Posted on 10 April, 2020 | 4 mins
Benchmarking, you either love it or hate it. When implemented effectively, it can be a useful tool to assess business management and performance and to inform decisions. We consider simple ways to benchmark your business
Your financials may look good, your marketing campaigns might be performing, and your customers may be spending, but how does your business performance compare to your competition?
That’s where benchmarking comes in.
Monitoring your business’ key performance indicators (KPIs) tells you how your business is performing. Comparing your KPIs against other, similar businesses helps you to accurately judge performance and identify areas for improvement.
What is benchmarking?
Benchmarking Is he process of measuring your business’ performance – across finance, marketing, product, services, processes – against other, similar businesses to discover any gaps in performance. Where gaps are found, it’s an opportunity to evaluate what can be done to improve.
It’s really about assessing efficiency and establishing how you can enhance your businesses performance.
Benchmarking best practice
There are various approaches to benchmarking – internal, generic, functional benchmarking, for example – but we’ll focus on competitive benchmarking. For small to medium-sized businesses, it’s probably the most relevant and the most accurate because it compares a business against its direct competitors.
The information you gain from competitive benchmarking can help you develop and improve your business in the most effective ways.
Where do you start with your benchmarking exercise?
1 Focus your benchmarking efforts
For this to be a practical exercise, you need to focus your benchmarking efforts. Start by determining what your goals are, what you will benchmark and who you will benchmark yourself against.
Your goals will be aligned with what you want to achieve and set the markers for success. For example, your goal might be to increase revenue, make your marketing campaigns more effective, improve productivity, or reduce overheads.
With your goals fixed, you need to determine what you will benchmark, and which metrics are most relevant to measure. For example, if your goal is increased revenue, you’ll want to assess COGS (i.e. the cost of goods sold), conversion rates, and sales volumes.
Even if you’re familiar with your industry and your competitors, when identifying the competition, it’s useful to do a little more research. Remember you’re looking at direct competitors – businesses that are similar to yours in industry, market, size, etc. Also, ensure they are successful competitors.
2 Data, data, data
Businesses create an endless amount of data. Benchmarking asks you to collect data on your business and on your competitors’.
If your goal is to make your marketing campaigns more effective, you’ll need to understand how effective your campaigns are at reaching and engaging with your audience compared to your competitors.
Internally, metrics such as campaign performance, your subscriber growth and open rate vs click rate, can help you assess the success of your email campaigns. Read together – and alongside analysis of your content – you can gauge what resonates with your audience and what doesn’t. By connecting Mailchimp to your 9 Spokes dashboard, you can collect this data quickly.
When benchmarking against your competition, you’ll have to evaluate based on content. Consider the following:
- email templates – are your email templates modern and sleek, shabby, or chic?
- email content – is the focus text, image, video? Is the material promotional, or does it take a more educational angle? Which is more interesting, more engaging?
- do you send a similar amount/ variety of triggered emails? Do you have similar touchpoints, are there some you’re missing?
- compare deals and offers.
Where do you get access to this content? Simple, sign up for emails – your own and those of your selected competitors. Then, record the emails you receive, documenting data such as subject lines, days/ times and frequency, content type, promotions, positioning, personalisation.
If you want to know something about anything, Google is probably your best bet. Company websites can help you assess their brand messaging and product offering, pricing, etc. Check out their blog to which areas they are focusing – it will tell you a lot about who they are targeting and how. From a financial perspective, some businesses are required to post their finance report on their site, another valuable source of information.
3 Data analysis
Armed with data, it’s time to analyse your findings.
Are there areas that your business is ahead in? What are the contributing factors? Can you further enhance these areas? Are there areas that your competition is excelling in? What are they doing differently?
With this information, you can start to strategise ways to improve your performance.
4 Take action
You’ve done your homework, and you’ve mapped your strategies, it’s now time to implement the necessary changes. To be successful, you need to bring your team on board.
5 Continue to monitor
Data has brought you to this point so, as you start to adjust your processes and implement new strategies, remember to monitor your progress. Are the changes effective?
Change takes time, but it can produce a positive effect.