Surviving in the business world has its trick. Ideas wear out and many times it is better to look at the competition of the idea that a business is betting on (even if it is already developed). Benchmarking takes care of that.
What is Benchmarking
What is? We could define it as the process that measures all actions related to the company’s goods and services in comparison with another rival, in order to find out what competitors did years before and what the company can do to improve, especially in its marketing strategy. .
Benchmarking’s mission is to identify internal opportunities for improvement. For research companies, it would be tearing down what makes superior performance possible and then comparing those processes with how the business operates, or how changes can be implemented that make way for major improvements.
These improvements could mean a modification of the characteristics of the products to match a competitor’s offer, or the resizing of the services offered, or the beginning of a new relationship with the customer (CRM) to establish more capable relationships with them.
We could say that there are two types of opportunities to improve; continuous and disruptive. The first is gradual and involves small adjustments to gather measurable progress. The second type of improvement can only occur through the regeneration of the entire internal work process.
Benchmarking, step by step
Benchmarking is a simple and detailed process that we could summarize in five steps:
- Choose an internal product , service or department for the benchmark.
- Determine the best companies with which you should contrast or with which you would compare your business models
- Gather information and metrics in internal procedure
- Compare data from both organizations to identify gaps in company actions
- Adopt the processes and policies that are among the best.
To compare something, you need quantitative data to study. This means that it is necessary to decompose internal processes to calculate performance metrics and quantify everything because only quantifiable information can be correctly compared. Benchmarking will indicate the changes that make a difference, but it will depend on who executes the actions to put them in their place.
Benchmarking benefits for your company
In addition to helping companies become more efficient and profitable, benchmarking has other benefits such as:
- Improve the employee’s understanding of the cost of infrastructures and internal processes.
- Encourage the construction and cooperation of a team in terms of interests to be more competitive.
- Improve familiarity with key actions and dimension improvement opportunities.
- It helps employees understand how a part of the company’s processes can be the key to greater success just as the contributions of an employee can guide them to achieve the proposed objectives.
Keys to keep in mind when benchmarking
In order to improve compared to your competitors, you should take into account aspects such as:
- If the inventory has a higher cost than that of the competitors. In this case, expenses could be reduced or better supplier rates negotiated.
- If earnings per employee are lower than the industry average
- Study other similar businesses and learn how they process their jobs
- Implement changes based on observations and research
- Evaluate the results of the changes implemented
- Check if you have the necessary skills to improve in the business
When comparing with competing companies in the sector, it is necessary to analyze in detail how it is going to be done. Benchmarking needs to be integrated into a marketing plan, a strategy. Once you have achieved the action points to make improvements, you move on to action. Then you are ready to develop a plan and encourage change.
For benchmarking to work properly, you need to keep your employees and customers informed and make changes to your business. If problems increase, act immediately. Benchmarking is a process of continuous improvement. Once the changes have been implemented, you have to do a business check to see the results, analyze them and, consequently, be able to improve.