How to do a benchmark? The simple steps to follow
How to do a benchmark? If you say to yourself “A Bench-what?”, our article will be useful to you.
A benchmark or a comparative study, we offer you a detailed analysis to know everything about good practices, uses and advantages of a good benchmark. As usual, we will focus on the concrete (yes we will spare you the SWOT model seen and reviewed).
At the end of this article, you will find the complete process that allows us to perform effective benchmarking and rigorously analyze software.
For the 4 types of existing benchmark (competitive, internal, generic and functional), the objective is to have a better view of the object of study and to make more informed decisions.
What is a benchmark? Definition and explanations
Benchmarking is a marketing and quality management technique based on comparative studies imported from the United States.
It consists of carrying out a comparative competitive analysis of the management and organizational methods of competing companies, in order to extract the best from them to apply it to one’s own organization.
It was invented by Xerox Corporation to make a major investment decision – modernizing inventory management.
The American company specializing in the manufacture of printers made the concept a sanctuary in the 1980s, after taking inspiration from another company’s model to perfect its own.
David Kearns, ex-CEO of the company, defined the benchmark as “a continuous process of evaluating products, services and methods in relation to those of competitors or the most serious partners or organizations recognized as leader or leader”.
Simply put, benchmarking is a form of comparative study.
Benchmarking amounts to comparing a process, a function, a product, etc. With the best on the market, or among players known to be the best or to have competitive advantages in a given field.
From this comparison exercise, quantified performance indicators can be drawn, making it possible to improve the quality and/or productivity of a company and your competitiveness.
Why do a benchmark?
Simple question, simple answer: to survive.
By identifying direct and indirect competitors as well as the processes that work with the competition, you equip yourself with tools to make strategic decisions and ensure that your own business remains competitive.
Observing the practices of the most serious players and analyzing the competition makes it possible to identify those that can be improved within one’s own organization, and to increase its performance.
This objective can be pursued by all decision-makers, regardless of the business model or type of company.
It is possible – and sometimes necessary – to benchmark each of the links that structure an organization. The important thing is to learn how to compare well in order to progress.
Doing this work will help you set goals to achieve, for example to improve your strategy and get or keep the leading position in your field.
The risk, for the company that does not do this, is to find itself locked into inefficient processes, or that do not satisfy either employees or customers.
Who says inefficient process, says drop in sales. And who says falling sales, says slow death. It’s simple and definitive (and extremely depressing, by the way).
Don’t want your business to die? Stay in the competition! Benchmark, analyze, put into practice what you have observed in others.
We know it: competition can be a threat of extinction as well as an incredible source of motivation… So choose to make the most of it. In two words: adapt.
Benchmark, competitive intelligence, sourcing or market research… What are the differences?
Benchmarking, sourcing, competitive intelligence and market research are often the subject of a vast confusion of genres. Let’s look at the definitions of these 4 terms to see more clearly:
Market research
It makes it possible to identify and anticipate consumer expectations of a product or service. If it is absolutely necessary during the business creation process, it can be done at other times. For example, when a decision-maker considers that it is necessary to make a readjustment of the offer.
Sourcing
Sourcing is more complete than a benchmark. The term is often used in human resources, we talk about HR sourcing and within purchasing departments, we talk about supplier sourcing. Sourcing is the search for candidates or suppliers. It is a complex process that can be roughly summarized as follows: research > benchmark > selection. The benchmark is therefore only one step in a sourcing process.
The benchmark
Although it exists in several forms, it generally consists of observing the processes implemented in other companies and making comparisons. It is from the comparison of the performance indicators of one’s own company with the performance indicators collected during this observation phase that the conclusions will be drawn. The word benchmark is often used beyond its strict meaning to refer to the simple fact of comparing.
Competitive intelligence
This last term expresses a method more or less similar to that of the benchmark. However, there is an important difference between these two concepts.
Where competitive intelligence is carried out continuously, the benchmark takes the form of a one-off competition study (to be repeated very often all the same).
You can compare the best software on many topics: online chartered accountancy, accounting software, invoicing software, electronic signature software and many others.
This rigorous analysis allows us to direct users to the software that suits them. We offer a mix of benchmarking and competitive intelligence on each of the software markets studied.
What are the 4 types of benchmarks?
There are different benchmarking methods. The following models can be selected:
- internal benchmark
- generic benchmarking
- make a competitive benchmark
- functional benchmarking
Let’s dwell a little on the aspects they focus on, what they aim to compare and the usefulness it can have:
Do an internal benchmark
This form of benchmarking is used in organizations large enough to have several departments or departments.
When these companies carry out an internal benchmark, they compare the level of efficiency of their various departments/services.
Thus, certain processes observed in one department can be applied in another if their effectiveness is recognized.
We talk about internal benchmarking, as opposed to other benchmarking methods that relate to external data (those of the competition or non-competing companies).
Make a generic benchmark
The generic benchmarking process, also called horizontal, allows you to analyze your functions or your processes through the prism of the functions/processes of other companies.
The important thing is to choose companies known to be very successful on the subject that is the subject of analysis.
To measure the performance of your own methods and tools, you will thus extend your observation to business sectors or environments different from yours.
In the case of Xerox and its inventory management problem, it was the management of orders by a company selling sporting goods by mail order that was observed.
In other words, the comparison was made not with a competitor but with a company that excelled in the way it addressed a given aspect of its organization…
But whose market and positioning had absolutely nothing to do with the manufacture and sale of printers!
Do a functional benchmark
Performing a functional benchmark means taking an interest in the functioning of a functional service (human resources, marketing, etc.) and non-operational (production, sales, logistics, etc.).
This type of benchmark can be carried out between competing and non-competing companies, as long as it makes the activity more competitive and efficient.
The important thing is that the overall organization of the company is improved.
Make a competitive benchmark
As its name suggests, the competitive benchmark, also called competitive benchmark or competitive study, consists in comparing its activity with that of its direct competitors. The objective is to better understand your competitive environment by knowing the strengths, weaknesses and key success factors of each of your competitors.
This is generally the most complicated benchmarking to achieve, given that access to information is often made difficult by the competitive environment. This is when the Tool Advisor comparator helps BtoB software.
It seems logical: if you know that you are one step ahead of your competitors, you will make sure to keep the recipe for your success secret.
It is for this reason that competitive benchmarking generally focuses on a product or service. It is often confused with competitive intelligence and market research processes.
If we dwell on these definitions, it is because depending on the benchmarking method you want to use, you will not be analyzing the same companies or the same data.
Hang-on, we explain!
http://consultant4companies.com/swot-analysis-business-potential-with-examples-and-how-to-address-the-weaknesses-threats-identified/
The steps of a good benchmark
Benchmarking requires rigor and organization. We advise you to follow the following 6 steps to ensure that you do not forget anything in your competitor analysis.
Step 1: self-analysis
Do you want to carry out a benchmark in the rules of the art? Regardless of the benchmarking model chosen, one thing is certain: you will have to do your self-criticism.
Do you know the strengths and weaknesses of your organization? This is a good thing. But before comparing yourself to others, also learn to recognize your weaknesses. This is essential.
To do this, start by asking yourself questions. Not too many, but the right questions, starting with this one: what exactly do you need to assess?
Do you need to assess the placement of your product relative to the market? Or is it rather a process/a working method whose relevance you want to validate?
You will see that answering this question is not necessarily obvious…
And yet, it is important. If you don’t ask yourself this, you risk going all over the place, but above all arriving nowhere, tearing your hair out and wasting time.
benchmarking
To avoid getting there – we are mainly worried about the strength of your mane – try to inventory your structure.
Gather the KPIs of your different departments and/or functions and try to determine those whose analysis is the most relevant.
These vary greatly depending on the issues identified. The important thing is that they constitute a system of units of value on which you can rely to analyze yourself.
Your customer retention rate is low? Look for the reasons that could explain it (effectiveness of the onboarding process, degree of personalization, relevance of the after-sales service?), and identify the corresponding KPIs.
In short, carry out a diagnosis of your business and/or the function you wish to benchmark. Then format it in a spreadsheet or chart.
This step is important because it will allow you to have a better vision of what you want to improve.
Don’t just jot down information – we see you back there, those who prefer to use the paper diary because “it’s more concrete” – on a loose sheet.
The benchmarking process is a serious operation that deserves some time and respect for a certain method.
Step 2: compare yourself yes… But to whom?
We listed several benchmarking methods earlier. Depending on the method you opt for, you will not choose the same reference companies to do your benchmark.
Let’s say – regardless of your activity – whether you want to be or maintain your place as a market leader. You will need to define a list of companies to benchmark, but be careful…
Not too long, the list! If you exceed 5 companies, you risk being overwhelmed with information, to the point that you will no longer be able to analyze it.
Similarly, you risk falling into a classic trap if you analyze too little: wanting to stupidly reproduce the processes observed within the organizations analyzed.
To do well, limit your analysis of the competition to a number between 3 and 5 – 3 elements at the minimum, and 5 at the most. Study the competition yes, disperse no.
Among the competition, choose companies that stand out for their excellent and/or innovative management.
You will achieve this by choosing different types of companies, from the multinational to the startup to the family company, but also by analyzing a different sector of activity.
In short, drawing comparisons is one thing… But doing it intelligently and efficiently is another! Needless to say, only the second option will help you progress.
Step 3: information gathering
Once you’ve figured out what to compare and which companies to compare with, you’ll need to find a way to get reliable data to do so.
And believe us, it’s not always easy… This is where things can get complicated!
On the bright side, you won’t necessarily have trouble getting hold of them for the purposes of a generic or working benchmark.
If you are benchmarking a process, a task or a functional service within a non-competing company, you can even propose to this company the establishment of a partnership.
Is she willing to collaborate? This will make your job much easier. You will have access to the most accurate information possible, and you will not waste time looking for it.
Nevertheless, it is difficult to imagine such a scenario in a competitive context. It is precisely obtaining information about your main competitors that may not be easy…
Unfortunately, you will have to settle for those to which you have free access. This will be possible via the press, professional social networks, official company publications, etc.
Customer opinions, collected through the sending of a satisfaction questionnaire or through a telephone survey, can also be of great use to you.
Ditto for marketing analysis tools, such as those intended to optimize its referencing which will allow you to audit the SEO factors of the sites or web pages of your competitors.
In order to facilitate the work of analysis, make sure to collect figures (market share, turnover, workforce, growth). It will be difficult to analyze them seriously if this is not the case.
Step 4: data analysis
In the same way that you will have classified the data relating to your own structure, classify the data collected about the benchmarked companies.
If you opted for a spreadsheet – which is recommended – for your own diagnosis, do the same for your competitors. Ditto in the case where you used a graph.
“But once I have these spreadsheets in front of me, what do I do? you rightly wonder, holding your breath to contain the suspense.
We give it to you in a thousand: we compare!
We measure the gap between data collected internally and data collected from competitors or non-competitors.
If this gap is significant, it is because there is room for improvement to be fixed and solutions to be invented. If others are doing better than you, it is in your best interest to learn from their methods.
The word “inspire” is important. Because doing a benchmark is not copying and pasting. It is to identify the strengths, season them in your own way and apply them to your organization.
Keep in mind that the benchmark is not industrial espionage: first, because it is strictly prohibited.
And secondly, because reproducing identically is useless, it is the fact of adapting processes that work to one’s own methods that is useful and virtuous.
Also note that if benchmarking is often considered as a hunt for gaps, it can also be used to demonstrate that your company is a leader on a subject.
Good news that should not prevent you from continuing your constant improvement process… The goal is not to let yourself be overwhelmed!
Step 5: Communicate the results
You will experience it: interpreting data from a benchmark can take time…
Be aware, however, that formatting and communicating them may take even more.
Why ? Because your team and your employees need clear and concrete guidelines to improve, not cross-statistics.
What interests your employees is to be equipped with the tools that will allow them to do better and achieve the objectives you set for them.
The purpose of this step is twofold:
on the one hand, transforming raw data into readable and understandable recommendations;
and on the other hand, establish quantified and achievable objectives.
Step 6: Set up and follow an action plan
You have communicated the results of your benchmark to the various people who work with you. You did it in such a way that they look both readable and constructive.
[Cheers. You want a medal?]
All you have to do is detail an action plan based on the lessons you have learned from your benchmark.
This must include quantified objectives and a precise timetable.
The more specific the objectives to be achieved and their timing, the easier it will be for your team to take ownership of them.
Once the action plan is in place and communicated, you will need to ensure that the objectives are met and the deadlines respected.
Because what will make the difference between you and the others is the speed with which you will put actions in place.
The world is constantly changing, this will not have escaped your notice. Tell yourself that the same is true for companies, which are constantly improving.
The bad news is that once you have reached the end of all these steps, you will only have to start all over again… Unfortunately, only regular benchmarks can keep you up to date.
And this idea of progress must guide your benchmarking strategy, whether the challenge is to have the best customer relationship or to arrive at the top of the results for a query in Google.
How long does a benchmark last?
From the analysis phases to the implementation of an action plan, the benchmarking process generally takes 5 to 6 months.
It is therefore a process in which we do not embark lightly… Make sure you devote the necessary time to it!
The applied benchmark
If these above steps correspond to a formalized benchmarking process, they can be followed in the same way to evaluate all kinds of data.
Overall, the benchmark is presented as a decision-making aid tool. And you are not unaware that making decisions is the number 1 task of the entrepreneur or decision-maker.
On a daily basis, you have to choose between a candidate and another when recruiting, between one supplier or another when buying raw materials.
You have to decide, and find logical and rational reasons to opt for solution A rather than solution B.
Without logic or reflection, you risk making these decisions tentatively, without really knowing why you made them… Or being able to justify them.
It is to support your decisions and argue them when necessary that the benchmark will be useful to you as an evaluation tool.
If, for example, you identify the need to equip yourself with a tool.
Whether it is a machine necessary for your production or an essential software for your marketing strategy, doing a benchmark will allow you to:
- to have a look at the different offers available on the market;
- to compare them methodically;
- to compare them with your needs and your budget;
- and thus, to ensure that the offer you choose is adapted to your project and your work habits.
The method on How to do a benchmark
As you will have understood, the benchmark at Tool Advisor is not to compare oneself to competitors but to carry out a comparative study of software by theme. This comparative study follows a strict process:
1. The selection
We select the software that we are going to study. It is not a question of studying all the software in all markets. We study the most recommended, the best known, the most used software or which meet a very specific need (free, particular profession).
It is better to study in depth 10 software on a theme than 30 superficially.
2. The facts, nothing but the facts
Tool Advisor studies features, prices and online reviews. We interview satisfied or unsatisfied users. Our teams test the tools, attend demos and scrutinize the T&Cs.
We list the promotions, commitment and more or less hidden additional costs (rather more than less).
3. Objectivity and subjectivity
Beyond the facts, we give our opinion on more complicated elements to analyze: the design, the responsiveness of the customer service or the reliability of the software. We also ask for the opinion of experts in each of the themes (agencies, freelancers, bloggers).
Finally, we send a satisfaction questionnaire to each Tool Advisor user we have advised. This feedback is very valuable and allows us to refine our competitive analyses.
4. A good analysis is an analysis that slices
We couldn’t find a better illustration. To say that all software is the best would be wrong. Saying that software is better suited to certain profiles or certain needs helps entrepreneurs and decision-makers more…
…And software because we only guide entrepreneurs and decision-makers who really correspond to software.
5. Communication of results
Our results are aggregated in comparisons such as our comparison of emailing software. Each software also has its detailed sheet.
For the most impatient among you, we have created simple questionnaires for each of the themes. They direct you to the software that corresponds to your needs and your profile at the moment T.
6. From benchmark to competitive intelligence
Our benchmark is supplemented by a monthly competitive watch for each theme studied so that our analyzes remain the most relevant. We have also compiled the lessons of the first 200 software analyzes
This article could have been called the 1001 uses of a good benchmark. You know everything ! All you have to do is get started!
Photo credit: Agnali via Pixabay
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