How do you compare against your competitors? It’s a simple question, yet it’s one that’s difficult to answer without clear evidence to back you up. In any given market, there are many ways of determining progress and success. Different metrics that can be analysed and from which conclusions can be drawn.
But without knowing how and where you’re leading or lagging behind, how do you make sure your sales and marketing strategies are focused on the right areas? How do you make sure you’re combatting potential threats and capitalising on opportunities? In 2020, 40% of companies failed to meet their sales goals. The economic turbulence of the past few years and those that lay ahead mean being competitive and finding a competitive advantage are paramount for most organisations.
In this article, we take a closer look at the role of competitive benchmarking – what it is, how it creates a competitive advantage and how to run it within your organisation.
What is competitive benchmarking?
Competitive benchmarking is a way of comparing your competitors against each other and against your own organisation across defined metrics. It is used to understand performance, strengths and weaknesses, providing insights that can be used to improve decision making and strategic planning.
What are the benefits of competitive benchmarking?
Competitive benchmarking gives you a clearer picture of the competitive landscape of the market you are operating in. Who’s leading or lagging? Who’s on the rise or falling behind? Which competitors’ campaigns and strategies are delivering the best results? How is the market evolving and what does that mean? And ultimately, how do you compare against them all?
Armed with that level of intelligence, you can make smarter, better-informed decisions and build more effective strategies and campaigns. You can react faster to threats and opportunities, identify areas for improvement and investment and clarify what strengths you can leverage on in your sales and marketing.
How To conduct competitive benchmarking?
Competitive benchmarking isn’t a new phenomenon. In its article, The History of Benchmarking, Benchmarking.com Australia states:
“The first formally recorded business benchmarkers emerged in the early 1800s during the industrial revolution. Industrialists such as Francis Lowell invested time and money into studying his manufacturing competitors and determining the techniques he could use for his own factories.”
While the principle and idea behind competitive benchmarking remains, the methods have drastically evolved. Hotstat’s article on the same subject charts the birth of competitive benchmarking to the 1970s and one company in particular:
“In the mid-1970s, Xerox embarked on creating the next phase of benchmarking, competitive benchmarking. For many years Xerox was the king of copy machine manufacturing, but they found themselves in a precarious position when their Japanese competitors were able to manufacture higher quality copy machines for far less than Xerox. Xerox saw their market share plummeting and decided to do something about it.
The company went on a quest to determine how their competitors were able to accomplish these quality and operational efficiencies, thus creating competitive benchmarking. By the time Xerox was awarded the Malcolm Baldridge National Quality Award in 1989 they had benchmarked nearly 230 performance areas across multiple industries.”
Fast-forward to today and the internet has made it easier to access an ocean of intel about rival organisations faster than ever before. Competitive insight tools are capable of tracking competitor activity, news and performance in real-time. That intelligence can take many forms but a number of tools have been built with competitive benchmarking in mind, allowing you to set who and what you want to track and measure.
In the next section, we outline the key decisions you need to make when deploying competitor benchmarking.
How to deploy competitive benchmarking
1. Identify your competitors
Competitors come in many forms. You have direct rivals with similar product offerings in the same territory. Those that compete in different territories with similar product offerings. And there are some in the same territory with different product offerings.
If it’s your first venture into competitive benchmarking, you may find it useful to start small by focusing on your direct competitors and adding more over time. It’s important to include up-and-coming competitors alongside more established organisations as well as tracking new entrants into the market.
As you become comfortable handling and analysing the data, you can start adding more competitors who post a direct or indirect threat to your revenue.
2. Set your benchmarking criteria
What you track will depend on the nuances of your market and where things are won and lost. For example, in fashion, social media engagement will be more revealing than in an FMCG category – although it’s still worth keeping an eye on.
The real value of competitive benchmarking is gathering data that is usable – intelligence that will shape your strategies and marketing campaigns. While the options are seemingly endless, some of the most popular areas to benchmark are pricing, promotions (frequency and details), products (including roll-outs, updates, feature specification and more), social media (followers and engagement numbers), financial performance and consumer review scores.
Don’t focus solely on the areas where you believe you’re strong or weak, be comprehensive and build up as complete a picture as possible to help you understand how you compare.
A final note on this. Some competitive benchmarking and intelligence gathering tools will provide market analysts to help you set up your benchmarking approach and get the most from your investment.
3. Identify who needs the data
Competitive benchmarking is of particular value to marketing and sales teams whose activity is in direct competition with that of other organisations. They can use it to identify threats and opportunities that lead to better strategies and results.
But the insights you gather have far broader potential. From product teams to senior management, there may be a number of groups and individuals in your organisation who will benefit from understanding your strengths and weaknesses in the context of the competition.
Identifying a list of people or departments at the outset will help you to track and measure its impact in your organisation and assess its value for future use.
4. Get the data to them
How you share the insights you gather from competitive benchmarking matters. Not everyone will be comfortable analysing graphs and charts, while others won’t want to read in-depth reports.
Integrating your benchmarking software with the communication and data visualisation tools that people are already using and comfortable with will go a long way to ensuring smooth transition into becoming a more data-driven organisation.
You also need to consider frequency and format when presenting the data. Who needs daily or weekly updates versus detailed reports? Do you need both?
5. Turn competitive benchmarking into a competitive advantage
We’ve already spoken about the importance of using what you’re learning to make the investment worthwhile. To encourage buy-in, you need to mobilise the organisation by identifying clear areas of responsibility and expectation, and processes for how benchmarking should be used.
The easier you make it for people to understand the competitive landscape and make data-driven strategic decisions, the more value you’ll get.
WatchMyCompetitor (WMC) offers a market leading AI-powered competitor intelligence platform that your organisation can harness for competitive benchmarking purposes as well. To learn more about the benefits of using WMC’s platform, please click here.
