Introduction

Organizations all over the world are constantly seeking to improve every aspect of their business in a bid to remain relevant and maintain or increase their customer share. Areas of focus in this regard can range from anything, like customer experience to their operations, supply chain, assortment planning, etc.

To do this successfully there is a need to identify and know areas of strengths for consolidation and areas of weakness for necessary improvements vis a vis industry standard best practices. Performance tracking is an essential step in business growth and for sound business decisions.

The only way to sustain success at the top of your business niche is competitive benchmarking. Competitive benchmarking is the process involved in comparing your organization’s growth, and milestones metric with your competitors in other see how well you are doing as a business.

To do this successfully, you must understand your innate weakness/strengths and uncover the best practices and strategy adopted by your competition that makes them better or bigger than you. The process of achieving this is called competitive benchmarking.

Let us take a look at the term competitive benchmarking, its benefits, various types, its limitations, and more.

What is Competitive Benchmarking?

Competitive benchmarking is a method of finding out all you can intelligently about your competitors and their industry leaders on ways, strategies, and practices they use to record success. You would then use the details of your finding a standard or yardstick for your organization, to see your business position when compared to these competitors.

The goal is to see if you are doing well or need to step up your game to keep up with them in terms of market/customer share or overtake them. This is a method of adapting to standard industry processes as well as preventing losing out on market share.

In simple terms, competitive benchmarking is a process used to uncover the unique selling points of any business and use it as the set standard an organization should strive to achieve. For example, a company might be doing poorly in customer experience while its counterparts may be recording great wins in that regard. In this scenario, a company can carry out competitive benchmarking to answer the following questions:

• Which organizations are doing best in terms of excellent customer experience across all touchpoints in the customer experience journey?
• What approach does the competition use to amplify its customer experience? 
• Are there any undiscovered touchpoints not addressed by the competition?
• How do the customers rate the company and its competitors, on KPIs like visual merchandising, stock assortment, operations, and customer service?

Competitive benchmarking is a strategic way of sustaining a competitive edge. By constantly monitoring the competition, you can be at par with the best industry practice for your business.

Essentially it lets you know your position in the industry you cater to.

Benefits of Competitive Benchmarking

• With competitive benchmarking, you get to have a holistic view of your strengths and weaknesses as an organization.
• This knowledge equips you with the right information on areas that need your attention or intervention to record great results.
• The practice of competitive benchmarking helps you create a standard as an organization that you aim to meet or exceed to position your business as the market leader in that niche.
• It also shows you somewhat the recipe for success your close competitors adopt to succeed at their business.
• It offers you insight into what already works, even if you are a newbie in the business space.
• It is a smart way to grow because, with competitive benchmarking, you do not need to know everything about your competition. You can simply focus on metrics with the highest business impact and focus on them during the benchmarking process.

Types of Competitive Benchmarking

There are three popular types of this process, each with its unique comparison analysis. Based on your business goal, you get to choose what works best for you or use a combination of the three main categories to gain deeper insight.

1. Process Benchmarking

The focus of process benchmarking is the evaluation of the current process or ways of conducting your activities as a company compared to your competition. An internal and external approach is adopted to identify the differences in your operations. This way you can easily tell or pinpoint areas where the competition outshines you and use the information to develop smart goals to achieve or exceed the same.

Key performance indicators in this process are a combination of your attrition rate, cost per hire, cost of customer acquisition, work hours, and more.

2. Strategic Benchmarking

The focus here is the insight-driven techniques, and ideas used by your competition to achieve their results. It includes metrics like market share traffic to a website or physical stores, their SEO ranking, and the like.

3. Performance Benchmarking

This particular method evaluates results, in terms of the performance of your overall strategy and the qualitative and quantitative results recorded.

In this case, you check your competitor’s performance to see if their strategy is effective in th getting them groundbreaking results.

The metrics measured here are brand awareness, brand perception, customer loyalty, satisfaction ratio, and many more.

How To Choose Your Competitive Benchmarks

In choosing the metrics for your competitive benchmarks, here are a few metrics to measure;

Net Promoter Score® (NPS® )

This evaluates the percentage of customers who are advocates for a business and the number of detractors who deter other customers from coming onboards. Advocates or promoters amplify your brand image and encourage first-time customers to try our offering. 

Customer Satisfaction Score (CSAT)

CSAT depicts a customer’s total satisfaction with an organization. It is one of the most popular satisfaction metrics.

Customer Effort Score (CES)

CES shows the ease with which customers carried out business activities with your organization. It identifies any bottlenecks or hold-ups in your sales process. Customers who had a seamless experience would have a low effort score. Customers who experience gridlocks when interacting with your brand wont be as satisfied hence, it would affect your CES rating negatively.

Brand Awareness

 Brand awareness is the ability of customers to distinctly identify your brand in terms of the brand logo, color, brand voice, and brand name. The higher your brand awareness the higher your sales, credibility, and customer loyalty simply because you are not lost in the crowd. 

Read Also:  The Ultimate Guide to Brand Awareness

Web Traffic

Impressive web traffics means more visitors with a likelihood of becoming customers. This means you have a superior web presence compared to competition with lower web traffic. Identifying strategies used by your competition and implementing them should give you similar or even better results.

Brand Sentiment

Brand sentiment shows the perceptions and emotions customers experience when they interact with your brand. Tracking this metric would show you the varying emotional experience when people mention your brand or they see your ad. 

In summary, you can identify the areas where your business is failing and pinpoint the strengths your competition is experiencing in that regard, would also guide you in selecting the area where you should apply competitive benchmarking.

How To Choose Competitors To Benchmark Against

Deciding on who to benchmark your organization against can be a bit tasking. The easiest way to do this is to split your market into 3 segments, namely;

Close Competition: Organizations are almost at par with you in terms of performance. In this case, you can entrench your position by excelling at methods used by them and making their weakness your strength.

Upcoming Businesses: These are companies with similar interests as your organization.

Industry Leaders: These are the giants of the industry who cannot be overlooked in that business space.

Organizations that fall into any of these categories are a good place to begin your competitive benchmarking. 

 Know Your Competitors: To choose the right competitor to benchmark against, you must identify first who your competitors are. Factors like similarity in size, success stories, and similar products can help narrow down further for the best fit.

You can choose to benchmark against competitors of similar size and with similar success as your own. These establishments can be your greatest rivals in the industry, and monitoring their performance puts you on course to meeting your goals.

These companies will ultimately be your closest rivals. By being familiar with their performance, you can ensure you’re on the right track toward success and identify opportunities for improvement.

Just like we discussed, once you have identified relevant competition, you can decide to benchmark against the competition that is above or the industry giants in your field.

You can also choose to benchmark against the competition located above you in the industry. 

Finally, you can also benchmark against the competitor’s way you in the marketspace. New, smaller companies should not be waived aside as they possess the potential to shake up the entire industry.

How To Measure Your Competitive Benchmark Metrics

There are various metrics to measure for competitive benchmarking. While there are some specific metrics you might want to focus on because of your business niche, here are a few ways to measure your competitive benchmark metrics. There are numerous metrics for competitive benchmarking, and the ones you want to focus on will vary from one industry and business to another. 

1. Growth Rate

A close look at your growth rate, by monitoring your web traffic closely will help you identify your place when compared with your competition.

2. SEO Ranking Improvements

Evaluating your SEO ranking can show you your place with target keywords free and pay in comparison with your competition.

3. Social Media Reach

Measuring your social media reach, engagement with your content or posts, and the number of followers amongst others will let you know how well your social handles are doing and the extent of their reach when placed side by side with your competition.

4. Brand Awareness and Perception

The level of awareness or recognition your brand gets through your advertisements, logo, brand colors, and general brand perception is an ideal metric to track. When people see your brand and the competition side by side, are you distinctly recognizable, is there a unique selling point that separates the competition from you?

5. Product Success

Comparing the success of your competition’s product to yours can provide insight into what makes them preferred. With this information, you can make adjustments to your campaigns and products to match what the market wants. 

Limitations Of Competitive Benchmarking

Benchmarking only helps you to identify areas of improvement, it makes no input into resolving any challenges uncovered, hence it is just one out of many steps that can improve performance.

Secondly, it is just a basis for comparison, micro and macro factors that boosted the growth or failure of your competition are not accounted for with competitive benchmarking.

Competitive benchmarking is similar to planting a GPS tracker on a moving target — it’s a way to monitor competitor motion and long-term strategies.  Any change you want to make or record ultimately lies in your commitment to using the information you have effectively.

Conclusion 

Competitive benchmarking is comparing your brand against an identified competition with the help of specific key performance indicators that provides specific insight into your progress against your competition. Competitive benchmarking is a continuous process that can give you the data required to gauge your performance as it relates to your competition.