Benchmarking: What is it and what advantages does it bring to companies?

All posts Leave a comment   Published on par Jonatan Carbonell

Benchmarking is characterized as a deep strategic analysis of the best practices that are carried out by companies in the same segment as yours. Its main purpose is to extract ideas applicable to the reality of certain organizations. In this article you will learn in detail about this topic, how we can do benchmarking and why you should not stop doing it in your company. Come and read on!

The digital transformation and the emergence of Startups, has generated that the race for the attention of potential customers are more complex for companies. Therefore, in highly competitive scenarios, those who fail to update and improve commercial offerings tend to risk falling into oblivion and losing relevance in the market.

This is how the benchmarking process is generated, which is responsible for analyzing the mistakes and successes of other companies in the same segment. Let’s know in depth what it is all about.

What is benchmarking?

Benchmarking is a comparative evaluation based on those “referents” which in this case are other brands similar or related to ours in some way.

Therefore, it is in charge of evaluating and analyzing the processes, services, products and other aspects of other companies; in order to compare and take as a reference point for future strategies.

The important thing is to try to learn from the experience of others to improve your own performance. On the contrary, to copy, as this will allow you to differentiate yourself from others in an effective way.

Benchmarking is characterized as a continuous process that helps companies to stay ahead. In addition, innovate in a world of constant change, so it is recommended to have a constant learning and adaptability.

Why is benchmarking important?

When we analyze our company and the market in which it operates, we get to know our potential customers, and we can discover inspiring and innovative ideas that can be applied in the organization.

In addition, we can recognize the strengths and weaknesses of competitors and thus achieve a better market position. The important thing, however, is that benchmarking can generate knowledge about your own company.

Through this process, you can also identify the misalignments in your business and clearly see where your own weaknesses lie.

In this way, you will be able to develop action plans to adapt best practices in order to increase performance in the short, medium or long term.

 

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 What are the objectives of this technique?

One of the main purposes of benchmarking is to discover how to continuously improve performance, to know, understand and adapt what others are doing.

This can be achieved by establishing comparable goals and understanding the processes that enable the best companies to achieve the best results. The primary objectives of a benchmarking process are:

  • Try to define the new concepts of analysis

  • Expanding the knowledge of your own companies

  •  Identify all areas for improvement

  • Establish new realistic and feasible objectives

  • To gain a better understanding of the competition and competitive levels in the market.

  • Aligning organizations with best market practices

  • Seeking to improve business communications

  • Improve processes

  •  Reduce the number of errors

  •  Reduce costs

 

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What are the types that exist?

These are the types of benchmarking that you can put into practice in your companies:

Internal

If you thought benchmarking applied only to competitors, you were wrong.

Internal benchmarking is responsible for evaluating and analyzing one or more areas of the company, this allows to compare and determine in which aspect it is necessary to strengthen, and what can be learned from it.

For example, if there is a department that performs better than others in any aspect, the benchmarking technique is the best option to find out what they do well so that actions are adapted to the other departments.

Competition

However, if you take your eyes outside your organizations, you may have a very myopic view of innovations and other interesting things happening in the industry.

This type of competitive benchmarking studies other companies in the same sector in order to analyze their practices.

Therefore, it is of great help to identify the weak points with respect to services, processes and strategies, and thus take the necessary actions to be more competitive.

For example, if you have a simple fast food restaurant, but you constantly receive complaints about delivery delays. You should proceed to study other businesses that are similar, so that you can analyze how they manage their services and determine if they have practices that you can apply.

Functional

But if you are looking to innovate, inspiration can come from the least expected places. This type of benchmarking is known as functional or strategic benchmarking, and it references other companies’ strategies or processes.

These should not be in the same sector and should not be competitors. If we continue with the previous example of fast food, this case could analyze courier companies or internet sales.

In addition, this type of benchmarking allows us to rethink the paradigms of the industries themselves, since it implies looking beyond the sectors.

 

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How can benchmarking be done?

Now that you know what benchmarking is all about, do you want to put it into practice? Here are the steps to follow so that you can carry out this process in your company.

1. Study the business

You should study your own business so that you can understand the internal processes or business practices that need to be improved. This type of analysis can be done, for example, by identifying the most common complaints among customer feedback.

2. Select the type of benchmarking

Choosing the type of benchmarking depends a lot on the purpose and who will be the reference in that aspect. From the moment you define it in the first part, the benchmarking practice should be done between departments of your own company. Even organizations with similar profiles, but not exactly in the same segment, or with your direct competitors.

3. Select the companies to be analyzed

Depending on the processes and practices you want to improve, you will have to analyze other companies, the perfect would be to select one to three companies. We recommend that you opt for those that are market leaders and have successful track records.

4. Establish the data you are going to collect

This is the moment to determine the information you are going to collect, that is, to gather all the data related to the comparative aspects of the companies you have chosen.

For example, if you are looking for a benchmarking analysis of the digital presence, you should collect all the online information of the companies. You should investigate social networks, blog or sites, search engine rankings, if there are complaints, speed of responses, including paid traffic investments, etc.

5. Analyze the data that were collected

Once you have all the data collected, the next step is to proceed to analyze it. You should make comparisons, look at the magnitudes of the references, and discover the relationships you can create with your own business.

Also, check the factors that you can use and those that are not relevant to the company. In this way, you will be able to use what you have seen as a reference and you should take into account the failures in order not to repeat them in your planning.

6. Implement improvements

With all the information in hand, you can optimize your processes and practices. Before, you should not forget to make a report with all the conclusions that were obtained, as well as the opportunities found.

In addition, remember to take into account the important points of improvement in the strategies, including possible threats and suggestions on how to avoid them.

You can then proceed to create a strategic planning and action plan to implement the improvements that were identified during the benchmarking.

Digital benchmarking tools

Benchmarking has many applications, including in the digital area. Thus, there are tools that allow you to compare your positioning with that of similar pages.

However, in addition to relevant information such as traffic, search, duration of visits, etc., these are the most used:

Google Trends

It is a completely free tool from Google, which shows us search trends and allows us to compare the popularity of different keywords.

It is usually easy to use, it is in Spanish and the results are in a visual way.

SEMrush

It is one of the most complete tools, since it allows you to analyze data from your sites and any other you are interested in.

SEMrush provides you with detailed information about keywords, geographic locations, organic competitors, among other aspects. In addition, it is available in Spanish and you can access some of its functions for free.

 

Published on par Jonatan Carbonell

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