One of the steps that you should take advantage of when you want to grow your brand is competitive benchmarking. Benchmarking competitors is an integral part of growing your business nowadays. Without observing how the competitors are performing, you and your team will find it difficult to determine the detailed go-to-market strategy for your brand.
Here’s a brief overview of competitive benchmarking in business and its best practices that you can apply.
Competitive Benchmarking: Your Way to Outperform the Competition
Competitive benchmarking is a process in which a business entity compares its performance with competitors. Usually, the business entity will identify other businesses in similar industries, analyze their strengths and weaknesses, along with evaluating market share.
Competitive benchmarking is very useful in determining the right market strategy. It helps you and your team to know where your brand stands in the market and how to deal with competitors.
In conducting competitive benchmarking, you must prepare the appropriate key performance indicators and benchmarking metrics to compare every vital aspect of your brand with other brands. Any data and insights from this benchmarking process will later be utilized to determine the right marketing strategy.
Benefits of Competitive Benchmarking
Growing your business is already complex, even more so if you are not utilizing competitive benchmarking. The essence of competitive benchmarking is to stay relevant and informed with every market practice. That way, your brand can avoid being left behind and losing customers due to a lack of innovation.
The following paragraphs will explain some of the advantages of using competitive benchmarking.
- Identify Gaps in Your Business Strategies – Competitive benchmarking allows your brand to identify strategic gaps and update your business model to stay relevant in the market niche.
- Track Your Competitors – Tracking your competitors makes you more aware of their achievements and the latest business trends. Never let your brand fall behind them.
- Get an Overview of Your Organization – If you want to know more about your brand, competition benchmarking is a good tool to use alongside external observation.
- Improve the Company Culture – Comparing your business with other businesses can help you identify the culture in it that needs changes, such as benefits, salaries, events, conferences, and so on. Never let your team feel dissatisfied and switch to another brand.
- Improve Marketing Communications – Competitive benchmarking is also useful for comparing customer feedback and your brand’s performance on social media, as well as finding out which social media management techniques are most appropriate for your brand.
- Increase Revenue – Competitive benchmarking will greatly impact the sales and profits of your brand.
3 Types of Competitive Benchmarking
1. SWOT Analysis
SWOT Analysis is one of the most commonly used competitive benchmarking techniques. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats.
2. Customer Journey Map
You and your team can also use the Customer Journey Map for competitive benchmarking. This technique analyzes each customer’s journey from one touchpoint to another within your brand. This technique lets you map all existing customer channels and determine customer personas. You can analyze each touchpoint reached by customers by considering their personas.
3. Growth-Share Matrix
Growth-Share Matrix is a way of competitive benchmarking that divides your brand’s products into categories based on market growth and market share.
- Stars – Your products with high market growth, high market share.
- Question Marks – Your products with high market growth, low market share.
- Cash Cows – Your products with low market growth, high market share.
- Pets – Your products with low market growth, low market share.
Metrics to Watch in Competitive Benchmarking
There are several crucial metrics in competitive benchmarking that you and your team should be aware of, including brand awareness, traffic, brand sentiment, social media reach, Net Promoter Score (NPS), Customer Satisfaction Score (CSAT), and Average Revenue Per User (ARPU).
1. Brand Awareness
Brand awareness measures how well known your brand is compared to competitors. The higher your brand awareness, the more potential customers will be attracted.
2. Traffic
The traffic referred to here is the number of visitors to the website or social media profiles of your business. The greater the amount of traffic, the more likely people are to be interested in your brand.
3. Brand Sentiment
Brand sentiment refers to the positive or negative perception that customers have towards your brand. By maintaining a positive sentiment, you can foster customer loyalty and advocacy.
4. Social Media Reach
This metric refers to how many people see your brand’s social media content. The more people who see it, the more potential exposure your brand can get.
5. Net Promoter Score (NPS)
Net Promoter Score (NPS) is a customer loyalty metric that measures how likely customers are to recommend your brand to other people. A high NPS for your brand suggests that a large portion of your target audience is pleased and loyal to your product.
6. Customer Satisfaction Score (CSAT)
Customer Satisfaction Score (CSAT) is very similar to Net Promoter Score (NPS). However, CSAT focuses more on measuring satisfaction.
7. Average Revenue Per User (ARPU)
Average Revenue Per User (ARPU) is the amount of revenue divided by the number of active customers in a certain period. ARPU can be used as a benchmark during competitive benchmarking.
Best Practices in Competitive Benchmarking
Competitive benchmarking is very appropriate if it is utilized to help you determine which market strategy is best suited to rival competitors. However, you and your team must understand that the key to benchmarking is to stay modest and objective. This objective attitude is needed, so that you and your team will not underestimate competitors’ performance and not overestimate your brand’s success.
Competitive benchmarking is a continuous activity, it needs regular updates to stay on track. Also consider some of the metrics and key performance indicators that will be used. Are they in line with your target? Are they measurable?
By ensuring that all the necessary preparations have been made for the competitive benchmarking process, you and your team can start on a journey to compare your brand with competitor brands. This will help you identify strategic gaps that will set you apart in the market.