What is performance benchmarking?
How does your business stack up against your competitors? Your industry? Better? Worse? No idea? I’m not talking about profits. I’m talking processes, operations, time to market, customer retention. A benchmarking process compares your brand with best-in-class standards, so you can improve across the board. Ensure your company runs efficiently and cost effectively. Let’s take a look...
Performance benchmarking is a powerful tool, if you’re looking for continuous improvements in your business processes. But, you’ll be wasting your time if you only benchmark against yourself.
What is performance benchmarking?
First up, you need to determine the processes in your company that keep it running smoothly. And I mean all of them. From your internal messaging tool to your product’s time to market. Then, pit them against other companies and industry standards.
Let’s start digging…
Table of contents
- Benchmarking definition
- Why is benchmarking important?
- Benchmarking basics
- Benchmarking process
- Benchmarking marketing
- Marketing benchmarks
- Benchmarking tools
First up… what is performance benchmarking?
Benchmarking is a process of measuring the performance of a company’s products, services, operations, processes against other companies - recognized as best-in-class - or the wider marketplace.
The most common metrics for benchmarking include cost per unit, time to produce, product/service quality, effectiveness, time to market, customer satisfaction and loyalty, brand recognition.
Benchmarking against leading companies will gather insights to help you understand how your brand compares, even if they’re in a different industry, or have a different audience.
Benchmarking is a process for obtaining a measure - a benchmark. Simply stated, benchmarks are the “what”, and benchmarking is the “how.”
Implementing a benchmarking process will help your business get stronger. Processes will be more efficient. Quality improved. You’ll save money, while increasing revenue. Studying best-in-class companies, identifying why their processes work so well, will enable continuous improvement within your business.
That could mean updating a product feature to meet or beat a competitor’s product. Implementing a social media management tool for scheduling your social messaging. Introducing training days for your team.
Benchmarking will help your business…
- Improve your processes, operations, procedures
- Measure how effective your past performance is
- Identify how your competitors operate
- Improve efficiency and reduce operating costs
- Improve product/service quality
- Increase customer satisfaction and loyalty
Look at current benchmark metrics in order to identify industry standards that you should strive to meet or surpass. Benchmarking is an ongoing process, with performance monitoring playing a crucial part.
By comparing your performance with that of your competitors - what they’re doing right and what they’re doing wrong - you’ll identify areas in your business that can be improved. Gaining the competitive edge.
No doubt you’ve already determined your business goals, but benchmarking goals are different. They’re about improved performance of your company processes. They’re competitive. But, as with your business goals, they must be achievable.
Don’t forget, they must be SMART - Specific, Measurable, Achievable, Relevant, Timely.
SMART goals - Specific, Measurable, Achievable, Relevant, Timely.
- Specific - real numbers, real deadlines - who, what, where, why?
- Achievable - are your goals challenging, yet possible?
- Measurable - how will you track and analyze your progress?
- Relevant - do you have the resources to achieve your goal?
- Timely - when do you intend to reach your goal?
Make your goals unrealistic, and you’re going to fail.
Benchmarking is a way to measure the performance of your company’s products, services, processes, operations. The data collected should then be compared to an industry standard - a benchmark.
Benchmarks are the what. Benchmarking is the how.
For instance, it takes one hour to produce your product, one engineer, and sells at a cost of $25.
Is that good or bad?
You can only answer this question accurately, if you have data from other companies producing the same product as you. If brand X produces its product in 30 minutes, one engineer, and also sells for $25, this benchmark indicates that you need to look at ways to speed up your production line.
It’s all about improving how your company works. Making it run smoothly and efficiently. Ensuring you’re not wasting money. Grabbing a bigger portion of your market.
- Identify where other brands are performing better than you, and how
- Compare your competitors’ processes with yours
- Analyze the data collected and implement changes to improve your processes, products, operations
There are several forms of benchmarking. I’ll concentrate on the primary ones..
Can an internal process be more efficient?
Collect data on your performance at different times - days, week, months, etc. - or during different situations- during a PR crisis, product launch, event - and find the areas that are weakest. Processes that can be improved, such as converting leads to customers, onboarding new team members, etc.
The advantages of internal benchmarking are that you have access to all the data you need, and it’s a quicker process.
You’re limiting your success, if you don’t go outside your business/industry, and learn from top performers.
How do your competitors’ processes and operations function?
Unlike competitor analysis, where a brand tries to gain the competitive edge by jumping into areas missed - new features, countries to target, etc., competitive benchmarking involves the gathering of insights to show how their processes work, compared to yours. And, will identify industry performance standards.
Compare products, services, processes, methods. You’ll identify your position in your industry, and how to increase productivity and success.
For example… what’s customer sentiment - positive, negative, neutral - towards your competitor’s brand? What are customers saying in comments, reviews, social posts? Collect this data and then, if it’s better than your internal results, work out how to improve those areas in your business.
Strategic benchmarking is when you compare your performance with best-in-class performers. Your data collection shouldn’t be limited to your own industry. You’ll be looking at brands that have proved successful in a particular process.
This type of benchmarking will help with overall performance of your business. It looks at your long-term strategies, compared to other brands. Suggested improvements that result from strategic benchmarking are not quick fixes. You’ll be considering your core competencies, new product development, etc.
The benchmarking process doesn’t have to be difficult. I’m going to share the key steps involved, which work across all industries.
Successful benchmarking is quantitative and qualitative. You’ll be comparing your business with competitors, and with organizations outside your industry. It’s a process that requires the support of your entire company.
It’s not a quick fix. And it’s not magic. Updating your CRM software won’t turn you into IBM. But, it will motivate change in your company. You’ll collect insights that if managed, will bring about improvements.
Here’s the process to follow...
You’ll need to get top management onboard, and prepared to allot time, manpower, money. You’ll also need their involvement to support any major changes that are a result of your benchmarking, such as new product development, training, purchasing new tools.
Choose processes that are integral to your company’s success. Those that give you the competitive edge. They need to be measurable, so you can determine the metrics to be compared.
Perform SWOT analysis to determine your company’s strengths, weaknesses, opportunities, and threats, compared with those of your competitors.
SWOT analysis - Strengths, Weaknesses, Opportunities, Threats.
Don’t forget the knock-on effect. If you change one process, how will it affect other processes? Fix one and break another, is not the way to go.
Now you have to choose a benchmark to compare with. It could be from an organization such as a competitor, or an organization in a different industry, country, region, etc. But, ensure that it’s a top performer in the process you’re looking to evaluate/improve.
The collection of data
You’ll be collecting data from several sources. From the company you wish to benchmark against, and data that’s publicly available - websites, press releases, publications. When researching, consider market research, surveys, questionnaires, onsite/telephone interviews, etc.
Using social media analytics, you’ll also be able to gather information from online conversations, blogs, forums, review sites. Information that will reveal sentiment towards a brand, consumer feedback on products, services, and processes.
Benchmarking example - customer service
Wanting to improve customer service, a brand should compare its processes with those of its top competitors. The successful ones. Identify what they’re doing that’s working.
Online or brick and mortar business, identify how are they talking to customers? What language are they using? Do they use ‘how to’ videos to help customers?
Many offline industries - restaurants, bars, etc. - will use mystery customers as part of their benchmarking process. For example, a person going to a bar, ordering a drink, food. Checking the standard of cleanliness, customer service, upselling offers.
All relevant data collected, it’s time to analyze.
Data visualization tools are going to help your process. It’s way easier for people to understand images, than pages of numbers.
Quick Search - Showing share of countries for Coca-Cola & Pepsi.
So much easier to understand than an Excel spreadsheet!
Identify the gaps in your processes - compared to the organization your benchmarking against - where your performance is letting you down. What’s caused this gap - manpower, time, wrong tools, etc.?
How is brand X getting their product to market quicker than you? How does brand X manufacture their product cheaper than you?
Time to implement
You’re going to need a plan of action.
You’ve found the gaps, and you know how to fill them. It’s going to mean potentially big changes, and you’ll need your bosses and your team onside. Ensure you have the resources you need to implement the improvements.
Once everything is in place, you’re on your way to a winning benchmarking process.
It doesn’t stop. Ever.
For your benchmarking to be successful, you have to monitor regularly. What progress has been made? How have the changes impacted your business processes? Do you need to make changes to improve further?
I’m going to take a look at how marketers will benefit if they follow a digital benchmarking process…
Benchmarking your marketing strategies, enables you to evaluate whether they’re as good as they can be. You’ll need to start by reviewing your existing activities. Tracking the frequency of campaigns. Engagement rates. Results they bring - conversions, new customers, open-rates, etc.
Having collected all your data, you’ll be able to make improvements and increase ROI.
First up, collecting the data. Follow these seven steps, to benchmark your brand’s marketing efforts…
1 Determine the marketing processes you want to measure
To choose what you want to benchmark - social media channels, website, emails, blog posts, paid ads, etc. - you’ll need to have your marketing goals already established. Goals that could include...
- Increasing email open-rate
- Boosting engagement on your social posts
- Increasing the number of visitors to your site
Your marketing benchmarking could focus on…
- Measuring the open-rate of your promotional emails
- Tracking the engagement rate your tweets are earning
- How long visitors are spending on your website
2 Choose your metrics
Don’t go crazy. Too much data collected, and you’ll be overwhelmed.
Benchmarking has to be precise, so you can implement the best actions. For instance, benchmarking your blog…
- What’s the frequency of your blog posts?
- Where are your blog visitors coming from?
- How long do visitors spend reading your content?
- What do visitors do after they’ve read your content - click CTA, click to another page, bounce, etc.?
For your social media channels, benchmarking performance metrics could be…
- How often do you tweet/share?
- What’s the engagement rate of your social posts?
- How many people click your CTA?
- How many retweet/share your messages?
3 Competitor analysis
Competitor analysis is vital, regardless of your industry. What are they doing that’s working? Are you doing it too? What countries are they successful in? Are you? You have to learn from their strengths, and exploit their weaknesses.
- How often do they publish blog posts?
- What’s their social media posting schedule?
- Which countries are they targeting?
- What are consumers saying about their products?
Check out my Competitor Analysis Guide. Not a sneaky peek at your competitors’ social channels. That’s just being nosey. The best competitor analysis will identify opportunities that’ll help you improve your marketing campaigns - targeting, SEO, content, leads, conversions, revenue, and more.
Determine which channels are working best for your competitors.
(simulated Talkwalker report).
Remember, you have to be brutally honest about your brand, and compare with the data you collect about your competitors.
4 Build your digital marketing strategy
Got another marketing guide that’s going to help. My Digital Marketing Strategy eBook. You’ll learn...
- How to deliver a sustainable competitive advantage
- The data to track from previous marketing campaigns
- How to report your results
- How to plan, monitor, and measure your social media activity with social listening
- How to create social media reports to present your results
You’ve established your digital marketing benchmark. Now you need to define your strategic objectives. Choose SMART goals. For example...
- Blog - increase subscribers to your blog by 55% by Q3
- Social - increase LinkedIn followers to 750K by Q4
- Email - achieve an average email click-through rate of 20% by December
- Paid - increase website traffic 4,000 visitors per month by November
5 Regular analysis
Benchmarking your marketing activities is not a one-time process. It should be performed regularly, so you can understand how your processes are improving and the impact your strategies are having.
You're going to an analytics plan. Have a look at my Social Media Analytics Guide. It explains all that you need to measure, how to do it, competitive intelligence, and the tools you'll need.
Talkwalker social media analytics platform - competitive benchmarking.
Marketing benchmarks allow you to compare your results with your competitors and industry. You’ll find your competitive advantage. You’ll identify where you’re underachieving.
To benchmark your marketing activities, you’ll need data about your competitors. Much of this data is freely available in the public domain. Financial reports, market research surveys, for instance. There are also research companies that provide - for a price - benchmarking data. Then there’s analytics tools...
Marketing metrics benchmarks include…
Top of mind awareness - TOMA
The first brand, product, service that springs to mind, when a specific product category is named. If consumers are asked to name a premium car - Rolls Royce, Ferrari, Bentley, Porsche, etc. - the brand with the highest percentage of mentions is top of mind. Some brands have achieved so much TOMA, that their product has become a generic word for a product.
An example being, Kleenex for tissues, regardless of brand.
Unprompted brand recall
When consumers remember a brand - when a product category is mentioned - without it having been mentioned.
How many burger brands can you name?
Consumers identifying your logo, tagline, jingle, packaging, ads over your competitors.
Which trainer comes with a tick?
The percentage of your target audience that you reach with your content marketing, compared to your competitors.
The interaction between consumers and your brand with regard to your marketing messages - likes, follows, shares, retweets, comments, click-throughs, time spent on your website.
The number of visitors to your website that complete an action - subscribe to newsletter, request free demo, download report.
Metric that shows the percentage of how happy customers are with your brand, product, service, compared to your competitors.
This metric reveals how likely a customer is to buy a particular brand on a regular basis.
If you can’t have a McDonald’s, you won’t have a burger. You only buy Samsung. A positive experience, brings customers back again and again.
A customer’s impression and awareness of your brand, products, services. Their opinion is formed through every direct and indirect interaction with your company. Measure to find pain points and to improve CX.
The value consumers put on your products - new, updated. Collected user-generated content can be used to improve product development, and inspire marketing campaigns.
Woohoo! Another resource to help you out - How to get the most out of user-generated content.
Competitors can monitor Amazon reviews, to determine consumer opinion.
The percentage of total industry sales in a product category that are down to your company. For instance, if consumers buy 100 mobile phones, 55 from Samsung, the brand has 55% market share.
Share of wallet - SOW
Metric that calculates the percentage of a customer’s spending on your brand, as opposed to your competitors.
Customer reviews/ratings shared on review sites, ecommerce sites, etc. For example, Amazon’s star rating, TripAdvisor, and more.
Customer acquisition cost - CAC
How much it costs for you to persuade consumers to buy your product or service. Costs include market research, surveys, marketing, paid ads, printing, TV commercials, events, etc.
Customer lifetime value - CLV
The amount of money a customer is estimated to spend on your products and services in the future. Based on their average spend per year.
Customer retention rate
A metric which enables companies to calculate the percentage of customers they’re retaining, versus the percentage they’re losing.
An ongoing process to identify what consumers are willing to pay for your products, and to monitor what your competitors are charging. Optimize your price strategy accordingly.
Analysis decided. Metrics to measure sorted. Choose the time period that you’d like to monitor - for instance, previous two to three months/Q1, etc. Now it’s time to get your toolkit out.
You can do basic analysis to start…
- How many blog posts you published
- How many tweets per day
- How many emails sent
- How many social media ads shared
To understand better. To collect more detailed data, you’ll need benchmarking tools…
Talkwalker | Performance benchmarking
Talkwalker Analytics has several awesome features to protect your brand, analyze the social data surrounding your campaigns, measure the results. Perform competitor and consumer analytics. Mitigate reputational risk with instant and predictive alerting, unique AI-powered sentiment analysis, image and video analytics.
Talkwalker AI-powered sentiment analysis of three leading fizzy drink brands.
Google Analytics | Monitor website traffic
To monitor traffic to your website and understand your audience, Google Analytics is a free benchmarking tool to beat all others.
Google Analytics - audience intelligence in performance benchmarking.
You’ll be able to find out which devices consumers are using when visiting your site. Their touchpoints, moving around your site. Which pages they’re landing on. How long they’re spending. Which CTAs they’re responding to.
Twitter Analytics | Simple, accurate, free
Inbuilt analytics tools mean you can be confident the data is accurate.
All part of the platform, Twitter Analytics shows you how your tweets are performing - impressions, engagement, engagement rate, top tweets, replies, and more. You can choose your time period. Analyze promoted tweets. Pull out audience insights. And, export all your data.
MailChimp | Email marketing
Build your email campaigns in MailChimp, and track their success. Monitor trends, track performance, A/B test campaigns. Find valuable insights and create winning campaigns. Collect your audience data, and reach your goals faster and with huge. Promote your brand in email, social media, ads, and landing pages.
MailChimp - performance benchmarking tool.
High-performance companies look to find the processes, operations, offerings that are crucial to their business. They test their efficiency and effectiveness against best-in-class organizations.
Benchmarking your marketing processes, allows you to monitor the impact of your campaigns. This will lead to an improved marketing strategy and an increase in leads.
Drive brand success and ensure you brand survives uncertain times with Social Media Trends 2021.