Successful competitive analysis is a cornerstone of growing a business. Competitive research is usually done with relevant metrics while investigating how other companies achieve what they do. We have compiled a short guide on competitive benchmarking and how to utilize it best to gain market advantage for your business.
What is competitive benchmarking?
Competitive benchmarking describes the process of strategic monitoring of competitors in your company's sector to understand their business actions and corporate strategies. It basically measures how other companies are doing compared to yours, using specific metrics. While a benchmarking analysis uses a group of metrics, a comprehensive analysis will also understand what led to the results of the metrics. Your company can then identify the most important information from certain metrics and learn about best practices and see how much its own approach aligns with the best industry practices. Note that competitive benchmarking and comprehensive analysis are not the same. The former is simply one of the processes involved in the latter.
How does a strategic benchmarking analysis work?
Choosing competitive benchmarks
Firstly, you need to choose the metrics to be analyzed in the benchmarking process. You can eg involve identifying essential metrics to be improved on, informed by your business's current pre-existing KPIs. Examples of performance metrics could be brand awareness, reach on a company's social media performance, or customer retention statistics.
Identifying your competitors for analysis
Secondly, you need to understand what other companies are competing in your sector. This selection should be made on the basis of what a company intends to benchmark and its purpose for benchmarking. You could eg benchmark against competitors of a similar size or success. It might also be beneficial to benchmark against industry leaders and larger companies.
How to obtain the data on (closest) competitors
Thirdly, ensure that you undertake thorough research when undertaking performance benchmarking to get a hold of less public and more private data - reviewing competitors’ press releases, sales reports, and news articles can offer more specific information about them. You could also use a third company that deals with the type of data required to obtain the information you need for internal benchmarking. Also, the company can source data from certain companies dealing in the kind of data required for benchmarking analysis. Another option is to use benchmarking report templates or paid tools and platforms for the process. Benchmarking can be done in a lot of different ways - you just need to identify which one helps you achieve your business goals.
Perks of competitive analysis and benchmarking
Benchmarking metrics are a key tool for businesses - if used correctly, they can help improve business models, including strategies, processes and performance. This means you will have a better standing in the market. Growth is often a result of good benchmarking. The process of competitive benchmarking also helps companies to recognize industry trends faster and adjust their objectives accordingly. Competitive benchmarking can help you understand your competitors' actions and strategies when understanding how you compare to them in terms of key performance indicators (KPIs). It is likely to give you a competitive advantage over other players in the sector.
Of course, the process of competitive benchmarking is often time-consuming and might come with some cost to the company. However, the results of the process tend to pay off because they improve a company's long-term strategies significantly.