Competitive Benchmarking 101
Do you remember when you were back in school and use to get a report card?
Well, competitive benchmarking is much the same as a report card. All of us benchmark most of the time. In our jobs, in our lives and with our peers.
Might I add – women benchmark more than men.
For instance, prior to a function or party, women are very keen to know what others will be wearing so they can make sure to avoid color clashes.
Before I go into discussing competitive benchmarking in more detail, I wanted to bring to light a great example that David Hutches spoke about on his blog:
In the UK during 1973 there were about ten major manufacturers of television sets: McMichael, Sibell, Bush, Ultra, Decca, HMV etc. But one year later, only Ferguson remained and that was a special case. Sony, Hitachi, Toshiba, JVC, Panasonic and several others replaced local TV brands.
David goes onto talk about how the UK Television manufacturers were not using a ‘world class’ competitive benchmarking approach and as a result, let their quality slip, leading to them being swallowed up by their better, cheaper and more efficient Asian counterparts.
In this post and video you will learn:
- What competitive benchmarking is all about
- Some benchmarking techniques you can start implementing today
- How to benchmark correctly and get the best competitive intelligence
- A benchmarking tool that can do all the hard work for you
What is competitive benchmarking all about?
Competitive benchmarking can be defined as the continuous process of comparing a firm’s practices and performance measures with that of its most successful competitors.
I like to think of benchmarking as a means by which you measure your performance against a standard. The standard can generally be anything, but it’s important to be measuring your performance against a set of specific peers or competitors.
So why do you need to do competitive benchmarking?
The most compelling reason for you to benchmark your activities is so you can be a better company. By going through the process you will find areas to improve your customer service and sales.
So what do you benchmark?
In a Gallup research study of 1,000,000 small businesses, they found four key drivers when it came to determining if a customer was satisfied with your services.
If you’re looking for what to benchmark, I suggest you start with these four:
- Response times (speed & efficiency)
- Attention to details (accuracy and thoroughness)
- Collaboration (level of partnership between you and your clients)
- Helpfulness (willingness to go out your way to get the job done)
We use these four questions in our Client Heartbeat customer feedback surveys.
How to benchmark correctly and get the best competitive intelligence
There are a number of benchmarking techniques you can use, but first – I recommend you ask yourself, why benchmark?
Most companies benchmark because they are concerned about their company’s performance, looking for ways to fight off competitors or looking to grow market share. It’s important at this stage to decide WHY you are benchmarking and be specific.
Here is my five step guide to competitive benchmarking:
- Determine what and why you’re benchmarking – get all the top executives in a meeting and decide on the real reasons you’re benchmarking. Identify what you want to benchmark and the reasons why. For example, you might want to see how your customer satisfaction levels stack up against the industry’s best.
- Identify the drivers – find the drivers that will be used to determine the particular metric you are benchmarking.
- Find a way to measure – how are you going to measure these driver?
- State your current situation – here you need to find your base point – what’s your current performance.
- Identify who you are going to benchmark against – who do you want to compare against? Are they the industry leaders? Where are you going to obtain the data from. They’ll be several sources – make sure your specific.
Watch the competitive benchmarking 101 video:
Remember, benchmarking involves lots of activity, lots of visits to companies, chats with competitors and research. I recommend you use a planning sheet to keep track of everything.
Seems like a lot of work huh?
Well, if you’re not a fan of doing more than you need to – keep reading.
A benchmarking tool that can do all the hard work for you
For those of you that are serious about competitive benchmarking, I highly recommend learning more about Client Heartbeat.
Client Heartbeat is a business intelligence tool that lets you benchmark your performance against local competitors, industry leaders and industry averages. You can then use this intelligence to make better informed business decisions and keep that leg up on the market – so you don’t end up like those UK TV manufacturers!