategic decision-making and resource allocation to focus on areas where improvement is needed.
- Learning from Successes and Failures: Studying both successful and unsuccessful strategies of competitors provides valuable lessons. You can learn from their successes to replicate effective strategies and from their failures to avoid making similar mistakes.
- Benchmarking Metrics and KPIs: Comparing key performance indicators (KPIs) and metrics with competitors can highlight areas where your company is underperforming or excelling. This comparison can lead to the adoption of best practices in areas such as cost efficiency, customer satisfaction, and operational effectiveness.
- Process Improvement: Analyzing competitors’ processes and workflows can uncover opportunities for improvement within your own organization. By adopting industry best practices in areas such as production, supply chain management, and customer service, you can enhance efficiency and effectiveness.
- Innovation and Differentiation: Competitive benchmarking can inspire innovation and differentiation. By understanding what competitors are offering and how they are positioning themselves in the market, you can identify gaps and opportunities for innovation to differentiate your products or services.
- Continuous Improvement Culture: Implementing a culture of continuous improvement is essential for sustained success. Competitive benchmarking provides a systematic approach to regularly evaluate performance against industry standards and drive ongoing improvement initiatives.
Improve Competitive Performance
Competitive benchmarking is a valuable tool for gaining insights and best practices from industry peers, enabling companies to improve performance, innovate, and maintain a competitive edge in the marketplace. Of course, that is just the start of this important task. One must analyze the results and implement strategies to fully take advantage of this process. Performing competitive benchmarking as a regular process can help ensure that you track the impact of your initiatives.
Video courtesy of Similarweb
