If you own a business, you’re probably always looking for ways to improve the customer experience and increase engagement. Companies are constantly working to improve every aspect of their operations to provide a smooth and enjoyable customer experience. This entails determining where the company falls short and learning about the best practices used by competitors to work on upgrading business models. In this article, we will discuss competitor benchmarking analysis, examples of competitor benchmarking tools, the advantages of competitor benchmarking and how to calculate competitor benchmarking analysis.
What Exactly is Competitor Benchmarking?
Competitor benchmarking is a useful tool for determining where you can go next with your brand strategy and where you could better serve your customers. It can help you understand why your audience might choose a competitor over you, and it can help you devise strategies to entice them to choose your offering instead.
The goal of competitor benchmarking analysis is to understand your brand’s success in comparison to others in your industry. You could compare their business strategy, practices, or products and services to see if they compare favorably or unfavourably. You can create a set of benchmarks for yourself using key performance indicators to compare to others in your industry and understand where the gaps are.
Types of Benchmarking Competitor Analysis
There are three types of Competitor benchmarking analysis: performance benchmarking, strategic benchmarking, and process benchmarking.
#1. Performance Benchmarking
Benchmarking your brand’s performance across revenue, brand awareness, social media engagement, and more to see how you compare to others in your industry. What are your results, and how could you outperform your competitors?
#2. Strategic Benchmarking
Strategic benchmarking is the process of comparing how your brand conducts business to competitors. What are their business models? How does your company approach planning and execution, and how does it compare to the market leader’s approach? You can become more effective at implementing change and improving your strategy by taking a close look at how you plan for and carry out your strategy.
#3. Process Benchmarking
Process benchmarking is an analysis of how well your current business processes work. Evaluating how your processes work in comparison to competitors can help you see the differences between your company and the next, allowing you to take inspiration from competitors or work on providing unique selling points to your customers. One of the primary reasons for benchmarking in this manner is to become more efficient.
Advantages of Competitor Benchmarking
Companies are constantly working to improve every aspect of their operations to provide a smooth and enjoyable customer experience. This entails determining where the company falls short and learning about the best practices used by competitors to work on upgrading business models.
#1. Obtain an Objective Assessment of Your Organisation
Most marketers have a good understanding of their brand’s market position. It is preferable to use data to back up your understanding of your market position. That is precisely what benchmarking aims to achieve. Get an unbiased assessment of how you rank in the market, regardless of how good you believe your product or service is.
#2. Boost Sales and Revenue
As you discover new ways to improve, your sales and revenue should rise as well. Isn’t that the whole point of making improvements? You want to develop a product that outperforms your competitors’ offerings. When you do, you will be able to capture a larger share of the market while also retaining existing customers and preventing them from switching to a competitor. Improvements are likely to result in increased sales, higher customer satisfaction, more referrals, and even more media coverage.
#3. Keep an Eye on Your Competitors
For the time being, you may have an advantage over your competitors. But what if they start gaining ground on you? What happens when new competitors enter the fray? Or does a competitor completely change course?
While you may not follow suit, keeping an eye on what your competitors are doing is a good idea. If they’re growing faster than you, getting more media opportunities, outperforming you in content marketing, or otherwise outperforming you in certain areas, it’s a sign you need to step up your game.
#4. Keep Abreast of New and Emerging Trends
Benchmarking data assists you in determining how to improve your brand’s market position. Given how quickly market conditions can change, this has become more important than ever in recent years. Brands can stay on top of trends that may upend their current position by benchmarking on an ongoing basis, giving them more time to react.
#5. Respond to Market Changes More Quickly
Aside from trends, market shifts can open up new opportunities for brand growth. Fads and trends come and go, consumer preferences shift, and new products emerge in different markets all the time. These changes can help you connect with new audiences that were previously off your radar.
#6. Enhance the Overall Culture of the Company
Competitor benchmarking analysis not only assists businesses in identifying areas for improvement but also encourages them to take action. It demonstrates your dedication to keeping the company moving forward, which can help instil confidence in your employees. Contributing to your company’s future-proofing increases employee happiness and well-being, productivity, and a desire to continuously improve.
#7. Encourage New Thoughts and Innovation
New ideas and innovation are natural byproducts of discovering new strengths, weaknesses, threats, and opportunities. Staying in touch with competitors can help you come up with ideas to improve and innovate, often in unexpected ways. Maintain a positive mindset at all times, even if you don’t always know what success looks like. When you notice your competitors doing something different, it can at least point you in the right direction.
How to Perform a Competitor Benchmarking Analysis
With the benefits listed above in mind, consider the following simple steps to begin Competitor benchmarking:
#1. Define Specific Goals and Objectives
Knowing why you’re benchmarking is as important as the process itself. Begin by writing down your goals, which will help guide the process.
#2. Make a List of Your Rivals
To benchmark your competitors, you must first identify who your true competitors are. Direct competitors (those who have a similar product and compete directly for your audience) and indirect competitors (those who share your audience but do not necessarily offer a comparable product) will be involved.
If you don’t know who your top competitors are, do a quick Google search for what you sell and see who comes up. You can then do some research to find out who their target audience is, how big their company is, and other pertinent information, and proceed from there.
#3. Create Metrics for Benchmarking
Benchmarking metrics assist you in focusing on the appropriate data to measure. This could be sales, content marketing engagement, media mentions, share of voice, website traffic, SEO, customer satisfaction scores, customer churn, or any number of other factors that indicate the success of your competitors. Connect your metrics to your goals. Numerous metrics can be used to aid in the achievement of your initial goals.
#4. Gather Benchmarking Information
Once you’ve determined what data you want to collect, it’s time to put all of your preparations into action. To save manual hours and effort, use competitor benchmarking tools like Meltwater to learn more about your competitors using real-time data.
Don’t forget that you’ll need to collect data on your own company to compare to competitor data.
#5. Examine Your Results
After gathering the necessary information, begin comparing it to your standings. Conduct a SWOT analysis to determine your best opportunities, then create an action plan for improvement.
#6. Refine and Iterate
The value of competitor benchmarking grows over time. You’ll learn more about your competitors and how they change over time, as well as how your performance evolves.
Metrics For Benchmarking
There are numerous metrics for competitor benchmarking, and the ones you want to focus on will differ depending on the industry and business. Overall, you want to keep things as simple as possible so they can be reviewed and reassessed over time.
As a result, you should prioritise the following KPIs, among others relevant to your industry and business objectives:
#1. Growth Evaluation
Examining your website traffic statistics closely will allow you to determine your company’s growth rate in comparison to its competitors.
#2. Ranking Enhancements
Evaluating your SEO ranking can help you determine where you stand with your competition for target keywords.
#3. Reach on Social Media
Evaluating your social media-related website traffic, engagement metrics, follower counts, and other metrics will allow you to assess how well your social media pages are performing and identify areas for improvement by examining your competitors’ social media success.
#4. Share of Voice and Brand Awareness
Direct traffic numbers are important in determining the success of your brand awareness, whereas the share of voice can be determined by examining traffic share.
#5. Product Achievement
Comparing your product success to that of your competitors can help you identify what is working for them so that you can make changes to your product campaigns and offerings.
Tips For Selecting Benchmarking Competitors
Determine which competitors to include in your benchmarking strategy once you’ve determined what benchmarks you want to measure. Comparing your benchmarks to those of other companies may yield unexpected results. Use the following guidelines to choose the most valuable competitors for benchmarking:
#1. Keep an Eye on Key Competitors
Begin by compiling a list of your primary competitors and direct competitors. Tracking information about your main competitors is a good way to determine your market position and explore strategies for improving your numbers.
#2. Follow the Industry’s Leaders
Even if your company is small, you can benchmark against the top companies in an entire industry. Benchmarking with the most successful companies gives you goals to strive for as your company grows.
#3. Keep an Eye Out For Potential Threats
Growing businesses should compare themselves to small, emerging businesses to identify potential threats to their success. Consider what you might learn from Competitor benchmarking with smaller companies in your industry.
#4. Size Comparison
Exploring similarly sized companies in other industries is another method for selecting benchmarking competitors. Even though they serve different customer groups, these companies can demonstrate successful operating procedures and strategic initiatives.
#5. Make Changes to Your List
Examine your options in each competitor category and weigh the benefits of benchmarking with each one. Refine your strategy by selecting companies that bring new perspectives to a competitor benchmarking analysis.
Tools For Competitor Benchmarking Analysis
It is impossible to avoid competition. It’s also not fun to analyse, but having competitive intelligence as part of your marketing strategy is critical. Fortunately, there are several competitor benchmarking tools available that will do the work for you and keep an eye on your competitors. Examples of competitor benchmarking tools include
#1. Phlanx
Phlanx is an Instagram engagement calculator with a slew of features to help you keep tabs on your competitors. To begin, you will receive statistics on the engagement rate, follower growth, audience demographics, brand mentions, and so on to assist you in tracking the progress of your competitors on Instagram. This competitor benchmarking tool also includes an Influencer Auditor feature, which generates reports on an influencer’s profile, including engagement rate, follower count, and more.
#2. Ahrefs
Ahrefs is an example of a powerful competitor benchmarking tools with a plethora of features. The Site Explorer feature of the tool allows you to discover which keywords your competitors are ranking for and which pages bring them the most search engine traffic. You can also see how much traffic they get from each keyword. This tool also assists you in determining the quality of your competitors’ backlink profiles.
#3. SEMrush
SEMrush is the third example of a competitor benchmarking tool that can assist you in keeping tabs on your competitors. This tool provides information about your competitors’ traffic volume, traffic source, mobile vs. desktop traffic, top landing pages, subdomains, and much more. you can also track your competitors’ marketing activities and strategies by looking for audience overlap and identifying your competitors’ business connections, traffic sources, and so on. These features will not only reveal your competitors’ strategies but will also assist you in fine-tuning your own.
What Can Go Wrong With Competitor Benchmarking
The following are some common pitfalls to be aware of:
- Uncertainty about your goal and why you are benchmarking
- Failure to understand the appropriate competitor benchmarking tools and resources that can be used
- Competitor benchmarking and Competitor analysis are ongoing processes, not one-time events.
- Consider your competitors to be the same. Out-of-sector benchmarking is frequently required to be the best in class.
- Not acting immediately. You must prioritise actions and then cross-check or review whether the actions were successful or not.
What are the Four Elements of a Competitor Benchmarking Analysis?
A solid competitor benchmarking analysis framework consists of four key components:
- The Five Forces of Porter.
- The SWOT analysis.
- Models of business.
- Mapping the Customer Journey.
What Exactly is Six Sigma Benchmarking?
Benchmarking in Six Sigma entails a company analyzing its performance rather than measuring it against industry standards or a world-class company in another industry. It typically focuses on processes and operations within a single business unit.
What are the Essential Elements of Effective Benchmarking?
Comparing one’s processes and performance to those of others identifies gaps in performance between the organisation and better performers. Furthermore, performance gaps are examined to find explanations. These comparisons must be meaningful and credible.
What is the Primary Goal of Benchmarking?
The goal of benchmarking is to develop new methods or improve existing processes to meet a higher standard. It’s not a one-time thing. Rather, it is a component of continuous process improvement that the best organizations commit to to remain competitive.
How Frequently Should Benchmarking Be Performed?
Competitor Competitor benchmarking can occur both at the end of one design cycle (for example, after the evaluation phase) and before the start of the next cycle (for example, before the define phase). It is up to your team to determine how frequently you will conduct benchmarking studies. Their frequency may also be affected by the methodologies you employ.
Conclusion
Finally, competitor benchmarking gives you the data you need to compare your performance to that of your competitors and determine what steps you need to take to improve in specific areas. Remember that competitor benchmarking is not a one-time event.
Instead, it is a continuous process that can provide insights into your current efforts as well as help you identify future trends and best practices that will help you grow.
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