Do you know where you rank amongst the top businesses in your industry? Do you know where you can make improvements? If you answered “no”, then you may want to benchmark your business to see how well you are doing.
Benchmarking can be divided into three categories: internal, competitive, and strategic benchmarking. In this article, we will focus on competitive benchmarking. This type of benchmarking looks at how well your business is doing compared to similar businesses in your industry. Here are six steps to benchmark your business to success.
1. Identify the key drivers in your business
Key drivers are those business processes which help you to achieve your business goals. These drivers are related to production, sales or customer service. In production, you may look at how many defective articles are made or how long it takes you to produce a product. In sales, you may look at how many sales are made per salesperson, and in customer service, you may measure how long it takes to answer a customer’s query or how many phone calls it takes to solve a customer’s complaint.
2. Decide on who your competitors are
Now you need to look at your industry and decide which of the players you want to measure yourself against. If you choose a business which makes more revenue than you, then you need to keep that in mind when you benchmark your business so as not to get disheartened. You could also look for the best players in similar industries to measure your performance against.
3. Research your competitors
If your competitors are public companies, then you will be able to get annual reports to use for your research. You can also offer to share information between your competitors to help get accurate benchmarking data. Some questions to think about are:
- What type of technology are they using?
- What sales channels are they using?
- How are they differentiating themselves in the market?
4. Analyse the data
When you have your data and your competitor’s data, you can compare them and see which areas you are succeeding in and which areas you need to improve on. This may also highlight areas in your industry where there is a gap in the market.
5. Develop an action plan
What would the use be of doing all this research without developing an action plan to improve your business? You should involve the people who need to implement the action plan in the development of it. This will help you to understand the challenges that they may be experiencing and it could highlight a different approach which you may not have thought about.
6. Measure the results
You should measure the results of your action plan to ensure you are getting the desired result. If you are not getting the desired result you should review your action plan and try a different solution. You should also remember that it takes time for changes to be effective.
By benchmarking your business, you can see where you rank within your industry and see how you can build a better business. Though it may take time to get the information for your analysis, the benefits will be worth the time spent on analysing the competition.
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