Do you know how well your business stacks up against its competitors? In today’s fast-paced marketplace, many businesses are looking to gain an edge any way they can. One essential way to achieve this goal is through benchmarking.
Benchmarking is when you compare a certain element of your business with that of an industry competitor. Whether you’re aiming to compare an internal or external work function or a specific process or performance metric, benchmarking is an insightful practice that businesses should regularly employ to help differentiate themselves in the market.
The Business Advantages of Benchmarking
Following are a few ways benchmarking can benefit your business and refine your overall strategy.
Boost Efficiencies and Results
Regularly benchmarking your work processes can help you identify where manual or mundane tasks may be holding back progress. You can then eliminate or consolidate these tasks as needed to streamline your workflows and drive increased productivity. On top of that, cutting out mundane tasks may also lead to reduced overhead costs, as you’re trimming down your work processes. The more time and cost savings you can generate as a business, the better.
Help You Understand the “Ins and Outs” of Your Competition
Knowing exactly where your competition excels and where they have gaps can help inform your business’s strategy and highlight opportunities for getting ahead. For example, if both you and a certain competitor offer a similar service, benchmarking can help you see whether there’s anything missing in your competition’s service offering that you could include in yours to stand out more in the market.
Enhance Your Products and Services
Benchmarking the features of your product or the reception of your services can help you determine whether there are any gaps with customer expectations or, as mentioned above, your competitors. You can then target those gaps to keep your customer base happy with a service offering that meets their changing needs. Continuing to fine-tune your product and/or service and deliver what your clients want could help lead to increased sales and a more loyal consumer base.
Promote Continuous Team Improvements
Benchmarking the output of internal teams allows you to see which ones are performing better than others. To give you a baseline for comparison, determine what specific key performance indicators (KPIs) you want to track among teams. Evaluating and comparing these metrics throughout the year can help your teams continually refine their processes. Based on the KPI results, if you have a team that’s consistently crushing it, you can model other teams off their success to drive further results.
Further Your Goals
Achieving your business goals is a wonderful thing, but if you set the same goals each year, you may be limiting your business’s potential. Benchmarking your business goals gives you clarity on how well you hit your goals compared to the year prior and can help you build off your goals instead of pressing the repeat button.
Your Data Matters
Benchmarking can lead to many innovative breakthroughs for your business, but effectively doing so requires accessible and accurate data. If you don’t trust your business’s data or have had issues pulling the figures you need in real time, you’re not alone. Managing and interpreting data continues to be a common challenge for businesses, as many rely on various technologies to perform their operations — all with separate data sources to navigate. Before benchmarking certain analytics at your business, be sure your systems are equipped to report on the data you’re seeking and that you have the resources and expertise you need to turn insights into action.
Not sure of next steps? Creative Planning Business Services can help you get started. We offer benchmarking analyses as part of our outsourced accounting services to help our clients gain clarity on their financials and stand out among competitors. Schedule a meeting with us to learn more about our services and discover what we can do to help innovate your financial processes.
