Competitor benchmarking: How do you measure up?
It can be remarkably easy as a business just to keep doing what you’re doing in the confidence that there are only so many outside factors that will influence how you perform.
Unless you’re in a very small (and fortunate) minority where you have no competition, often the biggest external threat to your success will be your competitors.
Regularly benchmarking your business against your key competitors will reduce the impact they can have however, and even help to identify areas where you can improve your performance to give your company a competitive edge.
How do I do it?
The first step to successfully achieving this is knowing who your competitors are. That’s the easy part; a quick Google search will identify the biggest players in your market. The hard part is to keep up to date with what they’re doing.
To do this, sign up to their company newsletters and social media feeds. Google alerts can also be set up to pick up any coverage on their activities. Be sure to share the information you receive through these channels with relevant people in your business to make sure your team are always aware of new advances within your industry. Also, keep an eye out for new businesses in your market who could bring new changes with them.
By looking at what other companies in your sector are doing you can identify areas where you can make changes to make your firm more profitable. Important questions to consider include: how much do they charge (mystery shopping can be incredibly effective here)? Are they diversifying or expanding? And where are they exceeding objectives?
But what you should be most interested in is how you can use this knowledge to improve your own business. Are they using methods that your business can also adopt to remain competitive? Or, even better, is there a way you can take your business a step further and get ahead of the competition, becoming the market innovators instead?
Where should I start?
Most business owners know that they should be benchmarking regularly but they don’t know where to begin. Here’s a simple five-step plan to follow when benchmarking your business against its competitors:
1. Select which areas you want to compare
It is often best to focus on your key business drivers first as these are the areas that are critical to your business’s success. Also, try to stick to one or two key indicators to benchmark at one time. The more focused your research the more useful it’s likely to be.
2. Clarify your current situation
Before you can make comparisons to other businesses you need to make sure you have an accurate representation of how your business is performing.
3. Decide who to benchmark against
It’s often worth looking at firms of a similar size and with similar objectives to yours to see how you measure against your direct competition. But it’s also worthwhile comparing your business with firms outside your sector who excel in areas you want to measure. By analysing their approach and using it in your business you could put your business ahead of its competitors.
4. Weigh your costs against industry norms
Your trade association is often a useful starting point as they will often collate sector-wide statistics for you to make comparisons with. Also, commercial market reports may provide extra insight.
5. Make any necessary adjustments
Now that you understand where you stand amongst your competitors use this information to set your business targets to help you reach the benchmark values to which you aspire.
Do you have any competitor benchmarking tips you’d like to share? If so, we’d love to hear them. Please share your thoughts below.