What is Benchmarking?Benchmarking is a process of measuring the performance of a company’s products, services, or processes against those of another business considered to be the best in the industry, aka “best in class.” The point of benchmarking is to identify internal opportunities for improvement. By studying companies with superior performance, breaking down what makes such superior performance possible, and then comparing those processes to how your business operates, you can implement changes that will yield significant improvements. Show
That might mean tweaking a product’s features to more closely match a competitor’s offering, or changing the scope of services you offer, or installing a new customer relationship management (CRM) system to enable more personalized communications with customers. There are two basic kinds of improvement opportunities: continuous and dramatic. Continuous improvement is incremental, involving only small adjustments to reap sizeable advances. Dramatic improvement can only come about through reengineering the whole internal work process. Step-by-Step BenchmarkingBenchmarking is a simple, but detailed, five-step process:
Benchmarking will point out what changes will make the most difference, but it’s up to you to actually put them in place. First StepsIn order to benchmark anything, you need to have quantitative data available to study. That means breaking down internal processes to calculate performance metrics. Quantify everything, because only quantifiable information can be accurately compared. Key BenefitsIn addition to helping companies become more efficient and profitable, benchmarking has other benefits, too, such as:
In essence, benchmarking helps employees understand how one small piece of a company’s processes or products can be the key to major success, just as one employee’s contributions can lead to a big win. How does your business stack up against your competitors? Your industry? Better? Worse? No idea? I’m not talking about profits. I’m talking processes, operations, time to market, customer retention. A benchmarking process compares your brand with best-in-class standards, so you can improve across the board. Ensure your company runs efficiently and cost effectively. Let’s take a look... Show me a performance benchmarking tool! Performance benchmarking is a powerful tool, if you’re looking for continuous improvements in your business processes. But, you’ll be wasting your time if you only benchmark against yourself. What is performance benchmarking? First up, you need to determine the processes in your company that keep it running smoothly. And I mean all of them. From your internal messaging tool to your product’s time to market. Then, pit them against other companies and industry standards. Let’s start digging… Table of contents
First up… what is performance benchmarking? Benchmarking definitionBenchmarking is a process of measuring the performance of a company’s products, services, operations, processes against other companies - recognized as best-in-class - or the wider marketplace. The most common metrics for benchmarking include cost per unit, time to produce, product/service quality, effectiveness, time to market, customer satisfaction and loyalty, brand recognition. Benchmarking against leading companies will gather insights to help you understand how your brand compares, even if they’re in a different industry, or have a different audience. Benchmarking is a process for obtaining a measure - a benchmark. Simply stated, benchmarks are the “what”, and benchmarking is the “how.” Why is benchmarking important?Implementing a benchmarking process will help your business get stronger. Processes will be more efficient. Quality improved. You’ll save money, while increasing revenue. Studying best-in-class companies, identifying why their processes work so well, will enable continuous improvement within your business. That could mean updating a product feature to meet or beat a competitor’s product. Implementing a social media management tool for scheduling your social messaging. Introducing training days for your team. Benchmarking will help your business…
Monitor performanceLook at current benchmark metrics in order to identify industry standards that you should strive to meet or surpass. Benchmarking is an ongoing process, with performance monitoring playing a crucial part. Competitive analysisBy comparing your performance with that of your competitors - what they’re doing right and what they’re doing wrong - you’ll identify areas in your business that can be improved. Gaining the competitive edge. GoalsNo doubt you’ve already determined your business goals, but benchmarking goals are different. They’re about improved performance of your company processes. They’re competitive. But, as with your business goals, they must be achievable. Don’t forget, they must be SMART - Specific, Measurable, Achievable, Relevant, Timely. SMART goals - Specific, Measurable, Achievable, Relevant, Timely.
Make your goals unrealistic, and you’re going to fail. Benchmarking basicsBenchmarking is a way to measure the performance of your company’s products, services, processes, operations. The data collected should then be compared to an industry standard - a benchmark. Benchmarks are the what. Benchmarking is the how. For instance, it takes one hour to produce your product, one engineer, and sells at a cost of $25. Is that good or bad? You can only answer this question accurately, if you have data from other companies producing the same product as you. If brand X produces its product in 30 minutes, one engineer, and also sells for $25, this benchmark indicates that you need to look at ways to speed up your production line. It’s all about improving how your company works. Making it run smoothly and efficiently. Ensuring you’re not wasting money. Grabbing a bigger portion of your market.
Benchmarking classificationsThere are several forms of benchmarking. I’ll concentrate on the primary ones.. Internal benchmarkingCan an internal process be more efficient? Collect data on your performance at different times - days, week, months, etc. - or during different situations- during a PR crisis, product launch, event - and find the areas that are weakest. Processes that can be improved, such as converting leads to customers, onboarding new team members, etc. The advantages of internal benchmarking are that you have access to all the data you need, and it’s a quicker process. The disadvantage? You’re limiting your success, if you don’t go outside your business/industry, and learn from top performers. Competitive benchmarkingHow do your competitors’ processes and operations function? Unlike competitor analysis, where a brand tries to gain the competitive edge by jumping into areas missed - new features, countries to target, etc., competitive benchmarking involves the gathering of insights to show how their processes work, compared to yours. And, will identify industry performance standards. Compare products, services, processes, methods. You’ll identify your position in your industry, and how to increase productivity and success. For example… what’s customer sentiment - positive, negative, neutral - towards your competitor’s brand? What are customers saying in comments, reviews, social posts? Collect this data and then, if it’s better than your internal results, work out how to improve those areas in your business. Strategic benchmarkingStrategic benchmarking is when you compare your performance with best-in-class performers. Your data collection shouldn’t be limited to your own industry. You’ll be looking at brands that have proved successful in a particular process. This type of benchmarking will help with overall performance of your business. It looks at your long-term strategies, compared to other brands. Suggested improvements that result from strategic benchmarking are not quick fixes. You’ll be considering your core competencies, new product development, etc. Performance benchmarking processThe benchmarking process doesn’t have to be difficult. I’m going to share the key steps involved, which work across all industries. Successful benchmarking is quantitative and qualitative. You’ll be comparing your business with competitors, and with organizations outside your industry. It’s a process that requires the support of your entire company. It’s not a quick fix. And it’s not magic. Updating your CRM software won’t turn you into IBM. But, it will motivate change in your company. You’ll collect insights that if managed, will bring about improvements. Here’s the process to follow... The planYou’ll need to get top management onboard, and prepared to allot time, manpower, money. You’ll also need their involvement to support any major changes that are a result of your benchmarking, such as new product development, training, purchasing new tools. Choose processes that are integral to your company’s success. Those that give you the competitive edge. They need to be measurable, so you can determine the metrics to be compared. Perform SWOT analysis to determine your company’s strengths, weaknesses, opportunities, and threats, compared with those of your competitors. SWOT analysis - Strengths, Weaknesses, Opportunities, Threats. Don’t forget the knock-on effect. If you change one process, how will it affect other processes? Fix one and break another, is not the way to go. Now you have to choose a benchmark to compare with. It could be from an organization such as a competitor, or an organization in a different industry, country, region, etc. But, ensure that it’s a top performer in the process you’re looking to evaluate/improve. The collection of dataYou’ll be collecting data from several sources. From the company you wish to benchmark against, and data that’s publicly available - websites, press releases, publications. When researching, consider market research, surveys, questionnaires, onsite/telephone interviews, etc. Using social media analytics, you’ll also be able to gather information from online conversations, blogs, forums, review sites. Information that will reveal sentiment towards a brand, consumer feedback on products, services, and processes. Benchmarking example - customer service Wanting to improve customer service, a brand should compare its processes with those of its top competitors. The successful ones. Identify what they’re doing that’s working. Online or brick and mortar business, identify how are they talking to customers? What language are they using? Do they use ‘how to’ videos to help customers? Many offline industries - restaurants, bars, etc. - will use mystery customers as part of their benchmarking process. For example, a person going to a bar, ordering a drink, food. Checking the standard of cleanliness, customer service, upselling offers. The analysisAll relevant data collected, it’s time to analyze. Data visualization tools are going to help your process. It’s way easier for people to understand images, than pages of numbers. Quick Search - Showing share of countries for Coca-Cola & Pepsi. Identify the gaps in your processes - compared to the organization your benchmarking against - where your performance is letting you down. What’s caused this gap - manpower, time, wrong tools, etc.? How is brand X getting their product to market quicker than you? How does brand X manufacture their product cheaper than you? Time to implementYou’re going to need a plan of action. You’ve found the gaps, and you know how to fill them. It’s going to mean potentially big changes, and you’ll need your bosses and your team onside. Ensure you have the resources you need to implement the improvements. Once everything is in place, you’re on your way to a winning benchmarking process. Ongoing evaluationIt doesn’t stop. Ever. For your benchmarking to be successful, you have to monitor regularly. What progress has been made? How have the changes impacted your business processes? Do you need to make changes to improve further? I’m going to take a look at how marketers will benefit if they follow a digital benchmarking process… Benchmarking marketingBenchmarking your marketing strategies, enables you to evaluate whether they’re as good as they can be. You’ll need to start by reviewing your existing activities. Tracking the frequency of campaigns. Engagement rates. Results they bring - conversions, new customers, open-rates, etc. Having collected all your data, you’ll be able to make improvements and increase ROI. First up, collecting the data. Follow these seven steps, to benchmark your brand’s marketing efforts… 1 Determine the marketing processes you want to measureTo choose what you want to benchmark - social media channels, website, emails, blog posts, paid ads, etc. - you’ll need to have your marketing goals already established. Goals that could include...
Your marketing benchmarking could focus on…
2 Choose your metricsDon’t go crazy. Too much data collected, and you’ll be overwhelmed. Benchmarking has to be precise, so you can implement the best actions. For instance, benchmarking your blog…
For your social media channels, benchmarking performance metrics could be…
3 Competitor analysisCompetitor analysis is vital, regardless of your industry. What are they doing that’s working? Are you doing it too? What countries are they successful in? Are you? You have to learn from their strengths, and exploit their weaknesses.
Check out my Competitor Analysis Guide. Not a sneaky peek at your competitors’ social channels. That’s just being nosey. The best competitor analysis will identify opportunities that’ll help you improve your marketing campaigns - targeting, SEO, content, leads, conversions, revenue, and more. Determine which channels are working best for your
competitors. Remember, you have to be brutally honest about your brand, and compare with the data you collect about your competitors. 4 Build your digital marketing strategyGot another marketing guide that’s going to help. My Digital Marketing Strategy eBook. You’ll learn...
You’ve established your digital marketing benchmark. Now you need to define your strategic objectives. Choose SMART goals. For example...
5 Regular analysisBenchmarking your marketing activities is not a one-time process. It should be performed regularly, so you can understand how your processes are improving and the impact your strategies are having. You're going to an analytics plan. Have a look at my Social Media Analytics Guide. It explains all that you need to measure, how to do it, competitive intelligence, and the tools you'll need. Talkwalker social media analytics platform - competitive benchmarking. Marketing benchmarksMarketing benchmarks allow you to compare your results with your competitors and industry. You’ll find your competitive advantage. You’ll identify where you’re underachieving. To benchmark your marketing activities, you’ll need data about your competitors. Much of this data is freely available in the public domain. Financial reports, market research surveys, for instance. There are also research companies that provide - for a price - benchmarking data. Then there’s analytics tools... Marketing metrics benchmarks include… Top of mind awareness - TOMAThe first brand, product, service that springs to mind, when a specific product category is named. If consumers are asked to name a premium car - Rolls Royce, Ferrari, Bentley, Porsche, etc. - the brand with the highest percentage of mentions is top of mind. Some brands have achieved so much TOMA, that their product has become a generic word for a product. An example being, Kleenex for tissues, regardless of brand. Unprompted brand recallWhen consumers remember a brand - when a product category is mentioned - without it having been mentioned. How many burger brands can you name? Brand recognitionConsumers identifying your logo, tagline, jingle, packaging, ads over your competitors. Which trainer comes with a tick? ReachThe percentage of your target audience that you reach with your content marketing, compared to your competitors. EngagementThe interaction between consumers and your brand with regard to your marketing messages - likes, follows, shares, retweets, comments, click-throughs, time spent on your website. Conversion rateThe number of visitors to your website that complete an action - subscribe to newsletter, request free demo, download report. Customer satisfactionMetric that shows the percentage of how happy customers are with your brand, product, service, compared to your competitors. Customer loyaltyThis metric reveals how likely a customer is to buy a particular brand on a regular basis. If you can’t have a McDonald’s, you won’t have a burger. You only buy Samsung. A positive experience, brings customers back again and again. Customer perceptionsA customer’s impression and awareness of your brand, products, services. Their opinion is formed through every direct and indirect interaction with your company. Measure to find pain points and to improve CX. Product performanceThe value consumers put on your products - new, updated. Collected user-generated content can be used to improve product development, and inspire marketing campaigns. Woohoo! Another resource to help you out - How to get the most out of user-generated content. Competitors can monitor Amazon reviews, to determine consumer opinion. Market shareThe percentage of total industry sales in a product category that are down to your company. For instance, if consumers buy 100 mobile phones, 55 from Samsung, the brand has 55% market share. Share of wallet - SOWMetric that calculates the percentage of a customer’s spending on your brand, as opposed to your competitors. Customer reviewsCustomer reviews/ratings shared on review sites, ecommerce sites, etc. For example, Amazon’s star rating, TripAdvisor, and more. Customer acquisition cost - CACHow much it costs for you to persuade consumers to buy your product or service. Costs include market research, surveys, marketing, paid ads, printing, TV commercials, events, etc. Customer lifetime value - CLVThe amount of money a customer is estimated to spend on your products and services in the future. Based on their average spend per year. Customer retention rateA metric which enables companies to calculate the percentage of customers they’re retaining, versus the percentage they’re losing. Pricing strategyAn ongoing process to identify what consumers are willing to pay for your products, and to monitor what your competitors are charging. Optimize your price strategy accordingly. Benchmarking toolsAnalysis decided. Metrics to measure sorted. Choose the time period that you’d like to monitor - for instance, previous two to three months/Q1, etc. Now it’s time to get your toolkit out. You can do basic analysis to start…
To understand better. To collect more detailed data, you’ll need benchmarking tools… Talkwalker | Performance benchmarkingTalkwalker Analytics has several awesome features to protect your brand, analyze the social data surrounding your campaigns, measure the results. Perform competitor and consumer analytics. Mitigate reputational risk with instant and predictive alerting, unique AI-powered sentiment analysis, image and video analytics. Talkwalker AI-powered sentiment analysis of three leading fizzy drink brands. Google Analytics | Monitor website trafficTo monitor traffic to your website and understand your audience, Google Analytics is a free benchmarking tool to beat all others. Google Analytics - audience intelligence in performance benchmarking. You’ll be able to find out which devices consumers are using when visiting your site. Their touchpoints, moving around your site. Which pages they’re landing on. How long they’re spending. Which CTAs they’re responding to. Twitter Analytics | Simple, accurate, freeInbuilt analytics tools mean you can be confident the data is accurate. All part of the platform, Twitter Analytics shows you how your tweets are performing - impressions, engagement, engagement rate, top tweets, replies, and more. You can choose your time period. Analyze promoted tweets. Pull out audience insights. And, export all your data. MailChimp | Email marketingBuild your email campaigns in MailChimp, and track their success. Monitor trends, track performance, A/B test campaigns. Find valuable insights and create winning campaigns. Collect your audience data, and reach your goals faster and with huge. Promote your brand in email, social media, ads, and landing pages. MailChimp - performance benchmarking tool. TakeawayHigh-performance companies look to find the processes, operations, offerings that are crucial to their business. They test their efficiency and effectiveness against best-in-class organizations. Benchmarking your marketing processes, allows you to monitor the impact of your campaigns. This will lead to an improved marketing strategy and an increase in leads. Drive brand success and ensure you brand survives uncertain times with Social Media Trends 2021. Meg is a member of the Talkwalker content team. Walking to the beat of a different drum, she swears that she’s only wearing black until a darker colour is invented. She may dramatize, she may exaggerate, she’s always brutally honest, but she’s never ever ever sarcastic! She hates writing about herself in the third person, but was persuaded by a small, blue Yeti. What is the process of comparing a firm's practices and technologies with those of other organizations?Benchmarking is the process of measuring key business metrics and practices and comparing them—within business areas or against a competitor, industry peers, or other companies around the world—to understand how and where the organization needs to change in order to improve performance.
Which type of activity within the value chain model is directly related to the production and distribution for a firms products and services?Primary activities are most directly related to the production and distribution of the firm's products and services that create value for the customer. Primary activities include inbound logistics, operations, outbound logistics, sales and marketing, and service.
What are the most successful solutions or problem solving methods that have been developed by a specific organization or industry?Best practices are the most successful solutions or problem-solving methods in an industry for consistently and effectively achieving a business objective.
Which of the following would a company employ to measure and compare its business processes to similar processes of other companies within their industry?Which of the following would a company employ to measure and compare its business processes to similar processes of other companies within their industry? The most successful solutions or methods for achieving a business objective are called: benchmarks.
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