Author: Sudeshna Ghosh
What is Competitive Benchmarking Analysis
Benchmarking in the simplest of terms, is defined as “the practice of comparing business processes and performance metrics to the industry bests and best practices from other companies.” Therefore, in competitive benchmarking, a company seeks to evaluate its performance and other key metrics against those of industry leaders or competitors to gauge the success of its brand/s. A company might evaluate its business strategy, practices, or the products and services that it offers to see whether it compares favorably or unfavorably against those offered by leaders in the industry in which it operates. Using key performance indicators, the company can create a set of benchmarks for it to match up to others in its sector and understand where the gaps are. Competitive benchmarking helps businesses understand their position in the market, identify areas for improvement, set goals, and implement best practices. Benchmarking is all about learning from the best to elevate your game.
Typical competitive benchmarking includes metrics such as:
- Customer engagement on social channels
- Brand awareness
- Customer experience ratings, such as satisfaction, ease of use, and more
- Search engine results
- Reviews
- Revenue
Key Takeaways
The main objectives of competitive benchmarking are:
- Competitive benchmarking helps outperform competitors by identifying gaps in performance and fostering strategic growth.
- Regular performance benchmarking enhances product quality, reduces costs, and boosts profit margins.
- Strategic and process benchmarking enables businesses to refine their operations and develop unique selling points.
- SpendEdge’s tailored solutions provide valuable market insights and data analysis, helping companies enhance customer experience and drive success.
Why Benchmarking Analysis
By analyzing and comparing financial and related data from similar organizations, competitive benchmarking analysis can provide you with insight into your company’s performance. Benchmarking analysis involves identifying areas for improvement, selecting benchmarking partners, collecting and analyzing relevant data, and implementing improvements based on the findings. As a business strategy, competitive benchmarking analysis provides valuable insights into industry trends, best practices, and areas for improvement. Comparison of key performance metrics with those of competitors or industry leaders enables you to identify areas in your business operations where you can optimize processes, enhance efficiency, and gain a competitive edge. For instance, using benchmarking analysis, you can discover innovative marketing strategies, cost-saving measures, or operational procedures that have helped a competitor or industry leader reach the top of its game. By adopting these proven strategies and adapting them to your own unique circumstances, you can stay relevant, innovative, and ahead of the curve.
Types of Competitive Benchmarking
Performance benchmarking
Strategic benchmarking
Process Benchmarking
Competitive benchmarking can be divided into three types: performance benchmarking, strategic benchmarking, and process benchmarking.
- Performance benchmarking involves comparing your brand’s performance in areas like revenue, brand awareness, and social media engagement with that of your competitors in the industry. This helps you understand how well you are doing compared to others and identify areas for improvement.
- Strategic benchmarking entails evaluating how your business operates in comparison to your competitors. You assess their business models, planning, and execution styles and compare them to your own. You need to figure out why certain companies are thriving. You can do so by looking at their business strategies and marketing campaigns. For example, if your email success rate is low, you can evaluate what your competition is doing differently with their email marketing campaigns. As a result, you can identify areas of improvement and customize email strategies to match your competitors.
- Process benchmarking involves analyzing how well your current business processes are working. By comparing your processes with those of your competitors, you can identify differences and either learn from them or develop unique selling points for your customers. The aim is to become more efficient.
By breaking down competitive benchmarking in this way you can overhaul your business strategy in a more manageable way.
What does the Process of Performance Benchmarking Analysis Involve
The first step in performance benchmarking analysis is to define your key performance indicators. For this, you will need to gather data on your competitors related to the following:
- Business research: What is their annual revenue? How many employees do they have?
- Brand research: What kind of online reviews do they have? What is their share of voice or share of wallet in your sector?
- SEO research: How do they fare in search engine results? Are they using paid social marketing to reach their audience?
- Survey research: How do they survey their customers? How often do they ask for feedback?
- Social media research: What level of social media engagement metrics do they generate? How do their social media metrics compare against your own?
- User experience research: Are their digital platforms mobile-optimized? Are their sites easy to navigate? Is it easy to understand their product and service offering, and make a purchase?
- Content analysis: What content do they produce, how much, and when? Does it get high levels of engagement?
Practical Steps for Benchmarking
Step 1
Determine which metrics are crucial for your business.
Step 2
Find industry leaders who excel in these KPIs for benchmarking.
Step 3
Gather internal performance data and obtain industry benchmarks.
Step 4
Compare your performance against the benchmarks.
Step 5
Create specific, measurable, and time-bound action plans.
Step 6
Regularly monitor your progress against these plans and adjust.
Benefits of Competitive Benchmarking Analysis
Identifying Performance Gaps
Benchmarking analysis allows businesses to identify performance gaps by comparing their performance against industry leaders or competitors. This helps in understanding areas where the company is falling behind and needs improvement.
Understanding the competition
If you want your business to be truly successful, you must thoroughly understand the competition. With comprehensive external benchmarking, you can accurately figure out what your competitors are doing well.
Finding new opportunities
Benchmarking can help you identify areas of opportunity within your business and your industry. For example, you might notice that your competitors are falling behind in a certain area, and you might be able to exploit that for your benefit.
Lowering expenses
Benchmarking can also help you reduce your overhead expenses. You might realize that inevitable redundancies are slowing down your workflows. You can also use benchmarking to reduce inefficiencies in your workplace.
Increasing sales
You can even use benchmarking to increase your sales. You might use technical benchmarking to determine where your products lag behind. Then, by targeting those areas, you can better meet the expectations of your customers and boost your sales.
Setting business goals
You can also use benchmarking to set specific SMART goals for your business. For example, if your company has consistently met its objectives for the past few years, it might be time to reassess your metrics and increase your expectations.
How can Infiniti Research Help Businesses with Competitive Benchmarking?
Infiniti Research offers a comprehensive suite of services to facilitate competitive benchmarking, enabling companies to gain a strategic edge in their respective industries. Leveraging our expertise in market intelligence and procurement solutions, we provide tailored support throughout the benchmarking process.
Firstly, our team conducts thorough market research, analyzing industry trends, competitor performance, and customer preferences. This data forms the foundation for benchmarking metrics, ensuring relevance and accuracy in comparisons.
With our Market Research Toolkit, clients gain access to a wealth of resources, including online surveys, polls, and case studies, to gather insights into competitors’ strategies and market positioning.
We specialize in identifying key performance indicators (KPIs) such as Net Promoter Score® (NPS®), Customer Satisfaction Score (CSAT), and Customer Effort Score (CES), enabling organizations to measure their performance against industry standards.
Our agile market research approach allows for real-time data collection and analysis, ensuring timely decision-making and adaptability to market shifts. Through competitive analysis, we help clients pinpoint areas for improvement and develop actionable goals to enhance sales and profits.
At Infiniti Research, we understand the importance of organizational culture in driving success. Our solutions are designed to align with your company’s values and objectives, fostering a collaborative environment focused on continuous improvement.
In summary, we empower businesses to excel in competitive benchmarking by providing comprehensive market intelligence, actionable insights, and strategic guidance tailored to their specific needs and goals.
Final Thoughts
Competitive benchmarking is indispensable for businesses aiming to enhance their customer engagement, brand awareness, and overall customer experience ratings. By leveraging market research trends and employing performance benchmarking, strategic benchmarking, and process benchmarking, companies can gain crucial market insight and develop a robust brand experience strategy. Our comprehensive approach to competitive analysis and data insights empowers businesses to set and achieve performance standards across various departments. Utilizing digital experience metrics and key performance indicators (KPIs), organizations can optimize their customer engagement tactics and foster a culture of continuous improvement. Embracing internal benchmarking and functional benchmarking further strengthens the alignment of goals and performance across different metrics and departments.
