Master Competitive Benchmarking: The Essential Guide for Starters

Competitive benchmarking has long been a pivotal strategy for both startups and established enterprises. Essentially, benchmarking involves measuring your business against similar companies to understand your position in the market and which areas you can improve in. More than a method to keep up with your competitors, smart businesses can leverage competitive benchmarking as a foundation for improvement and innovation. 

However, the techniques we use to measure it have changed massively in recent years. This is both an advantage, as more data gives us a fuller picture, and a disadvantage, as the need to stay ahead of the game has never been greater. 

That’s why the team at Bitrix24 has put together this essential guide to master competitive benchmarking. From answering the basic question of “what is competitive benchmarking” and uncovering the fundamentals of business comparison to understanding industry benchmarks and learning how to conduct a competitive analysis, this article will cover the knowledge and tools you need to use benchmarking as a driver of your company’s growth. 

What exactly is competitive benchmarking?

You can’t turn benchmarking into a business advantage if you don’t understand the concept at its core. Put simply, competitive benchmarking is an evaluation whereby a company compares itself against its competitors over a range of metrics. These metrics change depending on the industry and the specific focus of a business, but typical factors include:

• Product quality

• Service offerings

• Ethics

• Customer satisfaction

• Number of followers

Competitive benchmarking is especially important for new companies that don’t have a full awareness of their position. Therefore, startups need to hit the market with the right performance analytics tools in place to highlight both strong and weak areas of the business. 

Now we’ve covered the conceptual level but what is competitive benchmarking in practical terms? Let’s find out.

The basics of competitive benchmarking

Knowing the competitive benchmarking basics gives you the confidence that you’re on the right track. Follow each of these key steps in competitive benchmarking, and you’re well on your way to applying the fundamentals of business comparison. 

1. Identifying your competitors

Quite simply, you can’t benchmark your progress if you don’t know who you’re comparing yourself against. However, in the interconnected world we live in, competitors aren’t as easy to identify as they were in the past. 

Using your customer relationship management (CRM) tool, you can gather all the key data about your competitors. Competitive intelligence for beginners includes factors such as their size, industry, estimated valuation, and more. The best CRM tools will also allow you to create customized fields so you can tailor your competitive benchmarking analysis to your own needs. 

2. Choosing the elements you want to measure

As we briefly mentioned earlier, you’ll also need an understanding of the key areas of your business that you want to compare with your competitors. 

Understanding industry benchmarks helps to laser-focus your approach here. For example, retail organizations may measure footfall, wastage, and overall revenue. These will be the core elements that you measure.

However, you should also add in more niche areas where you think you can really stand out from your competitors. These aspects could include the sustainability of your supply chains and the amount spent on online advertising. Measuring these from the outset not only helps you pinpoint your position against competitors, but they can also be converted into powerful marketing claims. 

3. Analyzing data and creating action plans

Now you’ve gathered your data, it’s time to turn to the true aim of competitive benchmarking — drawing actionable insights out of that data. 

Looking out to your competitors, you should start by understanding how they achieve their successes and why they falter. This removes part of the trial-and-error process as you position yourself in the market and allows you to focus on tried-and-tested techniques, or to get experimental with fresh, new approaches.

Be sure to measure your new approaches from the start, analyzing how well you’re doing compared to your previous methods and compared to your competitors. For instance, if you’re aiming to improve the efficacy of your email marketing efforts, convert your innovation into a series of measurable steps, and keep a close eye on your progress.

How to conduct a competitive analysis across your industry

This introduction to market analysis is largely aimed at smaller companies, but we’re sure larger businesses can get a lot out of it, too. 

1. Define the scope of your analysis

It is theoretically possible to run a competitive benchmarking mission on a global scale, but time and resources render that somewhat pointless. However, you do need to work out how far you actually want to go. 

For example, it is often worth looking beyond your direct competitors to include the top players in your industry whose positions you want to steal. This is because it sets future targets for you to ultimately achieve and surpass, as well as more immediate benchmarks that you can tackle on a shorter timescale. 

2. Gather comprehensive data

Any competition benchmark is based on data, but beginner analysts often don’t know where to start their search. The good news is that there’s usually a lot of information out there. The bad news is that it’s often in different places. Here are a few reliable places to start:

• Competitor websites. These often feature a search bar, or you can alternatively search for keywords on each page to speed up the process.

• Marketing materials. Flyers, banners, landing pages, and more will usually include figures to back up their claims, so are a valuable source of information.

• Customer reviews. Online and offline reviews are best for finding what customers seem to value highest, rather than numerical data. 

• Financial reports. Many businesses publish quarterly reports, which are an absolute gold mine for data. Get your analytical hat on and scour these historical documents.

The best place to store your data is in a CRM. Each competitor should have its own profile filled with all the data you’ve compiled.

3. Analyze the data you’ve gathered

With the data you’ve collected, you can use CRM analytics to map out where each of your competitors stands out against the crowd. If you’re including both industry leaders and startups, you can segment each competitor into their respective group. This allows you to take a focused view of your standing among close competitors or to zoom out and see the industry as a whole. 

As well as stand-out leaders, the analytics stage of competitive benchmarking is also an opportunity to spot general trends. While you might not want to invest significant time and effort into improving these areas, you may want to make sure you’re at least ahead of the curve. 

4. Create strategic actions

This is the stage where you go beyond the numbers and enact plans to boost your position in the market. There is no right or wrong approach to take here, but you will ultimately make changes to your product or service in the areas where you’re behind industry benchmarks. 

For example, if you rank poorly on customer engagement, you may want to improve your presence on social media. Big changes like this take a structured approach, so whip out your task management tool, work on a budget, and assign a leader to your mini-project. This way, you can make impactful changes without your employees passing the buck and getting nothing done. 

Different kinds of benchmarking

When wondering how to conduct a competitive analysis, it’s easy to focus solely on performance. How you define that — revenue, social media reach, and number of followers are good examples — can change, but the category of benchmarking is the same. 

However, by digging further down into the details, you can uncover process and strategic benchmarking. While these don’t grab the headlines (or impress shareholders) as much as cold, hard performance statistics, they are just as important for businesses aiming to be sustainable over the long term.

We’ll look at each kind of benchmarking one by one so you can go far beyond competitive intelligence for beginners. 

Process benchmarking

There is a lot of buzz about improving your processes. For example, agile methodology unlocked impressive capabilities to speed up the production line and get products on the market as fast as possible. The first teams to adopt agile methodology shot ahead of their competitors who were left needing to adopt the new processes or become irrelevant. 

Process benchmarking can be seen as a company’s way of building good habits. You can use both internal and external benchmarking here. For example, you can adopt best practices from other companies, but if your sales team has productive meetings that only last 15 minutes, your entire organization can also learn from them. 

When focused on processes, your competitive benchmarking should identify key processes, such as the customer journey, customer service interactions, or onboarding. Analyze each step in your workflows and compare them against those of your competitors to find efficiencies and strategies that streamline your processes. Once you’ve proven your new concept, update your workflow templates and start doing things better. 

The results of successful process benchmarking are an increase in productivity, reduced costs, and an improved product or service.

Strategic benchmarking

Strategic benchmarking is more focused on your company’s mindset. Although you might not see results immediately, this type of benchmarking is crucial for putting long-term success factors in place. 

Competitive benchmarking basics for strategy involve finding the companies that always seem to be one step ahead of the curve. Take a deep dive into the factors behind their success. How active are they in industry events, what are their hiring practices, and what are their vision and mission? 

Now, you need to take an honest look at your own strategies. Even if you claim to focus on innovation, how much time do you realistically invest in it per week? Once you’ve identified your weak spots and understood the strategies needed to improve them, it’s essential to make an action plan. For example, you could organize scrum teams to make breakthroughs on specific problems or set aside Friday afternoons to develop and test daring new processes and products. 

With regular strategic benchmarking, you will ride the waves of turbulent industries better than competitors who stick to outdated mindsets.

Performance benchmarking

Finally, the clearest of the three kinds of competitive benchmarking — performance benchmarking. The definition of success is different for every company, so identifying key performance indicators (KPIs) to measure and compare your performance depends very much on which outcomes you value. 

Let’s take sales growth over a yearly period. A great way to analyze your competitors is by finding their published quarterly results and comparing them against your own. This will give you a good understanding of your market share and open up a range of avenues you can go down to improve your standing. 

For example, you can look into hiring a bigger sales team or pumping more investment into your marketing to improve your numbers. However, budgets often restrict your flexibility in this area, so try exploring more innovative ways of securing better business. You might choose to automate parts of your sales journey to give your humans more time to secure deals. Alternatively, if you’re a small player in your industry, try developing a more specialist product to get the edge over your larger competitors. 

Each of these benchmarking types — process benchmarking, strategic benchmarking, and performance benchmarking — serves a different but complementary purpose. Together, they provide a comprehensive view of where your business stands and where it needs to go.

Bitrix24: Your control panel for competitive benchmarking

We hope you’ve learned a lot from our key steps in competitive benchmarking. Whether it’s through the introduction to market analysis or the outlining of three different types of competition benchmarks, each of these steps contributes to a strategy whereby you stay ahead of your competitors. 

However, there’s an open secret that puts you in the best position to master competitive benchmarking before you even engage in any strategies — Get the right tools to make a difference.

Bitrix24 combines all the tools you need for professional benchmarking on one easy-to-use platform:

• A comprehensive CRM with analytics functions

• Performance analytics for unbiased self-assessment

• Project management software so you can implement changes successfully

• Replicable workflow templates to set the standard across all teams

• Dedicated spaces for sales, marketing, customer service, and HR departments under one unified roof

FAQs

Competitive benchmarking is important as it allows businesses to understand their position relative to competitors, identify best practices, and uncover areas for improvement, leading to enhanced performance and competitiveness in the market.

Effective benchmarking involves: 

• Identifying relevant KPIs 

• Choosing appropriate benchmarking competitors

• Collecting and analyzing data 

• Understanding industry benchmarks

• Implementing actionable strategies based on insights gained

Beginners can start benchmarking in their industry by defining clear objectives, identifying key competitors, gathering relevant data on them, and analyzing this information to understand their market position and areas for improvement.