You can learn a lot from your competition, no matter how similar, or different, their businesses are to yours. Industry benchmarking is incredibly important for measuring where you stand and for getting ideas on how to improve your processes, products, service, and more.
Let’s explore why industry benchmarking is so vital, the different types of benchmarking you can do, and how customer feedback can help.
Industry benchmarking is when you compare your business processes and performance metrics to other businesses within your space, typically your competitors. A benchmark can be any reference point that can be compared, such as customer satisfaction, product quality or operational costs.
There are lots of different types of benchmarking your business can do, depending on what you want to achieve, but we’ll go into more details about that later.
Understanding how you’re performing against your competitors will help you see where you are in the market and what you need to focus on to start outperforming them. If you’re a smaller business or just starting out, you can even use benchmarking to guide your financial forecasting and budgeting, as you can see what the industry standards are, taking away the need for any guesswork.
Industry benchmarking also allows you to get ideas and inspiration from your competitors. What are they doing differently? Is it working or failing? How can you do what they do, but better? These are all questions that benchmarking can help you answer.
So, if you want your business to grow and improve, or you simply want to see where you stand in relation to your competitors, industry benchmarking should be a key part of your growth strategy.
Key performance indicators, or KPIs, are used to track your business’s performance in relation to a specific goal. For example, your goal may be to increase sales revenue by 10% this year or reduce customer service responses rates by 40%. KPIs tell you whether you’re on track to reach that goal, or if you need to work harder and pick up the pace.
Put simply, KPIs help you compare the progress you’re making to a specific goal, while industry benchmarking compares your performance against your competitors. Both allow you to identify ways you can improve your business’s performance.
As we’ve already mentioned, there are lots of ways you can benchmark your business against others – it all depends on what you want to track and improve. Let’s take a look at some of the most common types of industry benchmarking.
Are your processes as efficient, fast and effective as they could be? Process benchmarking allows you to better understand your processes, by comparing them to how the top players in your industry operate. Optimising and improving your processes is vital for keeping your business running smoothly and at maximum efficiency.
To strengthen your strategies, approaches and business model, you need to see how your competitors differ. What strategies do they employ that work and result in effective teams? Which ones don’t? Understanding the different strategies that are out there, and their strengths and weaknesses, can help improve your own planning and determine your business’ priorities.
Performance benchmarking allows you to measure the performance outcomes that are most important to you hitting your objectives, such as customer satisfaction or revenue growth. These outcomes are usually measured by running in-depth surveys or interviews. This type of benchmarking is excellent for helping you to identify any performance gaps, as well as seeing how much you’re succeeding in comparison to your competitors.
If you want to make sure you remain competitive on price, or you’re a new business and aren’t sure how you should be pricing your products or services, price benchmarking is vital. It doesn’t just involve looking at the pricing of competitors’ products or service, it also compares quality, so you’re not simply looking for who’s the cheapest, but who offers the best quality for the best price. This allows you to price your products and services fairly, as well as gain knowledge that will help you take on competitors.
Product benchmarking compares your products with your competitors’, helping you to discover ways to make changes and improvements, and identify your market position. Through the use of product testing and consumer research, you can clearly see your product’s strengths and weaknesses, allowing you to compare them with what else is on the market.
Now you know what types of benchmarking are out there, it’s time to choose what you want to benchmark and put the wheels in motion.
Are you benchmarking a product, service or process? Think about your weakest areas or those you want to focus on – for example, if your amazing customer service is your unique selling point, you may want to discover if your team really is the best! There are always improvements that can be made.
What’s your measurement for success? How are you going to compare whatever you’re benchmarking to the competition? Price benchmarking, for example, is fairly straightforward, while product benchmarking may involve you heavily researching you competitor’s products and creating a comparison list between your (and their) product’s features, strengths and weaknesses.
You probably don’t want to benchmark yourself against every single one of your competitors. Pick your biggest competitors or the ones that you think are the strongest in the field you’re trying to benchmark against (e.g. the ones that are known for having the best customer service or the largest customer base).
Benchmarking can be internal as well as external, for example, you could benchmark one of your processes against another, or one team against another.
The data you need to collect will depend on the type of benchmarking you choose to do; it could vary from review and survey responses, to live chat response times and Google rankings. The data you need about your business should be easy to obtain, but what about your competitor’s? You’ll need to do your research, which could include looking at their website, recent press releases, any reports they’ve published or been featured in, and using various competitor analysis tools, such as SEMrush or SimilarWeb.
What did you discover? It’s time to decide what changes you’re going to make and how you’re going to measure the success of these changes. You could run a customer survey every six months or regularly measure your Net Promoter Score, for example. However you choose to act on your findings, make sure you do, so your benchmarking efforts don’t go to waste.
"As the world’s most trusted independent ratings and reviews platform, Feefo transparently and independently verifies our customer reviews in real time. Enabling us to track our 'world class' Net Promoter Score of 94."Paul Parkinson, Managing Director
Customer feedback is an excellent benchmarking tool. Not only can you compare review scores against your competition, you can also get detailed thoughts and opinions from your customers, allowing you to learn more about your business and your competition. Let’s take a look at some of the tools that we offer that can help you with industry benchmarking.
If you’re planning to do product or price benchmarking, collecting product reviews is vital. By understanding how your customers rate your products and why, you can see where they sit in the market compared to similar products. When collecting product reviews, you could even use Feefo’s Product Attributes feature to ask customers to rate things like ‘quality’, allowing you to benchmark prices against other products of a similar quality.
Surveys are private and can be distributed to anyone, not just current customers. This means you can ask anyone about anything, including your competition. Say you want to collect some in-depth feedback on your latest products and see how they compare to similar products on the market. You can ask people what products they’ve bought before from a multiple choice list, then get more details about what they thought of each product.
Surveys are incredibly flexible and can be used collect all sorts of information from customers, prospects and employees. They should therefore play a key role in your benchmarking efforts.
Knowing how loyal your customers are can play an important role in performance benchmarking and Net Promoter Score, also known as NPS, is a metric that’s widely used across some of the biggest companies in the world to track exactly that.
Understanding your NPS is easy; simply add one question to your surveys or feedback forms: ‘How likely are you to recommend [business name] to a friend, relative or colleague?’. Customers answer on a scale of 0 – 10, which puts them into one of three groups: promoters, passives and detractors. The higher your NPS score, the more loyal your customers are! By digging even deeper into your reviews and surveys, you can see what promoters love about your business and what detractors would change, allowing you to see your strengths and weaknesses and make improvements.
Customer Effort Score (CES) measures how easy or difficult it is for a customer to complete a task, such as making a purchase from your website or returning an item. This can come in handy when you’re process benchmarking, as it allows you to measure how easy some processes are compared to others.
CES questions can be added to any Feefo Survey, and customers answer on a simple 1 – 5 scale with 1 being ‘Very difficult’ to 5 being ‘Very easy’. You can add additional questions to your survey to discover why customers struggled with a specific task, allowing you to see which processes people are struggling with most and make meaningful improvements.
Another metric you can measure through Feefo Surveys is Customer Satisfaction Score (CSAT). This allows you to see how happy your customers are with a particular product, service, process – whatever you want to benchmark! For example, you may want to know how satisfied customers are with the level of support new customers received and benchmark this against the support existing customers receive. You may even want to survey customers who have just moved from a competitor brand to yours.
Trawling through your feedback to manually identify pros and cons about your products, services and processes can be labour intensive, especially if you collect thousands of reviews or surveys. Solutions like Feefo’s Performance Profiling use artificial intelligence technology to automatically analyse all the feedback you receive and identify common themes and the emotion surrounding them.
This makes it so much easier for you to see what people love about your business and what needs to be improved, and can be used to benchmark products, services or processes against one another.
If you want to be the best at what you do, benchmarking is hugely important, but you need to have the right data to get started. Speak to one of our consultants today and find out how Feefo can give you the insight you need.