{"id":1865,"date":"2017-03-14T12:20:41","date_gmt":"2017-03-14T17:20:41","guid":{"rendered":"https:\/\/107.170.216.171\/resources\/?p=1865"},"modified":"2020-06-04T13:27:06","modified_gmt":"2020-06-04T18:27:06","slug":"what-is-competitive-benchmarking-in-business","status":"publish","type":"post","link":"https:\/\/opsdog.com\/resources\/what-is-competitive-benchmarking-in-business\/","title":{"rendered":"What is Competitive Benchmarking in Business"},"content":{"rendered":"

What is Competitive Benchmarking in Business?<\/h4>\n

No, it\u2019s not what a pigeon does to that nice place where you\u2019d wanted to sit in the park. Competitive benchmarking in business is, in fact, a process of\u2014here comes the numbing definition, we\u2019ll translate it into plain English in a second, we promise\u2014comparing the quality of an organization\u2019s policies, products, operations, processes, etc., (e.g., a company\u2019s productivity, staffing levels, financial performance, etc.) against those of other organizations in the same industry, or in the broader marketplace through the use of standardized metrics, or KPIs.<\/p>\n

A Simple One Sentence Definition of Competitive Benchmarking: Benchmarking is the Process of Comparing Your Business to Others.<\/h4>\n

In this article, we\u2019re going to explain the different types of competitive benchmarking in business, and tell you a cool, real-world story of competitive benchmarking in action. This, you undoubtedly guessed by now, is to lay the groundwork so that you can arm yourself with the ability to benchmark your company against others, and thus determine what and where improvements are called for.<\/p>\n

\"A<\/a><\/h4>\n

What the Competitive Benchmarking Process in Business Answers<\/h4>\n

Using KPIs\u2014yup, that\u2019s Key Performance Indicators (and you can learn all about them in our KPIs 101 articles<\/a> if you need to)\u2014competitive benchmarking asks, and seeks to answer, three really good questions:<\/p>\n

    \n
  1. How is my organization performing compared to similar organizations?<\/li>\n
  2. Where should I focus my improvement efforts? (That is, which departments, processes, teams, or individuals need the most help, based on the data we\u2019ve uncovered?)<\/li>\n
  3. Who should I emulate for best practices? What companies, organizations, or individuals are setting the bar highest\u2014and what are they doing that I\u2019m not\u2026 yet could be?<\/li>\n<\/ol>\n

    Clearly, these are real-world concerns. Your business operates in a competitive field, and you can\u2019t see how it stacks up against others in a vacuum. This is why competitive benchmarking is such an important and trusted way to improve.<\/p>\n

    It gets better. Competitive benchmarking can be performed at different levels within your organization. It can be company-wide, regional, departmental, process-based, and even focused right down to the individual-employee level. If you can assign a KPI to it, you can benchmark that KPI against those of your peers. Pretty powerful.<\/p>\n

    \"finance<\/a><\/h4>\n

    Types of Competitive Benchmarking and Why the Business Operations Comparison Process Matters<\/h4>\n

    In true OpsDog fashion, we\u2019re going to not only define each type of competitive benchmarking in business, and give you example metrics thereof, but we\u2019ll also tell you, in plain English, why each type of benchmarking in business would matter to you. Because it\u2019s not enough that you simply understand<\/em> these concepts. It really starts to pay off when you make them work for you.<\/p>\n

    Below are 5 examples of competitive benchmarking used in business today:<\/p>\n

      \n
    1. Industry or market benchmarking analysis. This type of competitive benchmarking seeks to assess the overall positioning of a company within a certain market or industry. It\u2019s also known as \u201cstrategic benchmarking.\u201dCompetitive Benchmark Examples: Market Share, Market Penetration, Forecasted Growth Rate (Overall).
      \nIn English\/Why your business would care: \u201cHow come we only own 10 percent of the market in Ohio? We\u2019re based<\/em> in Ohio!\u201d<\/li>\n
    2. Financial benchmarking in business. This flavor of competitive benchmarking compares the fiscal performance and well-being of a company to that of similar organizations.Competitive Benchmark Examples: Total Revenue, Total Expense, Profit Margin, Earnings per Share (EPS), Quick Ratio, Dividend Payout Ratio, Market Cap.
      \nIn English\/Why your business would care: \u201cLook, we\u2019re bringing in more revenue than our peers\u2026 but it\u2019s offset by our higher expenses! Get me an antacid!\u201d<\/li>\n
    3. Product benchmarking analysis. Seeks to compare the performance and\/or quality of similar products or services offered by different organizations.Competitive Benchmark Examples: Product Unit Cost, Profit per Product Sold, Product Defect Rate, Forecasted Growth Rate (By Product), Number of Product Recalls, Net Promoter Score (NPS).
      \nIn English\/Why your business would care: \u201cThat new QA program is paying off! Our products have the lowest defect rate in the industry! I know some people who are gonna get some nice holiday bonuses!\u201d<\/li>\n
    4. Operational benchmarking in business. Compares the day-to-day internal business operations of a company to those of other similar organizations.Competitive Benchmark Examples: Vendor Invoice Error Rate, Cost per Hire, Mean Time to Repair, Average Handle Time (AHT).
      \nIn English\/Why your business would care: \u201cMost call centers in our industry are resolving these issues in half the time that we are! What are they doing that we\u2019re not?\u201d<\/li>\n
    5. Individual benchmarking analysis. This type of competitive benchmarking seeks to compare the performance of individual employees to that of other, similar employees, whether internal or external.Competitive Benchmark Examples: Sales Quota Attainment, Calls Handed, Number of New Customers Acquired, Lead-to-Close Rate.
      \nIn English\/Why your business would care: \u201cWhat the heck does Larry eat for lunch? His numbers blow away everyone else\u2019s in the department!\u201d<\/li>\n<\/ol>\n

      Competitive Benchmarking and How it is Connected to Other Internal Business Analysis<\/h4>\n

      Just as your business doesn\u2019t operate in a vacuum\u2014hence the need for competitive benchmarking\u2014the KPIs and benchmarking analysis which you employ shouldn\u2019t be considered in isolation. They\u2019re often downright symbiotic, and you can take advantage of this inherent interdependency by utilizing them in concert to supercharge business operations performance.<\/p>\n

      An example is in order:<\/p>\n