Competitor Benchmarking Exercise: The Key to Staying Ahead

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Competitor Benchmarking Exercise: The Key to Staying Ahead in the Market

Standing still means falling behind. Enter the competitor benchmarking exercise. A weapon to ensure you’re not just keeping up with the competition but beating them. Let’s break down this important practice and how to use it to sharpen your competitive edge.

What is Competitor Benchmarking?

Competitor benchmarking compares your company’s performance, products, and processes against your selected competitors. Now, this is about something other than copying what they do. It’s about understanding where they excel and where they fail. Then using that insight to improve what you do. Think of it as a reality check, innovation spark, and performance boost all rolled into one.

The Importance of Competitor Benchmarking

Identify Strengths and Weaknesses

By analysing your competitors, you can pinpoint areas where they outperform and fall short. This knowledge is gold—use it to enhance your strengths and shore up your weaknesses.

Set Realistic Goals

Benchmarking helps set achievable, data-driven goals. Knowing what’s possible in your industry not only makes your targets ambitious yet attainable, but also instills a sense of confidence in your strategic planning.

Drive Continuous Improvement

Things change all the time in business. Regular benchmarking ensures you stay ahead by constantly refining your strategies and operations. This emphasis on continuous improvement keeps you motivated and forward-thinking.

It’s not just about individual competitors; benchmarking can reveal broader market trends, empowering you to anticipate shifts and adapt proactively. This understanding gives you a sense of control in a dynamic business landscape.

Steps to Effective Competitor Benchmarking

Identify Key Competitors

Focus on leaders in your industry or direct competitors. This keeps your analysis relevant and impactful. Ask who are your competitors? Are they really you competitors, or just those who have always been there? How many are there? You will have more than you think and the obvious ones will not be the danger.

Define your questions

Define the questions you need to answer. Spend time to get those questions right. Great questions build the entire project. Great questions give you great answers.

Select Metrics

Determine which performance indicators are most critical to your business. This could include:

  • Sales and profit figures
  • Customer satisfaction scores
  • Social media engagement
  • Innovation rates
  • Talent and skill sets
  • Pricing
  • go-to-market messaging
  • Product and their features
  • The benefits they proclaim
  • How they sell and what they say on the website and in the real world
  • Markets they serve
  • Types of customers

Collect Data

Use publicly available data, industry reports, customer reviews, and competitive intelligence tools. But to get to the finer details of where the competitive advantage is, you need to talk. Talk to your competitors’ sales teams, experts, customers, and others. The goal is a comprehensive, accurate picture of your competitors’ performance. And you will not get it by just using software or reading the “latest” industry reports.

Analyse and Compare

Look at how your company stacks against each metric. Identify gaps, opportunities, and areas where you can learn from your competitors. Look for patterns and omissions. Determine what they are really saying and assess what they are not saying.

Develop Actionable Insights

Turn your findings into a strategic plan. This might mean adopting new technologies and refining your marketing approach. Or enhancing your customer service levels. For instance, if your competitor is excelling in customer service, you may consider implementing a similar strategy in your business.

Implement Changes and Monitor Progress

Put your plan into action, then regularly monitor your progress. Competitor benchmarking is an ongoing process—not a one-time project.

Common Pitfalls to Avoid

Overemphasis on Imitation

Benchmarking is about learning and improving, not copying. Use insights to innovate. Create something new or improving existing processes to smash them out of the park. Not just replicate, which means making an exact copy of something.

Ignoring Internal Benchmarks

While external comparisons are valuable, consider internal benchmarks. Measure progress against your past performance to ensure continuous improvement. Include yourself in the competitor benchmark exercise. Ask your competitive intelligence agency to benchmark your business. Many ignore themselves and rely on their existing knowledge. Using the competitor benchmarking exercise as a tick box to see where they win. And guess what? They miraculously win in most aspects.

Failure to Act

Data collection and analysis are only worthwhile with action. Ensure your insights lead to concrete changes and improvements. It’s essential to do something from the competitor benchmarking exercise. Many get the information, and the insight gets brushed under the carpet. Ignored as it can be too difficult, especially when you are already a leading player in the market.

A Competitive Edge with a Competitor Benchmark Exercise

In the words of competitive intelligence guru Ben Gilad, “Benchmarking is not just about knowing where you stand, but understanding where you can leap.” With competitor benchmarking, you’re not reacting to the market. You’re staying ahead, positioning your business for sustained success. So, dive into the data, glean insights, and confidently drive your company forward.

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