Company improvement is key to remaining at the top of your industry or to growing within your industry.
These improvements are not only beneficial to how your company grows, but they are also important in creating a smooth, enjoyable customer experience.
In order to make improvements within your company, you must first understand the company’s weaknesses and identify best practices and strategies that are used by successful competitors.
This can be done through competitive benchmarking, which takes both internal and external metrics and provides you with an overall view of your competitive landscape.
Let’s learn more, shall we?
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What is Competitive Benchmarking?
Competitive benchmarking is basically the process of utilizing a variety of metrics in an effort to compare the success of your brand with its competitors as well as the overall market.
Basically, it allows you to determine where you stand within your industry.
This particular comparison method allows your business to evaluate your overall performance, identify best practices within the industry, and move forward with a plan that will allow you to maintain an edge over your competition.
Confused? That’s alright. Put simply, competitive benchmarking is designed to:
- Identify areas of concern within your business.
- Locate the strengths in that same area of other businesses.
- Help determine the best course of action to improve your own efforts.
For example, let’s say your business struggles with customer engagement. However, your competitors are excelling in this department.
In order to identify where you are lacking, you must compare your efforts to the efforts of your competition.
You will identify the companies that are succeeding in customer engagement so that you can spot the practices and strategies they’re using to engage customers — more specifically, the practices and strategies that you aren’t currently utilizing.
Why Should Your Brand Use Competitive Benchmarking?
The information that you gain from performing competitive benchmarking gives you a bigger picture of how your business is performing in comparison to your competitors.
This data will allow you to not only compare your performance against the competition but also the standards within the industry, along with identifying potential opportunities to improve and the ability to set reasonable goals.
You essentially have the chance to pin down industry norms and whether your business is meeting the expectations of the industry.
Further, knowing how well your competitors are performing can give you and your team the motivation needed to improve and potentially soar past them.
Types of Competitive Benchmarking
There are ultimately three main types of competitive benchmarking, each with its own comparison analysis.
Depending on your particular business goals, you may choose to focus on only one category or you may choose to use multiple categories for the most comprehensive understanding of the industry.
1. Process Benchmarking
Process benchmarking focuses on the evaluation of the efficiency of your company’s current processes as they compare to your competitors.
This process takes both an internal and external approach to create a comprehensive analysis of the operational differences between you and the competition.
Process benchmarking helps you identify what your competitors are doing better than you, so you can then develop a plan to improve your company’s efficiency and productivity.
Some of the metrics you may use in this specific process include average hours worked, employee turnover rate, customer acquisition cost, cost per hire, and others.
2. Strategic Benchmarking
Strategic benchmarking focuses on a company’s overall strategy and how it compares to the competition’s strategies.
The strategies, practices, and ideas that are put to use for a business are placed under the microscope, providing a bigger picture of how leaders in the industry are achieving the same goals with different approaches.
Some of the metrics you may use with strategic benchmarking include SEO rank, web traffic, market share, growth forecasts, and more.
3. Performance Benchmarking
This particular method is focused on the outcome.
Basically, performance benchmarking works to determine just how well your strategies and processes are working in terms of qualitative and quantitative results.
A comparison is performed of your own to your competitor’s performance to determine the efficacy of reaching desired results.
Metrics for Competitive Benchmarking
There are numerous metrics for competitive benchmarking, and the ones you want to focus on will vary from one industry and business to another.
Overall, though, you want to keep things as simple as possible so they’re easy to look at over time and reevaluate later on.
Therefore, you should focus on these KPIs, among other ones specific to your industry and business goals:
1. Growth Assessment
Looking closely at your website traffic numbers will allow you to identify your business’s growth rate against your competitors.
2. Ranking Improvements
Evaluating your SEO ranking can help you determine where you stand with target keywords in comparison with your competition.
3. Social Media Reach
Evaluating your social media-related website traffic, engagement metrics, follower counts, and more will allow you to assess how well your social media pages are performing and identify where improvements can be made by looking at your competitor’s social media success.
4. Brand Awareness and Share of Voice
Direct traffic numbers play a significant role in identifying the success of your brand awareness, whereas share of voice can be identified by examining the share of traffic.
5. Product Success
Comparing your product success to your competitor’s product success can help you identify what is working for them, so you can make adjustments to your own product campaigns and offerings.
How to Use Competitive Benchmarks to Optimize Your Business
Now that you’re a bit more familiar with the competitive benchmarking process, it is time to learn how to use this process to optimize your business.
1. Identify Your Competitors
First and foremost, in order to use competitive benchmarks to optimize your business, you must first identify who your competitors are.
You must identify only relevant competitors within the industry. Otherwise, your metrics will be thrown off.
You can go about choosing your competitors for competitive benchmarking a few different ways.
You can choose to benchmark against competitors of similar size and with similar success as your own.
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.
You can also choose to benchmark against the competition located above you in the industry.
When it comes to long-term strategies, the bigger plays in the industry can provide incredible insight into the steps you need to take to get to where they are.
Finally, you can benchmark against the competitors below you in the market. Companies that are smaller or new have the potential to upset the entire industry.
2. Identify Where Improvements Can Be Made
No matter where you rank within the industry, there is always room to improve.
You just need to identify these areas for improvement and then compare those areas with the details of competing companies.
By focusing on only one area at a time, it will be easier to gain access to in-depth and targeted metrics.
3. Determine Your Benchmarking Metrics
It is always easy to retrieve data regarding your own company, but it may not be as straightforward with your competitors.
Public companies will release annual reports online, but if you are evaluating a private business, then some investigative work will be necessary.
Keep an eye out for news articles, press releases, and sales reports that can provide you with the data you need for competitive benchmarking analysis.
When it comes to identifying the metrics that you want to use in your benchmarking, you need to go off of what area you want to improve.
For instance, if you have been having difficulty acquiring new customers, then you should identify and focus on benchmarking brand awareness practices and strategies.
Some specific Key Performance Indicators (KPIs) include SEO practices, customer touchpoints, customer engagement, brand recall, brand recognition, brand equity, and advertising techniques.
Some other popular KPIs in benchmarking include domain authority, organic share of voice, conversion rates, and paid impression share.
A benchmarking tool may be helpful in keeping your data together, neat and clean.
In the end, competitive benchmarking provides you with the data needed to measure your performance as it relates to your competitors and determine what steps you need to take to improve in certain areas.
Keep in mind that competitive benchmarking is not a one-and-done thing.
Instead, it is an ongoing process that can continually provide insights into your current efforts and help you identify future trends and best practices that will help you grow.
Now, content plays a significant role in the success of your business, so check out this post about how to optimize your content strategy with a competitive analysis.