Competitive Benchmarking Analysis has always proved to be a very effective business strategy to build a position in the market. It basically involves the process of evaluating a company’s performance against its competitor in the market. You can easily do a thorough research on the comparison between your company’s growth with that of your competitor’s.
Competitive benchmarking analysis comes into play when you use predetermined metrics to compare between your company’s performance to that of your competitor’s. You can think of these metrics as certain business criteria and indicators, scores of which give a clear which area calls for improvement. Based on that you can devise a well-articulated plan, be it improving customer satisfaction, operational efficiency, or product quality. Making use of the plan, you can look for better resource allocation, better team management, and better investment strategies to overcome the gap in the performance of your company. This will eventually set your company apart from your competitors in the market.
While you might get confused between the use of metrics and Key Performance Indicators(KPIs) in competitive benchmarking analysis, both differ slightly. Key Performance Indicators are a subset of metrics, so to say not all metrics are KPIs. You can very well get data points and measurements of various activities in your company from the metrics you choose for evaluation. Metrics will fetch you with quantifiable data, measuring the status of various processes in your company. It can be market share, customer satisfaction, product quality, employee productivity, operational efficiency, total revenue, website traffic, total regional sales, employee attendance rate, etc.
Top 5 Competitive Benchmarking Metrics for Business Success
In competitive benchmarking analysis, metrics can be useful when you are seeking a granular understanding of the various operations in your company. For example: You wish to track the daily production rate in your company, metrics measurement can come to your rescue. Apart from providing a broader insight into different areas of your business, metrics ensure a strong operational monitoring by providing you with raw data.
Needless to say that HS Brands Asia serves you with one of the best competitive benchmarking services in India. Having worked with numerous clients and companies worldwide, HS Brands Asia has helped them reach the pinnacle of success with its strategy and consistent service.
While there can be way too many Competitive Benchmarking Metrics to choose for tracking the performance of your business, the ones that I’ve selected below for you comes under the top 5 ones. Without any further ado, let’s explore of the five metrics one by one, as follows-
Market Share
Many of the top competitive benchmarking services in India have considered market share as one of the best metrics to benchmark. It measures the percentage of total shares a company controls in the industry in comparison to its competitors in the market.
Not only will it give you ideas of where the improvement needs to be done, it’s also a clear indicator of your company’s relative success in capturing market’s demand. Higher the market share of your company, it will indicate a higher customer satisfaction, a stronger brand presence, and more effective sales in comparison to your competitors.
Your company’s increasing market share can very well be an indicator of successful strategies, referring to potential growth. If your company is capable of capturing a higher portion of the market, it will indicate a higher profitability.
Industries where you will see that a few large players are dominating, your company’s market share will give you strong insights into its competitive positioning in the market.
Customer Satisfaction (Net Promoter Score)
Do you ever recommend a company, service or product to others? Probably yes, when you can stop talking about how satisfied you are with the service or product, right?
You guessed it right! Net Promoter Score is the measure of customer satisfaction metric. An item on an NPS would typically look like- “On a scale of 0-10, how likely would you recommend this product to your friends and family members?”
Customers are thereafter classified into 3 groups: Promoters (9-10), Passives (7-8), and Detractors (0-6). A strong customer satisfaction directly translates into generating a positive word of mouth, thus helping in retaining old customers and bringing in newer ones.
If you consider benchmarking NPS in your competitive benchmarking analysis against your competitor, it will give you clear insights into your company’s relationship with your customers. Apart from that, you will get to know how a customer sees your competitor. A high customer satisfaction is indicative of organic growth through referrals and snowballing techniques.
Product Quality and Innovation
You will always seek products with the best quality and one that would be good at solving your problems. This is possible only when companies generate products of good quality and innovative ideas to solve their customer’s problems. A good quality product also ensures a lower return rate and greater durability. This eventually promises a cost effectiveness and a superior market positioning. By catering to your customers with good quality products and innovative services, you are ensuring a higher customer retention rate as well as your brand reputation.
Operational Efficiency
Your business’s operational efficiency indicates how well the inputs i.e. the capital, labor and resources are converted into outputs in the form of products and services. It must show how well the process is executed with a minimal loss (in terms of money, time, and resources).
The goal of operational efficiency is to minimize the cost of production and maximize the output, additionally maintaining customer satisfaction and the product quality. Benchmarking this metric will help you recognise cost-saving against your competitors. With a reduction in waste and cost and a proper optimization of resources, you can ensure a better profit margin by benchmarking this metric. Choosing this metric will also help you analyze your company’s scalability in comparison to that of your competitor’s. Scalability increases with an increase in operational efficiency.
Employee Productivity
How well and more productive a company’s workforce is will be directly reflected in the growth achieved. This growth can be seen through lowered production cost, greater customer satisfaction, improved market competitiveness and higher profitability.
Employee productivity in competitive benchmarking analysis shows how well your employees will convert inputs into valuable outputs. More the employee productivity, more will be the capability of the workforce to handle larger workloads. This will directly translate into cost effectiveness. Benchmarking this metric will show if all these aspects are in place with that of your market demand. You can further optimize your workforce based on the gaps (if found).
More the employees are productive, the more they will have scope for innovation which again links to one of the metrics mentioned above. This will ensure a strong competitive edge in the market.
Conclusion
Finally we can conclude that metrics are the building blocks of competitive benchmarking analysis which lays a quantifiable base for the evaluation. Starting from performance management, identifying performance gaps, tracking progress, enhancing competitiveness, to driving strategic decisions- metrics have it all covered.
HS Brands Asia has been serving all these goals as one of the leading competitive benchmarking services in India.
