Benchmarking: What it is and how to apply it to your strategy

“What is not measured cannot be improved,” a phrase attributed to the consultant and economist Peter Drucker, which makes sense if what you are looking for is to improve the positioning of your brand compared to the competition.

The above is precisely what benchmarking seeks, which in Spanish could be translated as comparison or reference . That is, it uses a series of companies as a reference to compare and seek to improve ours.

What is benchmarking?

Benchmarking is a continuous process of research, analysis and comparison of our company with direct competitors and leaders in our market. With this, you effectively measure the success of your company by comparing it with its competitors. By doing this, you'll learn more about what your company is doing well and what you could improve.

In simpler words: we compare our decisions with those of our competitors, to learn and improve.

Why is Benchmarking important?

There are many reasons why benchmarking is important. Since this process will allow you to identify the areas in which your company needs to improve. Likewise, it can help you compare your progress over time and obtain valuable information that will guide you in making informed decisions about your business.

Here are some important points why benchmarking can help you.

• Drives innovation and creativity.
• Creates a more efficient process of continuous improvement and problem resolution.
• Update and update your company or product with the best practices on the market.
• It reduces the chances of making mistakes and helps you make better decisions.
• It presents you with the successful practices and strategies of best-positioned companies.

Benchmarking: how to apply it in your strategy?

Regardless of the industry you are in, all companies seek to maximize their profits and exposure using the most efficient processes possible. To achieve this, many use benchmarking in their strategy. Next, we tell you how to make it part of your strategy.

Choose the type of benchmarking you will do

There are many ways to benchmark, some may be more effective than others in helping you achieve your goals, depending on your organization's industry.

Internal benchmarking

This first type of benchmarking is quite simple. Here you seek to compare similar processes or tasks within your company or business. This will require tracking the metrics of these comparable systems or departments, so that the parameters, better known as KPI (Key Performance Indicator), can be evaluated and compared.

With this comparison it will be possible to establish and meet standards in all areas, establishing consistency and ensuring that each area is as efficient as possible.

External benchmarking

With this second type of benchmarking you will seek to compare an internal process with that of a competitor, even with several other organizations. This approach can be a little more complicated because it requires access to industry data or company-specific data, which may not be available unless the other organization has agreed to share it with you.

External benchmarking is extremely valuable. You can better understand where your business fits in the broader market and identify areas of weakness that you should focus on.

Competitive benchmarking

Competitive benchmarking refers to a type of external benchmarking that will seek to focus on analyzing your own processes and metrics with direct competitors.

This benchmarking is important because it can identify exactly why a competitor is successful or what drives customer satisfaction in your industry.

Performance Benchmarking

Another important type of benchmarking is that related to business performance. Where, by tracking metrics and KPIs within the company, teams can continue to compare past results with current standards, which will help to continually update the standard to improve performance .

This type of benchmarking focuses on improving key business functions over time, as the idea is that benchmarks continue to get stronger.

Strategic benchmarking

Strategic benchmarking is usually external and specifically analyzes how other companies managed to succeed. We seek to answer: What type of commercial strategies do they use? For example, what is successful about your marketing campaigns?

With this type of benchmarking it would be possible to create strategies that can help you understand what has worked to gain ground inside and outside your industry.

This is often especially useful for startups or startups.

How to do good benchmarking?

To be successful when creating benchmarking for your business or company, you will need clear objectives to leverage competitive data. Before you begin your research, you will need to know what you can improve in your business.

1. As a first step, focus on companies that are the benchmark in the issues you intend to improve.
2. Identify at least 3 companies that inspire you and are related to the culture of your company or product.
3. Gather information and examine the data collected.
4. Compare the collected results with your company's current practices.
5. Prepare a report that describes the conclusions collected throughout the process.
6. Present the ideas that make sense to implement and that you would add to your area.
7. Now, apply the approved strategies and projects, monitor and evaluate positive results.

Best practices for good benchmarking

In addition to following the steps listed above, it would be worthwhile that during the development and definition of the type of benchmarking you will do, you can take the following related ideas as a reference.

• How does the hierarchy work in your business or company and what are the job descriptions/assignments for each position?
• What KPI do you use to measure results?
• What technological tools do you use to increase efficiency in your operations?
• Who are your best suppliers and what is their unique advantage? And who is your best supplier and why?
• What is your monthly budget?
• What are the cost reduction measures that have been working?

Conclusion

Including this comparative evaluation, or benchmarking, in your strategy will help you identify where your company/business is, comparing it with the objective you want to achieve.

Without a doubt, it will be an excellent starting point if you are looking to improve any process in your marketing strategy or business model, since you will be able to focus on the points that need changes or reinforcements.

If you want more information on this topic or are looking for other options to profile your ideal client, at MHA you will find the solution you need.