Understanding What Benchmarking is and How to Use it
In an increasingly competitive market, companies cannot look only at themselves. By ignoring what surrounds them, such as the competitors’ market, it becomes more difficult to identify opportunities, take advantage of gaps, and arrive at more appropriate results. To prevent the company from losing expressiveness and failing to stand out, benchmarking is an important process that works as a relevant competitive tool. Used correctly, it will make your business more aware of your business and also of what is around you. Therefore, it is important to be cautious not to make mistakes in its execution, and knowledge is indispensable. Therefore, see below what this practice is and learn how to use it correctly.
What is Benchmarking?
Benchmarking is nothing more than the practice of establishing a benchmark to understand how your company matches up to a certain standard. This is a way of understanding, for example, the level of competitiveness or efficiency of your business about others in the same sector.
In general, it is a practice that not only allows the monitoring of market results but also favors the analysis and inference of results. Based on this, the business can make changes and improvements to achieve a more appropriate and competitive performance.
What are the Types of Benchmarking?
Being a highly versatile strategy, benchmarking appears in different types. They can be used alone or together, to ensure a more complete, strategic, and focused on business objectives.
In this sense, there are four main types:
Competitive: One of the most used is competitive benchmarking, which serves to let your company know how to position itself about direct competitors. This is a way to identify market opportunities and threats, which helps to ensure that the business can stand out. At the same time, it is more difficult to execute, as knowing the results of the competition is not as simple as it looks – and sometimes it may not even be possible.
Internal: Internal benchmarking is especially useful for the company to understand how a given process or sector is positioned concerning other points of the same company. A franchise, for example, can use benchmarking to compare itself with other units of the same brand, or else to analyze processes between sectors within the business itself.
Functional: The functional is used to compare relatively equal operations, even between companies in different sectors. This facilitates the process because it expands the possibilities for the company, which does not need to remain restricted only to competitors. It is also especially useful when no relevant competitor is performing the same task or when it is relatively innovative within the segment in question.
Cooperative: The cooperative, in turn, is made when two companies share information in a partnership relationship. It can also be the case when a model company is opened to acquire more information that is passed on to the other company that is part of that cooperation.
How Important is this Tool?
First of all, benchmarking contributes to business intelligence. From the acquisition of information and its analysis, it is possible to better understand the market panorama and the positioning of the business.
This increases performance efficiency because it favors the decision-making process. Also, more productivity and fewer costs are achieved, in addition to better and more consolidated results.
Another important point is that the business can learn from what has proven to be successful. Therefore, it is easier to motivate the team to pursue equivalent and even superior results.
Last but not the least, there is a gain in competitiveness and a reduction in threats, since the company learns from the best how to act in the right way. Also, it is possible to learn from the mistakes of others, preventing your business from making the same mistakes, and losing with known situations that could be avoided.
How to Do Benchmarking?
To be able to take advantage of all these advantages, the process must be properly designed and conducted. For that, it is necessary to use a step by step, which is given as follows:
- Understand what the company’s internal situation is when mapping processes and identifying points of excellence, as this will tell you what is not comparable to your business.
- Set goals for the use of the information collected and analyzed. This allows you to assess whether the strategy has been successful or not.
- Identify the key performance indicators (KPIs) for the business, to understand which are the most strategic and important points for your company;
- Select the companies to be evaluated, internal processes, equivalent stages of companies from other sectors or cooperating businesses, depending on the type of benchmarking;
- Define how data collection will occur, which can happen digitally, manually or in both ways;
- Track data and perform analyzes and cross-checks on the information obtained to find trends and answers;
- Structure the transformation of data into actions. The changes must be adapted to the business and must not be mere copies of other sectors or companies;
- Monitor the results of the changes and continue performing the process to ensure continuous improvement.
In doing so, you will notice that it is essential that the process is carried out continuously, as this ensures the consolidation of change and also allows the enterprise to remain competitive and equal to the best in the industry or best practices.
Five Tips to Do Benchmarking
As we have mentioned earlier, benchmarking is an important and strategic process for your business to understand its position in the market and recognize opportunities and threats. When doing data analysis, it can recognize good practices that can be adapted and applied to maximize the company’s results. Therefore, it is worth knowing the processes involved to put it into practice as soon as possible.
Check out five tips for you to do your first benchmarking:
Have a clear goal
To succeed in this learning process, you need to have clear goals. Otherwise, you will not know how to take advantage of all the information you have discovered. Before starting the research, define which points of your business you want to improve. For example, what do you want to improve in your process? Telephone? Email? Define and focus on that point, looking for companies that do well what you need to improve.
Search for references
When looking for companies that you will include in your benchmarking, search for those that are considered references in the subject. Often, companies that have achieved great results for their work are proud to share their case with other entrepreneurs. Specialized magazines and Human Resource companies usually rank the best companies in different categories and tell a little about their cases.
Grow with results
More important than knowing which system that company adopts is, given all the information, having a good action plan. This means that in addition to discovering what other companies do, you have to identify their flaws and act to solve your problem or improve your practices. With all the information discovered during the benchmarking process, look at your budget and strategies, and see how you can adapt them to ensure your success.
Keep up with your competitors
Knowing what your competitors do best and worst is essential. Monitor how they work the product catalog, prices, delivery policies, shipping charges, promotions, and other important information.
The benchmarking process must continue, even after you have implemented changes and are achieving better results. You always need to be aware of what happens in the market so you don’t fall behind the competition. A successful company is always looking for improvements.