Benchmarking is a valuable way of improving your understanding of your business performance and potential by making comparisons with other businesses. ‘Compare’ is the 5th step in our Business Improvement Programme, it is an outwardly-looking process to examine how others achieve their performance levels, learn lessons from the processes they use and instigate improvements within your own organisation.
So who should you benchmark against? Your position in the market and your business objectives will affect which comparisons you should make – usually benchmarking with other businesses in the same sector is the most helpful but are there also lessons to be learnt from other industries?
Depending on your objectives, you may want to compare your business against the market leader or an average performer in your sector. Internal benchmarking between departments within your business is also useful and can help to identify best practice to be shared between teams.
What to benchmark
Again, the type of information that will be most useful to you depends on your business and market. The general questions to ask about your targets are:
- What do they offer?
- What is their pricing structure?
- What is their customer profile/quantity?
- What are their competitive advantages/disadvantages?
- What is their response to your own market presence?
You might find a SWOT (strengths, weaknesses, opportunities and threats) analysis useful to gather all the data together and show you how you compare to your close competitors in your market.
How to get hold of benchmarking data
There are several ways of finding out about your competitors:
- Publicly available information from their website such as sales literature, adverts, press releases, exhibitions, social media and company accounts.
- Asking your own salespeople, customers, local directories, opinions and their interaction on social media, newspaper articles and analyst reports.
- Trade associations and industry bodies may have sector-specific statistical reports and data to draw on.
- Although more pricey, commissioned market research will give you specific data in more detail.
Don’t forget to have your own business data to hand so that you can readily compare against benchmarking information.
Using your benchmarking data
This can be the biggest challenge. In order to drive improvement in your business, you need to set goals and targets based on the data you gather, to move in the right direction. Benchmarking isn’t a one-off exercise, it should become a regular and integral part of your business improvement efforts.
At CRM, we understand how important benchmarking is and we help our clients to compare key performance indicators against others in the same line of work.
If you’d like assistance with your benchmarking process or how to implement the improvements you identify, check out our 8 Step Business Improvement Programme and contact our business experts on 01865 379272.