Editor's Note: Take a look at our featured best practice, Benchmarking for Superior Performance (241-slide PowerPoint presentation). Benchmarking is the search for those best practices that will lead to the superior performance of a company. Establishing operating targets based on the best possible industry practices is a critical component in the success of every business. Traditional target-setting methods are still being [read more]
How to Use Benchmarking Tools to Overtake Competitors in Your Industry
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Growing a business and transforming it into a top player in the market is a herculean task. To say that the journey is filled with roadblocks would be an understatement.
Between understanding your customers’ needs and monitoring market trends, running a business is fraught with challenges. Things have turned all the more complex owing to the fierce competition in every industry.
Whether you’re running an online retail store or a manufacturing unit, you’ll need to compete with several other businesses in your industry.
So, how do you get an edge over your competitors and emerge as a winner? The key is to find out where your company stands in comparison to other businesses in your industry. And that’s where competitor benchmarking tools step into the picture.
The Role of Competitive Benchmarking
Simply put, benchmarking refers to the process of assessing the performance of your business by comparing it against industry standards. That involves analyzing various channels, including your website, social media profiles, and other marketing assets.
The biggest benefit of benchmarking is that it gives you a clear picture of how your business stacks up against other players in your industry.
Choosing the right benchmarks by industry helps you understand where your business is headed. You get to compare your website traffic, conversion rates, social signals, device distribution, etc. against top players in the market.
That, in turn, helps you understand whether your marketing campaigns and sales strategies are headed in the right direction. Also, it helps you identify market trends and harness new business differentiation opportunities. Similarly, you can keep an eye on new or smaller companies that are disrupting the market.
Ultimately, you get a deeper insight into what kind of digital marketing, lead generation, and sales tactics are working in your industry. It puts you in a better position to attract and convert potential customers.
So, how do you use benchmarking tools to gain a competitive advantage, and steer your business to greater heights? Let’s find out.
Know Your Purpose
Competitive benchmarking isn’t simply about using a tool to track online traffic and conversion rates. You must have a clear idea of the outcomes you want to achieve through benchmarking.
Ask yourself the following questions:
- Do you want to gain a deeper understanding of your market and target audience?
- Are you looking to understand the impact of various marketing channels on your projected revenue?
- What are the website performance metrics that matter the most to your business objectives?
Once you’ve got the answers to these questions, you’ll be better equipped to make the most of benchmarking tools. Also, you’ll get a fair idea of the metrics you need to monitor for benchmarking.
Find the Right Tools
Any standard website analytics tool will provide you with a ton of information about website visits, top traffic sources, engagement rates, etc. But you can’t utilize that data to the fullest unless you compare it with accurate industry benchmarks.
This emphasizes the need to identify tools that specialize in competitive benchmarking. Evaluate the features provided by the platform to understand whether they’ll fit your needs.
Any standard benchmarking tool will help you compare industry benchmarks related to online traffic, website engagement, lead generation, conversion rates, etc. Many tools also facilitate a closer comparison of specific product categories, web pages, or marketing channels.
If a free trial is available, take the tool for a spin to determine its ease of use. Don’t forget to check client testimonials, ratings, and reviews as well.
Judiciously Choose Your Competitors
The success of your benchmarking strategy depends on the businesses you choose to try and compete with. Comparing your performance with any random company in your industry won’t get you anywhere. Instead, you need to carefully identify competitors that are worth benchmarking against.
When you’re trying to grow your business, the most obvious choice would be direct competitors. These are companies that offer similar products/services, have similar target buyer personas and match the scale of your organization.
But if you want to devise a long-term growth strategy, it’s worth keeping an eye on industry leaders as well. The idea is to get a clear picture of what you need to accomplish to emerge as an industry authority.
It’s also a good idea to keep an eye on new companies that are creating a buzz in your industry. These could be startups or small businesses that are deploying creative digital marketing strategies to disrupt the market. Watching these competitors will help you upgrade your marketing campaigns for the future.
Competitive benchmarking is essential for optimizing your marketing campaigns, improving website conversion rates, and skyrocketing revenue. Choose a feature-packed benchmarking tool that lets you compare key metrics against industry standards. Identify the most relevant competitors based on your business objectives.
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Performance Management (also known as Strategic Performance Management, Performance Measurement, Business Performance Management, Enterprise Performance Management, or Corporate Performance Management) is a strategic management approach for monitoring how a business is performing. It describes the methodologies, metrics, processes, systems, and software that are used for monitoring and managing the business performance of an organization.
As Peter Drucker famously said, "If you can't measure it, you can't improve it."
Having a structured and robust Strategic Performance Management system (e.g. the Balanced Scorecard) is critical to the sustainable success of any organization; and affects all areas of our organization.
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About Shane AvronShane Avron is a freelance writer, specializing in business, general management, enterprise software, and digital technologies. In addition to Flevy, Shane's articles have appeared in Huffington Post, Forbes Magazine, among other business journals.
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