The business landscape is highly competitive, as a race. And in order to stay ahead of the competition, you need to be sure whether you’re on right track and travelling at a satisfactory pace. And if you aren’t, you should know what you can do to fix the situation.
Competitive benchmarking does something similar. It provides a rational appraisal of various processes in your business that require attention. It helps you prioritise activities and allocate resources optimally, which overall brings down operational costs and boosts efficiency.
Here are the major steps that you need to take to carry out the benchmarking study effectively.
Set Clear Objectives
There is no use trying if one doesn’t know what one wants to achieve. Having clarity on goals is a bare minimum. In order for your competitive benchmarking exercise to be successful, start by laying down clear and smart goals. For example, increasing sales by x% in the next two quarters, expanding marketing reach by y% in current fiscal, generating n leads from all event in next one year etc.
Select Business Drivers
Selecting the key drivers of your business is the key. Find out the variables that have a grip on the performance of your business. Remember that each business has different business drivers and competitive benchmarking tools may fail to work if you select a driver from a sector which is totally unrelated to yours.
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Identify Peers
The next step is to identify which peers you want to measure your business against. Here, the key consideration is choosing the firms that are the closest match to your firm in terms of the line of business, size, revenue, employees etc. This will enable you to compare your strategic goals with theirs and adopt the best practices from them. You can reach out the local trade bodies to get the right peer suggestions.
Determine the Measurement Intervals
Once you’ve implemented the benchmarking initiative, you’ll need to set an interval as to when you want to measure its performance. Depending on the parameters and metrics you’ve chosen, you’ll have to decide the best frequency at which you should conduct the measurement and analysis. It can range from a month to a year.
The benchmarking report this prepared will give you the clarity on where you stand and identify the gaps to fill to be able to gain a competitive advantage over your peers.
By and Large
You’ll have to keep in mind that it’s not a one-time activity. Depending on the benchmarks you’ve selected, the frequency for review will vary. Another aspect to note here is that prior to setting out on the benchmarking journey, you’ll have to make sure that you’ve successfully analyzed all your internal operations.
Overall, competitive benchmarking isn’t a simple one-step process. It’s a rather complicated process that requires a meticulous planning and careful observation and monitoring throughout the implementation process. If it is not your in-house expertise, you may want to partner with an external agency.
Although it takes investment in terms of time, efforts and capital, it’s well worth as it paves the way to higher productivity and success for your business.
