Benchmarking is a critical activity that tells you where your business stands by comparing your key business performance indicators with your competition.
It helps you measure your competitive advantage and disadvantage by identifying critical gaps in your organization where you may be vulnerable.
If you can’t measure your competitive advantages or disadvantages, you are never going to improve them.
If you’ve got the data, it’s possible to benchmark any aspect of your business. For example:
1. Product Benchmarks –
Cost, quality and time to market.
2. Technology Benchmarks –
Using technology to improve efficiency, customer service, targeting of customers and speeding up decision making.
3. Process Benchmarks –
Cost, efficiency, speed and quality of your processes.
4. Experience Benchmarks –
How does your customer experience stack up against the competition?
5. Market Benchmarks –
Looking at key marketing areas such as % of market, sale per sq ft, sale per employee, payment cycle and cost of purchase.
6. Culture Benchmarks –
How does your corporate culture compare with your competitors?
7. Financial Benchmarks-
Comparison of key financial indicators like investments, sales turnover, ebita, etc.
8. Change Benchmarks-
A look at the agility of your organization. For example, new product launches, other change initiatives, etc.
9. Social Impact-
How are we faring in social impact through our profits and products?
How To Benchmark? It can be difficult to find reliable industry data. Competitors aren’t likely to share their process benchmarks freely.
Consultants, common suppliers, industry reports, ROC are typically used as sources of insights.
Compare yourself to industry best practices. Alternatively, compare yourself to a handful of specific competitors that lead in the target area.
The following steps represent a high level benchmarking process:
1. Identify Key Performance Indicators – Decide what measurements are critical to your competitive advantage.
2. Measure – Create your baseline.
3. Measure The Competition – Identify the current leading measurements where your competitors are doing better than you.
4. Identify Gaps – Evaluate your performance against industry-leading performance in the target area.
5. Strategic Planning – Feed benchmarks into your strategic planning process.
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