"In nature nothing is created, nothing is lost, everything is transformed." This quote from Antoine Lavoisier (1743–1794), one of the fathers of modern chemistry, may be old, but it fits today's post perfectly.
Just as in nature, things also transform in the business world. And these transformations only happen because of the comparisons one company makes with others.
When a comparison is made, companies can see their strengths and weaknesses more clearly. And beyond that, identify which of their competitors' ideas can be reused or refined for their own benefit.
Want to stand out and secure a more competitive edge in the market?
In this post, see what benchmarking is, how it works, and what its benefits are — as well as how this strategy helps improve processes and how doing benchmarking can be simple!
Check it out!
So, what is benchmarking?
Benchmarking is a term that means "comparative assessment."
It is a research procedure among companies in the same sector to analyze how processes, products, and services are performing in relation to competitors.
The goal behind benchmarking is process improvement, in order to generate more profit and competitiveness.
A company that wants to stand out and secure a competitive advantage needs to understand how the market works and how it is behaving. It also needs to know what the numbers mean and how they affect performance and strategy design.
The data evaluated in benchmarking helps with this mission, since these references can be used to develop initiatives that greatly improve the brand's position in the market.
Advantages of benchmarking
It is human nature to compare ourselves with other people. It is a way of knowing whether we are making progress and whether we need to change our routine to reach our goals faster.
In the business world, it is the same thing.
A company needs to know how its business is being seen by customers, and to evaluate which strategies are needed to improve its position.
So comparing your results with a competitor's is an interesting way to achieve this. After all, the company can gain insights and draw inspiration to pursue process refinement and constant improvement.
Used correctly, benchmarking can bring fantastic benefits such as:
- Identifying which strategic actions helped other companies succeed;
- Spotting market trends and getting ahead;
- Building an action plan to develop strategies that will steer the company down the right path;
- Pinpointing the areas and processes that need improvement;
- Gaining insights from competitors already operating in the same segment;
- Acquiring the knowledge and confidence to discuss new projects.
What are the types of benchmarking
To put the strategy into practice, you need to understand that there are different types of benchmarking a company can use. Below, see the most common ones and how they work:
Competitive
The competitive type is meant to assess how the company is performing in relation to its competitors.
Generic
It is used to identify points for improvement by evaluating companies that have similar processes but do not necessarily compete for the same market.
Functional
In the functional version, the company looks for strategic actions that can be applied to any business, even ones that are not similar and do not compete for the same audience.
Internal
In the internal type, the company's own departments are analyzed. That is, areas such as development and customer service are compared in order to optimize internal processes and improve results.
Cooperative
This type of benchmarking is aimed at exchanging experience. That is, if one company excels in sales and another in customer service, they can analyze the practices that will help both grow.
How to do benchmarking
Now that you know what benchmarking is and its main types, here is the step-by-step guide to implementing the strategy within your company:
Step 1: Select competitors
The first thing you need in order to do benchmarking is to define who your competitors are. Check whether their niche is the same as yours, whether they sell the same products, and whether they target the same ideal customer profile.
Step 2: Establish the analysis indicators
Competitors selected? Then it is time to establish the analysis indicators: productivity indicator, efficiency indicator, quality indicator, and so on... Identify your company's most important numbers, which will serve as the basis for the comparison.
Step 3: Collect data for analysis
Once the analysis indicators are established, collect all the data for the comparison. Remember to check that the information is up to date and trustworthy.
Step 4: Compare the data
Once you have all the data in hand, it is time to compare the indicators.
This is a very important stage, since performing an in-depth analysis of the best practices used by competitors can help refine your company's processes and products/services.
Step 5: Identify the highs and lows
Finished comparing the data? Then it is time to detect your company's high and low points based on the comparison.
At this stage, assess which indicators your competitor excels at, where your company stands out, and which processes need improvement to achieve excellence.
See how improving processes and securing a competitive advantage doesn't have to be difficult? Just use the benchmarking method to identify what can be improved within your business.
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Originally published in Portuguese at useall.com.br.