Every company dreams of overcoming the competition and gaining the edge in the market that allows them to completely dominate the field.
But what are the challenges for making this dream a reality?
Well, the ultimate goal is to surpass your competitors in every single aspect of your business, which is impossible without understanding what your current positions on the market are and the steps to take to change the odds in your favor.
Competitor benchmarking is exactly the approach that gives you this competitive edge and helps you come up with the strategy to get there.
Let’s unpack this topic and talk about what competitive benchmarking is, how to implement it in your business processes, and which metrics you should measure to get the best results.
What Is Competitive Benchmarking?
Simply put, the process of determining the exact state of your business’s performance in comparison to other companies within your industry is known as Competitive Benchmarking.
Basically, this is the approach that helps you know what is your position on the market and what steps you need to take to improve it. Think of it as an effective way to understand the strategies and techniques to achieve your business goals.
Why is this method so effective, you ask?
Well, the key characteristic of a competitive benchmarking approach is that it helps you identify gaps and understand the exact areas for improvement, so automatically, your team’s performance gets better, helping you to get a competitive edge on the market.
Why Is Competitive Benchmarking Important?
Overcoming your competition and dominating your market is a long game. Incorporating the competitive benchmarking approach into your processes will contribute to your long-term success and exponential business growth.
More specifically, competitive benchmarking positively impacts your business by:
- Identifying New Opportunities in the Market: this is where you understand your market position and analyze your strengths and weaknesses. This way, it’s easier to identify untapped markets and increase your customer reach.
- Giving You the Data for Continuous Improvement: regularly measuring and analyzing your competitor’s actions will give you enough information to make proper adjustments in your strategy and improve your overall performance.
- Making More Informed and Data-Driven Decisions: competitive benchmarking gives data, which gives you insights to become more effective with your decision-making process and get better outcomes from the campaigns you plan.
- Gaining Competitive Edge and Trust From the Market: analyzing your competition gives you a sustainable head start, which ultimately comes back to you with increased loyalty from your customers.
Types of Competitive Benchmarking
Before getting started with implementing a competitive benchmarking approach into your processes, it is important to understand that there are three different types of this framework:
- Performance Benchmarking – this type of competitive benchmarking heavily relies on employing key performance indicators (KPIs) to determine your performance and compare it with your competitors and industry standards.
What is your average daily website traffic? How efficient are your processes? What is your brand awareness level? How good is your customer satisfaction rate?
These and similar questions will help you understand the numbers and compare them with your competitor’s data to understand your success rate.
- Process Benchmarking – this crucial type of competitive benchmarking helps you understand how your organization is doing on the operational level in comparison to other businesses on your market.
What are the processes that your most shining competitors use to achieve a high level of efficiency? And which strategies can you implement to enhance your team’s overall performance?
- Strategic Benchmarking – this is the type that overlooks the bigger picture and focuses on understanding the most effective strategies that your competitors have used to achieve great results.
What is their SEO strategy all about? Which growth tactics did they use to achieve results? Or how did their customers learn about their solutions in the first place?
Steps for Performing the Competitive Benchmarking Analysis
There are several steps to go through to successfully perform the competitive benchmarking analysis. Let’s have a walk through them and see the action points that each steps require from the company side:
- Step 1: Pin down Your Key Competitors
One of the most important steps to getting started with your competitive benchmarking analysis process is all about doing thorough research and identifying your competitors on the market.
Which companies operate in the same industry? Or which companies target similar customer segments as you? Analyzing both direct and indirect competitors is important for complete research.
Remember that you will build the whole competitive benchmarking process on this research, so make sure to take your time and have a high-quality list in hand for that.
- Step 2: Collect Data About Their Success
Once you know who you should compare your metrics against, start thinking about gathering data on their performance.
There is a lot to cover in this step. The common data points include analyzing their website traffic, understanding trends on their social media following, and getting an overview of the SEO keywords they rank for.
Other than these metrics, you can go deeper and check which PR practices they use to spread the word or what characteristics they rely on to create better brand awareness in the market.
- Step 3: Take Time to Analyze This Data
After getting the data, it is important to dissect your findings and analyze all about your competitor’s performance in different areas of business, such as SEO, social media, branding, product offering, and more.
How much share of voice do they have on the market? How frequently do they publish articles or social media posts? Which channels do they rely on when it comes to getting traffic on the website?
Take their data points side-by-side and analyze results to find the patterns of the most effective strategies that work specifically for your industry and audience.
- Step 4: Implement Learnings Into Your Strategy
Identify the key learnings from your analysis and implement the best practices into your everyday business processes. This will help you gain a competitive edge and improve the overall performance of your business.
What are the habits that you could acquire from your customers to improve your position in the market?
Implementing these changes is the main point of conducting the competitive benchmarking analysis, so make sure to carefully choose which practices to incorporate into your business.
- Step 5: Monitor Progress and Measure Results
The final and probably the most significant step for successfully conducting the competitive benchmarking analysis is monitoring your progress.
Make sure to carefully track your performance and analyze how the changes you made based on your learnings affect your overall business growth. This way, you will only keep the practices that work specifically for you, boosting your competitive advantage even further.
Which Metrics You Should Use for Competitive Benchmarking
When it comes to choosing the metrics for competitive benchmarking, it is important to keep in mind that they should be aligned with your business goals and give you insights that will help you better understand how to overcome your competition.
Let’s take a look at some of the common metrics that companies usually look out for:
- Market Share is a metric that will help you get more clarity on how well you are competing with other companies in the same field. Always being aware of your positions is a necessary prerequisite for exponential growth.
- Website Traffic represents a number of visitors that your and your competitor’s website receives. It is even more effective when you are breaking this data down into different channels, like how much traffic is coming from social media, paid search, email, etc.
- Keyword Rankings is a metric that determines how well you are doing with SEO. Higher positions for your relevant queries mean better visibility in search and higher traffic on your website from people who are probably searching for your solution.
- Pricing Model is a massive factor in strengthening your position in the market. Constantly tracking this metric will help you adjust your pricing strategy according to the market needs and outperform your competitors effectively.
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Read more:
- Competitive Positioning: Finding One’s Self And Self-Worth In A Competitive Pursuit
- Getting Started With Competitive Landscape Analysis: Steps And Frameworks For Effective Approach
- Competitive Intelligence: What It Is & How To Gather It
- How To Manage Competitive Matrix For Effective Competitor Analysis
