Want to create a recognizable brand that competes with the biggest players in the market? Have the courage to sit down and play by their rules. Observe and learn from the best, then refine your principles and implement them in your own organization. This is what benchmarking is all about. Why is it so important in marketing and how can it positively impact your company's growth? Find out.
The pandemic forced consumers to change their shopping habits. After all, closed shopping malls didn't mean a disappearance of needs. However, the way they satisfied them changed – instead of throwing products into shopping carts in stores, consumers were forced to embrace virtual ones. They've grown so fond of them that they're still eager to shop in the post-pandemic world, and there's no indication this trend will change anytime soon. For entrepreneurs developing their businesses online, this presents a significant challenge – competition is increasingly fierce, and e-commerce is constantly growing.
According to the data presented in the report "Prospects for the development of the e-commerce market in Poland 2018-2027", the value of the e-commerce market in 2027 may amount to PLN 187 billion, with almost double-digit growth year on year.
How can you stay ahead of the competition and increase sales in these challenging circumstances, on the cusp of difficult market times?
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One of many solutions is benchmarking. Let's take a closer look.
Benchmark – what is it?
To quote Mario Puzo, "Keep your friends close and your enemies closer." This principle applies both in your personal and professional life. All benchmarking is based on it.
It's nothing more than researching the market environment, taking a closer look at the competition and the brands you want to compete with. A benchmark is a standard, a point of reference that guides your actions and indicates the right path to business success. It provides invaluable support in optimizing processes and improving the overall health of your company. Benchmarking can impact:
- brand image.
- the appearance of your e-commerce.
- online store positioning.
- loyalty programs.
- marketing activities.
- promotional and marketing campaigns.
- method of presenting and describing products.
- implementing new technologies and payment methods.
- selection of assortment on virtual shelves.
- internal and external communication in your company.
- responding to crises and changes.
- supply chain, warehousing and shipping.
Depending on what goal you want to achieve, you can examine a specific segment of the business reality and compare how you compare to your opponents.
Benchmarking – examples
For the purposes of this post, let's assume you run an online shoe store. Your offerings are quite broad and targeted at a specific audience – you offer high-quality hiking footwear. You've been in business for a few years, your budget isn't a disaster, but you feel the potential is much greater. You know you'd start your business differently today, so you're planning a rebrand. You want your e-commerce store to gain a sleek, modern feel. Where to start? By visiting your competitors' online stores!
Pay attention to the layout of tabs, the way you communicate with your audience, how you present your products, the colors, and the logo. Price will also be important, and it still matters. It may not be the most important factor, but in times of impending economic crisis, when a growing number of Poles are looking to save money, it can be a crucial factor.
Once you've considered your competitors' offerings, it's time to translate them into your own strategy. Know who's doing what well. Draw inspiration, adapt it to your brand's identity, and grow.
During the comparative analysis, you may discover areas that require refinement and optimization that you hadn't previously considered in your repair process. How is your shipping performing? Are you utilizing cross-selling and upselling? Perhaps they, too, could use a breath of fresh air.
Benchmarking – types of benchmarking
Benchmarking is the process of comparing the performance, quality, or other key performance indicators of a company with other organizations in the industry or with industry standards. There are different types of benchmarking, each aimed at achieving specific goals. Depending on the corrective actions you intend to take, you can use:
Strategic benchmarking
Based on a comparative analysis of leaders, even those outside the industry , and their approach to business, strategic benchmarking involves comparing an organization's entire strategy with market best practices. The goal is to identify best practices and management methods that can be implemented within the company to improve business results.
Process benchmarking
It examines the implementation and execution of specific processes by companies we want to compete with. Process benchmarking involves comparing an organization's processes with industry best practices or industry standards. The goal is to identify ideal process practices and methods that can be implemented within the organization to improve efficiency and achieve better results.
Product benchmarking
Comparing the way products are presented by competitors. Product benchmarking analyzes various aspects of a product or service, such as quality, functionality, performance, durability, design, price, customer service, etc. The goal of this benchmarking is to identify the strengths and weaknesses of a company's products in order to improve their quality and competitiveness.
Internal benchmarking
This type of benchmarking involves comparing the performance of different departments, processes, or products within the same organization. Internal benchmarking aims to identify best practices and internal methods and leverage them across the organization to improve performance and achieve better results.
Competitive benchmarking
Allowing for in-depth analysis of companies offering the same products or services as ours . Competitive benchmarking helps improve competitiveness and achieve better results.
Organizational benchmarking
It provides a solid foundation for building a company and its processes. It allows you to determine what can be improved within the organization itself. If you want to improve the market, start with yourself 😉
Functional benchmarking
Referring to the implementation of specific functions within an organization. You can compare the length of the supply chain, corporate responsibility efforts, or environmental performance. Functional benchmarking involves comparing the performance of a specific function or process across organizations to identify best practices within the industry.
Benchmarking and building a competitive advantage
The use of benchmarking can contribute to building a competitive advantage in an organization, provided that the implementation is carried out in a well-thought-out, flexible manner and adapted to the specific nature of the business.
When is it worth referring to best practices used in our industry?
Here are some examples of when best practice analysis can make a difference:
- When introducing new products or services to the market,
- When restructuring a company,
- With improved quality and efficiency,
- When searching for the best suppliers or partners,
- While reducing costs.
Benchmarking - where to start?
If you are just planning the process, here are a good start:
- Określenie celów — Clarify what exactly you want to compare and what you're aiming for. This could be a comparison of financial results, operational efficiency, or product or service quality,
- Selection of benchmarks — Select companies or organizations with which we want to compare results and practices. These may be competitors in the industry or market segment, top players, or industry leaders,
- Analysis of results — after collecting the data, we should carefully analyze the results and compare them with our goals,
- Identifying best practices — analyze the practices of top companies and organizations to identify those that we can apply in our own company.
Co dalej?
Implementation of changes - based on the results of the analysis and identification of best practices, changes should be introduced in the company to achieve the assumed goals.
Benchmark Summary
Benchmarking is a way to maintain momentum and continually improve the company's performance. Comparing ourselves to the best allows us to refine our offerings, customer service, and the broader operation of the company.
Remember to draw inspiration, not copy. This kills creativity and makes your offerings indistinguishable from those of the players you're trying to enter the business ring with.
To know what your benchmark is, you first need to create a list of competitors or leaders outside your industry whose level you want to match . Then, you need to start separating the individual pieces of this business puzzle and putting them under a magnifying glass.
The process is continuous – the competition is constantly working to raise its standards, so you will always find something that (for inspiration!) you can take on board and improve.
Benchmark FAQs
A benchmark is a point of reference, standard or standard against which performance, quality or efficiency is measured and assessed.
Benchmarking is the continuous, systematic process of comparing your own practices, processes, products or services with market leaders or closest competitors in order to implement improvements in your own company.
Depending on who and what you compare it with, the following stand out:
- Internal benchmarking: Comparing processes and results between different departments or divisions within the same organization.
- Competitive benchmarking: Analyzing direct competitors in the same industry.
- Functional benchmarking: Comparing specific functions (e.g., logistics, customer service) with companies in other industries that are considered exemplary in that area.
- Generic (process) benchmarking: Analysis of universal business processes among market leaders, regardless of the sector in which they operate.
Benchmarking primarily allows you to identify bottlenecks within your company and identify areas requiring optimization. It helps reduce costs, improve service quality, motivate your team to achieve higher standards, and minimizes the risk of making mistakes by learning from the experiences of others.
This process is usually carried out in several steps:
- Planning: Selecting areas for improvement and identifying criteria and companies to compare.
- Data collection: Gathering information about your own processes and researching the practices of competitors or market leaders.
- Analysis: Comparing collected data, finding performance gaps and determining their causes.
- Implementation: Developing an action plan, adapting best practices to your own company and monitoring the results.
No. Benchmarking isn't mindless copying or plagiarism of solutions. It's a process of creative adaptation—understanding why a given solution works for a leader and then adapting that knowledge to the unique conditions, organizational culture, and technical capabilities of your own company.
In digital marketing, benchmarks are average market standards for specific metrics (KPIs). These might include the average click-through rate (CTR) for Google Ads ads in a given industry, the average cost per lead (CPA), or the average conversion rate in e-commerce. Comparing your results to these benchmarks allows you to assess whether your advertising campaigns are performing effectively.
Summary
The above article covers the following topics:
- A benchmark is a standard for analyzing competition, influencing the image, appearance of e-commerce, positioning, marketing, product presentation and communication of a company.
- Benchmarking involves analyzing competitive e-shops and adapting the best solutions to your own strategy.
- There are several types of benchmarking: strategic, process, product, internal, competitive, organizational and functional.
- Benchmarking builds competitive advantage when introducing products, restructuring, improving quality, finding partners and reducing costs.
- Implementation requires, among other things, defining goals, selecting companies for comparison, analyzing results, and identifying best practices.
- Benchmarking is a continuous process that draws inspiration from the best players in order to improve the company's offering and operations.
