Accept you always played a game of Monopoly and kept tabs on the other players? Maybe you lot took a mental note on which role player had the most properties, or who had the all-time buying and selling strategy.

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Merely the value of observing the competition isn't specific to lath games — actual companies can benefit from information technology as well.

One way to get at that place is through something called "competitive benchmarking" — the procedure of looking externally to come across how your concern stacks up against your competitors and manufacture standards.

Permit'south learn some more about the concept, review how to run a competitive benchmarking analysis, and look at some competitive benchmarking tools and examples.

What is competitive benchmarking?

Competitive benchmarking is the process of using relevant metrics to compare your company against its competitors and the overall market.

You lot might already do a form of benchmarking in your business. For example, a company may practise internal benchmarking within a department to ensure a goal is hit each week, such as completing a certain number of sales calls. But looking in can only get yous so far.

By benchmarking yourself against the competitors, you can identify whatsoever "bullheaded spots" in your sales efforts, pinpoint all-time practices, and maintain a competitive edge within your market.

Competitive benchmarking encompasses iii categories:

  • Strategic benchmarking: compares business models and strategies
  • Procedure benchmarking: compares business concern and operational processes
  • Performance benchmarking: compares concern outcomes based on a set of metrics

Information technology'south worth noting that competitive benchmarking is not the aforementioned as a competitive assay. Although similar in arroyo, they serve two distinct purposes.

A competitive analysis requires a deep swoop into the strengths and weaknesses of the competition relative to your ain concern. It scrutinizes every product and strategy — from messaging to sales processes.

Competitive benchmarking is future-focused — it measures how others perform over time to find all-time practices and trends in the data.

Competitive Benchmarking Analysis

Running a competitive benchmarking assay takes iii steps:

i. Select your competitive benchmarks.

The first pace is to determine the key operation indicators (KPIs) you desire to track and mensurate — that could exist annihilation from inventory turnover to client retention to average sales cycle length.

Platonic KPIs for a competitive benchmarking assay are ones your sales org already tracks that can serve every bit early indicators for bigger outcomes.

For instance, if yous think your customer retention rates aren't where you'd similar them to be, you might desire to benchmark your Net Promoter Score to see if your underperformance is on par with the residue of your industry.

2. Identify the contest.

Next, place competitors to benchmark confronting. It can be helpful to revisit your KPIs, then select relevant competitors that perform well in the areas you're looking to better. For example, if you want to develop a competitive selling strategy, which competitor has the most effective pricing model — and what exactly do they offer?

Benchmarking tin can be performed against a variety of companies across different industries, including:

  • Competitors of similar size and success: These competitors are considered your closest rivals. By keeping a pulse on their overall functioning, yous can ensure you're on the correct track and spot immediate opportunities for improvement.
  • Competitors to a higher place y'all: When looking to amend on long-term strategies, it tin be helpful to study the large players. Benchmarking against manufacture leaders can provide insight into proven strategies and processes.
  • Competitors below you: It's easy to look upwards for inspiration, merely information technology tin be simply as beneficial to look below. Competitors that are new — or much smaller — have the power to disrupt an industry with innovative strategies and products.

3. Decide on your benchmarking metrics and track them.

It's like shooting fish in a barrel to collect data from your ain company, but collecting data on your competitors is not as straightforward. Public companies release annual reports online, merely y'all'll take to do some sleuthing to find this info from privately owned businesses. Watch out for press releases, news articles, and sales reports that offer specific information almost the company.

To simplify this procedure, consider using a benchmarking tool to proceed track of your competitor's data. Some benchmarking tools are free or trial-based, while more comprehensive ones require a fee.

For case, Klue and Crayon assemble intel from millions of sources online (such as e-newsletters and news articles) and use AI to surface the nearly relevant intelligence for your sales squad. Other tools like SEMRush and Ahrefs benchmark your competitor's growth and performance beyond multiple digital marketing channels.

Competitive Benchmarking Examples

one. Xerox

For more than than 15 years, Xerox dominated the printer market place, eventually reaching a tape-setting $1 billion in revenue in the 1960s. By the 1970s, Xerox connected to thrive with strong patents, little competition, and a growing market.

Still, in the early on 1980s, a new batch of competitors like Canon and Kodak entered the market place, causing Xerox's market share to plummet.

In response, Xerox launched a new initiative, "Leadership Through Quality," to radically change the way it did concern. Xerox benchmarked more than two hundred processes with other companies, and the results were shocking.

In comparing itself with its contest, Xerox discovered information technology had:

  • x times as many rejects on the assembly line
  • Seven times every bit many manufacturing defects in finished products
  • 50% college cost to manufacture

Based on these findings, Xerox overhauled its quality and manufacturing operations, and benchmarking became an important tool for these efforts. For instance, upgrades to its distribution organisation came from L. L. Bean, a clothing and outdoor equipment retailer. And ideas for a new billing system were inspired by American Express.

In the years following, XEROX expanded the competitive benchmarking plan, continually improved and upgraded its processes, and eventually recaptured more than market share throughout the 1990s and early 2000s.

2. United Airlines

United Airlines sought to revamp and elevate its website's user feel, making it easier for customers to research and volume flights online.

Partnering with Centralis, a user experience enquiry company, United Airlines began testing its current site against several competitors. The process involved fifty-two testing sessions over 2 phases.

In the outset phase, Centralis assessed the usability of the so-electric current United website confronting three key competitors. Then, using the findings from the first round, United Airlines created a beta-version redesign of their website that was benchmarked against the aforementioned competitors.

Using competitive benchmarking, United Airlines was able to brand confident decisions when redesigning its website, eventually leading to an increase in its Net Promoter Score (NPS).

Competitive Benchmarking Matrix

Afterwards conducting a competitive benchmarking assay, it's a good idea to organize and design the information in a manner that makes sense to you. A competitive matrix is 1 way to visualize your competitive benchmarking assay.

These matrices can exist more than visual in nature, such equally a scatter plot, or as simple equally an Excel sail containing data. Regardless of the matrix you lot choose, the goal is the same — to meet your visitor's competitive landscape, equally well every bit trends and possible improvement opportunities in the data.

competitive benchmarking matrix

Epitome Source

Hither are common competitive matrix examples:

1. SWOT Analysis

A basic competitive matrix is the SWOT assay, which compiles your company's strengths, weaknesses, opportunities, and threats. Conducting a SWOT assay will assistance you identify areas where you could improve, too every bit uncover new strategies and opportunities to adopt.

two. Features/Benefits Spreadsheet

A features/benefits spreadsheet records how your product stacks up against competitors in terms of features, benefits, and price. This can requite y'all insight into what your customers want, and pinpoint the trade-offs for customers as they explore other options in the market place.

3. Review Tracker

A review tracker matrix will assist you see the reviews yous receive compared to those of your contest. Reviews tin can reveal compelling insight into what your company (or competitor) is doing well, and what areas could exist improved.

Final Thoughts

Competitive benchmarking should exist an ongoing process that, when conducted regularly, tin can provide powerful insights into whatever "blind spots" in your sales efforts and pinpoint best practices and future trends.

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Originally published Oct 18, 2021 7:00:00 AM, updated October 18 2021