Indeed, we are currently living in the midst of one of the most competitive periods in business history. Thanks to the rise of social media, ecommerce and other areas of democratizing tech, the playing field has been leveled, so that now, everyone in the world has a shot to put a meaningful dent in even the market share of even the largest multinational companies. While this is certainly encouraging, it also means that there are more and more players to contend with, and finding “blue ocean” niches is harder than ever. Basically, you need to be on top of your game if you want to stand out from the crowd. With that said, it’s important to remember that competition is not inherently a negative thing. In fact, it’s quite the opposite. Competition is healthy for businesses. It forces you to innovate and continually raises the bar higher and higher, motivating you to deliver more value to customers, improve efficiency, and eliminate waste.
What Is Benchmarking Data?
If you own a small business, one of the best ways to turn high levels of competition into an asset is through benchmarking. In a nutshell, benchmarking in business entails evaluating your organization’s quality, performance, and growth by analyzing the performance, processes and procedures of other companies (usually your competitors). On one level, your success is your success and isn’t contingent on anything that anyone else does. But on another level, you can only rise to be the most successful business in your niche if you’re more successful than the others – and it’s here that benchmarking tools come into play. If you suspect something can be improved within your organization, comparing your company to the industry “standard” and plotting a course for improvement is a great way to increase productivity and get the most out of your resources. Whether that means cutting costs, changing your marketing strategy, altering your prices, or merely engaging with consumers via new channels, benchmarking can help highlight new ways to improve your operations. Above all, the goal of benchmarking is continuous improvement, which all firms should strive towards. Thus, comparing your company to others might help you produce new ideas to help you get ahead and rise above the competition. On that note, here are some of the main types of benchmarking data and how business leaders implement them to gain a competitive advantage.
Digital Benchmarking
We are now living in an undeniably digital world. The business world is almost completely unrecognizable from just two short decades ago, from social media and GPS systems to artificial intelligence and digital twins. The good news for you as a business owner, is that this new reliance on technology means you now have more access to more consumer, competitor, and industry data than ever before. This means that with the use of a powerful benchmarking tool, you can easily assess your current performance against a wide variety of digital metrics, all of which have the potential to provide profound insights into how your business stacks up to the standard. These metrics include keyword ownership, traffic sources, digital customer acquisition, customer engagement, conversion rates, and marketing ROI. Armed with this data, you will be able to get a better grasp of your strengths and weaknesses. In other words, you will know where you need to double down and the areas that may require a little more focus. Obtaining this 360-degree view of your digital performance can also help you identify high-value opportunities that you would have otherwise missed, giving you the chance to grow your online market share and stay one step ahead of the competition.
Internal Benchmarking
How has your business been improving over time? Comparing your latest performance metrics to the same metrics from past time periods can often be even more useful than comparing your own business to others. Internal benchmarking is all about looking inwards and comparing your current business operations with historical data. Whether this means comparing organizational departments or different branch locations, you can implement internal benchmarking data to unearth the most effective and efficient practices within your business and then share them across the company. Employee performance and effectiveness, communication, and how your workforce utilizes the tools provided by your business are some of the main aspects that internal benchmarking focuses on.
Functional Benchmarking
Functional benchmarking is the practice of comparing your results across a diverse range of industries and companies, assessing various processes using commonalities in functional capabilities. This is usually done to compare your results to an industry that generally achieves superior outcomes within one particular area. Interestingly, this type of benchmarking is frequently utilized when data is lacking for direct benchmarking. For example, imagine an airline company that wants to improve the quality of its customer service. In this case, they could carry out functional benchmarking and compare their current service standards to those of a five-star luxury hotel. By doing this, they immediately raise the bar from the industry standard to a higher standard set in a completely different market segment. While this is not always easy, it is a good practice to help you think outside of the box where you can start to cherry-pick some of the best practices from other non-competing industries. With this data, companies can refine their practices and hold their internal operations to the gold standard, regardless of industry. Examples could include things such as lean manufacturing and six sigma processes.
Conclusion
In a business world that is becoming more competitive by the day, it’s important to look for new ways to separate yourself from the crowd. One of the best ways to do this as a small business is through benchmarking. Benchmarking allows you to look at your current business operations and develop ways to optimize them, such as boosting productivity, increasing efficiency, and generating more value for the end consumer. Of course, there are many different ways to conduct benchmarking and thousands of different metrics for you to measure. The one you decide to pursue should depend on your current KPIs, and the areas you believe have the most room for improvement.
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