Benchmarking is one of those business buzzwords that can seem a bit impenetrable. Simply put, benchmarking is the process of comparing how well a particular business performed in their interactions with and against other organisations. This data can be organised to show which areas should be improved upon. That’s the broad strokes definition, though. Here are a few, more specific, reasons benchmarking is important for your company.
Knowing is Half the Battle
Keeping a step ahead of the competition is vital in business and benchmarking is a powerful tool for maintaining your momentum. It lets you perform important research on your competitors and draw conclusions about how to further assert your brand. There are a few ways to go about acquiring this information but companies like GlobalX Legal Solutions provide business and legal software which is generally one of the fastest and most reliable ways to acquire company extracts and other useful information.
Have They Thought of Something You Haven’t?
Do your partners have any important strategic lessons to teach you? Having something like a big focus on quality standards might be an area in which they have an edge on you. Maybe they’re building stronger online sales channels. You should always be thinking about the ways strategic objectives employed by other firms and businesses could improve your own.
Follow the Money
Making sure you’re allocating your resources effectively is important and benchmarking can tell you if you’re pouring money into the same areas your competitors are. The data can tell you if they’re working with greater or fewer staff than you are, which parts of their business are receiving the lion’s share of the cash flow, if they’re investing in IT equipment or if they splurged on marketing. It’s all helpful and can be a great way to point you in the right direction.
Benchmarking can help you measure things like your standard of customer service, a hotly-contested area for companies that have very similar services or products. You can use this data to work out what proportion of your sales are coming from repeat business, how long it takes to fulfil orders and even how many complaints you get. This, in turn, can tell you how good or bad your service is against your competitor’s.
Properly benchmarking your company allows you to drill down on the things that are driving your business more than anything else. Say your business provides a specific service – in that case customer care is almost definitely going to be the major business driver (see previous point). If your company is specialises in high-volume manufacturing then your focus will be on the speed of your production line compared with that of your competitors.
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There are many reasons benchmarking is an important part of running a successful business, and these are just a few of them. Information is the key ingredient in helping your business to thrive and innovate now and in the future and you should be capitalising on it – you can bet your competitors are.