In today’s competitive landscape, you simply can’t stand still if you want to stay at the top of your game. But how exactly do you define how your business stacks up against the competition; where you sit in the marketplace?
The art of benchmarking compares your business against industry standards and similar businesses, uncovering areas for improvement and strategies to achieve industry-leading performance.
When it comes to Voice of Customer (VoC) research and general customer satisfaction, it’s also important to consider what stats you measure periodically and how often you do this. In this article we will explore how, why and when to benchmark your business.
Bench-what?
Benchmarking is a strategic process to measure your performance against your competitors and relevant industry standards and measuring your own KPIs year on year. For example, several of our own clients hire us to discover their Net Promoter Score (NPS), something they complete year-on-year to track any changes, both positive and negative. While this doesn’t necessarily have to be a yearly activity – some of our clients do this every 2 years! – being consistent will ensure you have accurate comparisons.
Why is it so crucial to benchmark against yourself or others? Here are just a few reasons:
- Having a regular ‘check in’ to find out how loyal and satisfied your customers are and whether their loyalty is waning or growing.
- Identify strengths and weaknesses: Benchmarking reveals your company’s true position within the competitive landscape. You can identify areas where you excel and those that need improvement.
- Set SMART goals: By comparing yourself, you can establish realistic yet ambitious goals (Specific, Measurable, Achievable, Relevant, and Time-bound) for your company’s growth.
- Boost efficiency and reduce costs: Benchmarking often highlights areas where processes can be streamlined, leading to an improvement to your bottom line.
- Stay ahead of the curve: knowing what and why you’re better (or worse) than your competitors will help you stay ahead and keep innovating.
- Measuring effectiveness of a new product launch: Getting a baseline understanding of customer insights before and after a product launch can make sure you’re hitting the mark.
Getting it right
There is no one-size-fits all answer to how to benchmark for your business, copying a similar business simply won’t cut it. Before you begin, there are two areas that are vital to understand:
Your current position
How stable your business is will significantly impact on what and when you should benchmark. A business going through a period of change should not be comparing their performance when it isn’t their norm and likely to be impacted by whatever is happening in the short term.
If your business is about to experience change, it will prove extremely useful in measuring the impact of said change if you are able to benchmark now so that you have valuable insights to look back on and compare once you’re in your new norm.
If you’re experiencing stagnation, now is an excellent time to benchmark to lift yourself back into contention at the top.
Another important aspect is whether you already have the metrics and data you need in order to conduct your benchmarking. You should consider at which point any new data is enough to return the level of insights you need. A great example of this is a project we recently completed for Durham Crime Commissioner where we conducted research before and after a period of 6 months ‘hot-spot policing’ on anti-social behaviour to determine the impact of their programme, funded by The Home Office.
What you want to achieve
In the wise words of #1 New York Times Bestseller venture capitalist John Doerr, ‘Measure What Matters…’
Benchmarking doesn’t require you to compare every single KPI you track, and it may highlight KPIs that aren’t yet in place. Wherever on that spectrum your business sits, it’s important to benchmark the areas that will give you the insights you need, aligned to your business goals.
The most important metrics to benchmark will vary depending on your unique business. From a research and insights perspective, we’d always suggest these at a top level:
- Customer Satisfaction: Measure customer satisfaction through surveys especially your Net Promoter Score (NPS), and customer churn / loyalty rate to understand your customer experience.
- Stakeholder Perceptions: Particularly important for larger public sector organisations, member organisations and charities; analyse who your stakeholders are, their impact and influence in your business, and the tactics you need to get them on board with the direction you want to take.
- Employee Engagement: Track employee engagement through surveys, compare this to absenteeism rates, and employee turnover to understand employee morale and productivity.
- Competitor activity: Figure out what metrics of your competitors you’re keen to track and conduct regular SWOT analysis – using desk research techniques – to determine these – or better still, hire MMC to manage it for you!
Incorporating benchmarking into your business strategy provides you with a powerful tool for continuous improvement. By understanding your strengths and weaknesses relative to recognised standards as well as the competition, you can set informed goals, streamline operations, and ultimately achieve long-term success.
Remember, benchmarking is a journey, not a destination. By consistently measuring, analysing, and adapting, you can ensure your business stays ahead of the curve.
