Benchmarking analysis is a type of market research used by a business that compares their data to that of their competitors or industry practices using a selection of useful metrics. Depending on the goals of the benchmark analysis, the metrics may pertain to marketing campaigns, production processes, product quality or other factors.
Benchmarking analysis is useful for helping a business see where it stands in comparison to its competitors within the industry overall.
Types of Benchmarking
There are four main types of benchmarking that may be used in benchmarking analysis:
- Strategic benchmarking: This entails improving parts of an organization by assessing others in the industry. This enables an organization to develop a strategy that drives them to be more competitive in their industry.
- Process benchmarking: This type of benchmarking is used to gain a deeper understanding of how an organization’s processes compare to those of their competitors. This can help them identify areas where they can make improvements in terms of efficiency and cost effectiveness.
- Performance benchmarking: Performance benchmarking is one of the more complicated types of benchmarking but also has the potential to be one of the most useful. It entails learning about your competitors’ performance metrics and changing processes in the business that can help set it up for success. Some of its findings may require significant changes to be implemented in the organization, but these often prove to be highly successful moves.
- Internal benchmarking: This is a process that is used to improve a business by comparing it to its historical data. It may be used to compare different branch locations or organizational departments and is an effective method for identifying the most efficient practices so they can be shared throughout the company. This helps businesses avoid wasting time and money and make better use of employee talent.
What is Involved in Benchmarking?
Outlined below is a brief look at the basic process of benchmarking analysis.
During the planning stage of benchmarking, organizations highlight what they are seeking to improve, who they need to benchmark themselves against, and what they would consider to be a success.
During the planning stage, the metrics being assessed need to be outlined in specific detail. In addition to including what is being measured, it is important to specify how units of measure will be classified, what should and should not be included in these measurements, how calculations will be made, and examples of typical measurements.
The next step is collecting information about the organization’s processes as well as those employed by its competitors. For example, if the goal is improving customer satisfaction, the organization needs to understand the processes involved in its customer service department, the ways in which communications with customers are approached, and how their methods differ from those of their competitors.
This stage is about gathering as much data as possible and obtaining deeper insight into the processes used by other companies.
Once all of the relevant information has been collected, it can be plotted to identify patterns and shortcomings. No business is perfect, so it is important to approach this stage with an open mind and understand that there will be flaws and shortcomings. However, finding them is the first step on the path to making lasting improvements.
The information that has been collected and analyzed will not be worth much if it is not used to implement changes and make improvements to the organization overall. It is essential to get every department on board with the proposed changes and explain how success in these efforts will be of benefit.
Monitoring the Results
Once action has been taken, it is essential to monitor the results on an ongoing basis using the goals for success that were identified earlier in the process to ensure the desired outcomes are reached.
Why is Benchmarking Analysis Useful?
Here is a look at some of the top benefits of benchmarking analysis.
Assessing the Competition
When businesses identify areas where they want to make improvements and benchmark their current performance against that of their competitors, they can find ways to gain a strategic advantage and move closer to their goals.
Planning and Goal Setting
Conducting benchmarking analysis allows organizations to set performance metrics and goals that can guide future decisions. By setting targets that are ambitious yet achievable, companies can achieve greater success.
Fostering Continuous Improvement
The goal of benchmarking is improving certain aspects of a business, but it is important that improvements are not forgotten once they are made. Instead, the goal should be ongoing improvements that help an organization continue to reach new heights in the long term.
Schedule a Consultation with the Professional Benefits Consultants
Benchmarking is an effective method of evaluating a business’s performance, whether an organization chooses to compare itself to its industry as a whole or its competitors. However, it can be a complicated process that requires specialized knowledge and experience.
The professional benefits consultants at Business Benefits Group (BBG) can help your company perform an effective benchmark analysis and glean useful insights that can drive success. Contact us today for more information.