The Importance Of Benchmarking Against Competitors

Benchmarking means that you can assess your growth and market penetration in relation to others.

Does one competitor seem to be growing faster than others, stealing market share?

If so, you might want to learn why customers see them as such a good proposition and try to emulate their tactics.

In short, benchmarking allows for better decision making because you are bearing in mind what your competitors are doing.



Why Should you be Benchmarking?

Why benchmark? Your competitors probably benchmark themselves against their main business sector rivals, which may well include your own, so failing to do the same thing may well mean that you lack the edge you need in today’s marketplace.

Key Performance Indicators

When benchmarking businesses against competitors, it is always a good idea to determine key performance indicators – or KPIs – that focus attention on how a company measures progress towards business goals. This might be turnover, or sales of new product lines, or geographical regions that are operated in. It depends on the nature of your business. The next step is to collate data around your own KPIs and to find out about those of your competitors so that you can compare. Sometimes this is easy, but for more sensitive data, you may need to use an external agency to help.

Set Realistic Goals

Demonstrating how the KPIs within your industry sector vary from business to business will help you to make key changes. For instance, if you notice from benchmarking growth in a certain area of the market you can set a goal that is realistic.

In this example you might be able to predict, from your benchmarking, that competitor A will get 50 percent share and competitor B a 20 percent share leaving you to set a goal of 30 percent. Benchmark-set goals could be anything, but they will be designed principally to improve profitability, reduce overheads or increase the efficiency of certain working practices.
In some cases, a successful benchmarking process will lead to radical changes of business practices and can even lead to the setting of new goals, although this tends to be rare. In short, benchmarking means understanding your competitors better. And an improved understanding of your competitors means understanding your own business’ strategy and long term aspirations better, too.

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Richard Coen

With over 21 years of experience in Digital Marketing, 31 years in sales and 25 years in business development, Richard assists companies to develop key growth strategies on a local or international basis. He can assist marketers to achieve balance in their approach to key areas affected by the growth in digital marketing.