Benchmarking as a Way to improve business performance
Competition can be an efficient way to improve your company’s performance. It is necessary to keep your business on track and look after trends. As well as researching your competitors' actions and analyze their strong and weak sides in order to build your own effective business plan.
In our world, numbers matter, and our actions need to be measured so we have a sense of where we are in our mission to find our path to success. As a result, it is no wonder that companies set goals and use key performance indicators (KPIs) to track performance over time.
Benchmarking - is a specific type of market research that allows you to compare your current performance to your competitors in order to implement the best practices and strengthen the weak ones. In the article, we will review this method of market analysis and inspect its main features in simple terms. Stay tuned!
What is benchmarking about?
Benchmarking - is a form of a comparative analysis of the company’s specific performance indicators to another, usually a more successful company. Therefore, an enterprise can implement the analysis of achievements, processes to optimize the workflow. Benchmarking focuses on business processes, advantages, and disadvantages of competitors, etc.
Benchmarking is very similar to goal setting as it sets out the minimum performance level or standard for a task, quality characteristics, or process performance.
Competitive benchmarking can fit around your business and its departments, being as broad or as granular as you like. There’s no set approach. It all comes down to do your aims and what areas are valuable to you.
8 steps in the benchmarking process
- Select a subject to benchmark.
- Decide which organizations or companies you want to benchmark.
- Document your current processes.
- Collect and analyze data.
- Measure your performance against the data you've collected.
- Set ultimate goals (based on your analysis data. Create a plan of its implementation.
- Implement the changes.
- Repeat the process.
Knowing exactly how your competitors perform allows you to outdo them and make your business an industry leader.
Create a list of competitors to analyze their performance and select a subject to benchmark
KPI metrics are a good subject to start. After its determination, you can go further and broader. Create a plan. Select the main features of competitors and prioritize them to investigate. For example, the channels and strategies of communication. Customer services, product quality also a great benchmark to compare.
You should select several different organizations to study in order to get the data you need. The organizations can vary depending on what you want to get out of it.
To make the comparative analysis easier, you should document all processes in your company.
Comparing it to other organizations, you can identify the gaps in your workflow and the ones that need improvement.
Collect and analyze the data
There are several ways available to collect the data for meaningful benchmarking activity.
- Telephone calls
Depending on the types of information you seek for and other variables, telephone calls, other tools may be as useful or even more effective in the benchmarking quest.
The most important feature you need to know whether the company can provide information about the leadership in the specific processes you have selected for research.
- Publications in Media
The use of publications/media can gather specific references that will be useful. It's always a good idea to check with the primary source - the organization an article is about.
Gather information through research, interviews, casual conversations with contacts from the other companies, and formal interviews or questionnaires.
You can also collect secondary information from websites, reports, marketing materials, and news articles. However, secondary information may not be as reliable.
Measure your performance
As you have gathered all the information you need, now the brainstorm is starting!
As you analyze the comparisons, try to identify what causes the gaps in your process. For example, do you have enough people, and are they sufficiently trained to perform assigned tasks? And so on. Brainstorm ideas to effectively and efficiently fill those gaps.
Set ultimate goals (based on your analysis data).
Create a plan of its implementation.
Your plan must include clearly defined goals. After determining where the pain points and strengths lie, it is important to act on them.
As with any implementation plan, it should identify a series of recommendations, the members of the organization responsible for implementing these recommendations, and a deadline for their implementation.
Closely monitor the changes and employee performance. If new processes are not running smoothly as expected, identify areas that need to be tweaked. Make sure all employees understand their jobs, are well trained and have the expertise to complete their assigned tasks.
When you correctly implement and follow the practice of benchmarking, your company will grow, and you will keep up with your competitors.