Competitive benchmarking is the continuous process of comparing a company’s performance with that of its counterparts or competitors in the industry using a set collection of metrics. Using competitive benchmarking analysis, not only can businesses get an organized overview of their company and how it performs on different levels, but they can also stay competitive. Benchmarking allows to easily spot when a competitor is doing well or beginning to struggle – both of which are prime times to evaluate the company’s own strategy and implement any changes wherever necessary. In today’s digital world, there is a myriad of data and methods available for competitive benchmarking analysis, however, what can be difficult is knowing where to start. If you are looking to build a robust competitive benchmarking framework for your business, here are five critical steps that you must follow:
Set clear objectives
Goals should be set based on what the company desires to achieve. Here, companies need to make smart decisions about their aim and goals. It is impossible to benchmark against something that is not measurable. So, it must be ensured that the goals can be measured and expressed in numerical terms. This would act as a clear and accurate measure while evaluating the performance.
Identify the data source
Businesses must identify the sources for the data that they want to gather for competitive benchmarking. It is vital to keep the data consistent. While choosing external sources of data for the competitive benchmarking framework it must be ensured that the data is consistent. Companies also use various competitive intelligence tools in order to better utilize data and measure their performance against that of the other players in the market.
Identify the common metrics
It would prove difficult for companies to undertake a competitive benchmarking analysis for a large number of parameters. So, it is vital to select some keys matrices that are compared against publicly available information. With the help of the data sources that have been identified, companies can easily decipher those matrices to use for benchmarking.
Set regular intervals of measurement
The intervals at which the company must undertake competitive benchmarking largely depends on the activities and benchmarks that they are focusing on. It could vary from once a year to once a week depending on the parameters in question. It is up to the It’s up to the business to determine what the most appropriate interval is for the benchmark and for the business.
Implement plans and monitor results
The final step in establishing a robust competitive benchmarking framework is to execute the set processes of measuring performance and identify the deviations. This also involves continuously evaluating the benchmarked practices and reinstituting the benchmarking process when necessary. In order to sustain market leadership, however, the benchmarking process must be a continuous and permanent part of the organization’s culture.
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