In highly competitive marketplaces, benchmarking is a vital strategic instrument for the continuous improvement and development of organizational operations. This is made possible due to the fact that benchmarking uncovers opportunities to improve effectiveness and efficiency by revealing the strengths and weaknesses of the organization when compared with other internal and external factors.

When benchmarking, the idea is to focus on key areas that have the highest potential for performance improvement. In general, benchmarking data is applied in three major areas:

●       Design and Planning. Benchmarking helps to  identify goals to design or to improve upon. Companies can learn from industry best practices, set achievable goals, and design better processes.

●       Control and Compliance. An assessment will identify means to hold the gains at benchmark levels. Companies obtain data for benchmarking and continuous comparison and hold gains made.

●       Breakthrough Improvement. Benchmarking will improve performance to significantly superior levels. Companies will gain an external perspective, identify performance gaps, prioritize improvement projects, and sustain results.

With benchmarking, business leaders can arm themselves with the vital data they need to sustain a competitive advantage over their rivals and secure a larger market share. On that note, let's take a deeper dive into the three main types of benchmarking data that companies utilize.

1. Strategic Benchmarking Data

Companies use strategic benchmarking data to focus on the best-in-class not only in their industry but throughout the entire world. The major purpose of this form of benchmarking is to learn from the success of others by obtaining a better understanding of how the big winners made it to where they are and how successful companies evolved over time.

This essentially means that business leaders can look at high-performing companies' business models to understand how they differ from their own. This allows them to identify elements to implement into their current structure to boost productivity, efficiency, and revenue generation.

A good example of this would be companies implementing the Toyota Production System throughout the 1950s to 1970s, as they looked to emulate Toyota's manufacturing processes since they were the standout industry leader. Toyota's system was designed to help them manufacture the best quality cars at the lowest cost while eliminating waste. Of course, this process has since become the widely adopted "lean manufacturing" technique that most of the leading manufacturing companies in the world today implement to great success.

In general, the idea is to use strategic benchmarking data to optimize business strategies or, on a smaller scale, marketing strategies, online presence, or financial schemes. Strategic benchmarking also enables companies to identify areas in which companies compete to detect gaps that need to be bridged.

2. Digital Benchmarking Data 

As we continue to edge forward into an increasingly digital world, digital datasets are becoming more and more valuable. With the vast majority of consumer engagement and a large proportion of purchases now being made through digital channels, digital benchmarking data is as relevant and valuable as ever.

In general, digital benchmarking data includes things such as:

●       Web traffic and other website metrics (sources, bounce rates, referrals, social, etc.)

●       Keyword ownership (organic & paid search)

●       Lead conversion rates

●       Brand metrics

●       Social listening

●       Mobile app downloads and usage

●       Marketing ROI

The goal here is to assess the impact of digital strategies and overall business performance and see how they match direct competitors. It's also possible to use digital benchmarking to hone in on specific aspects of business activity, such as evaluating traffic share and audience reach within one specific market segment.

This allows companies to compare and analyze different campaigns and marketing channels to determine where to focus efforts by seeing what is standard and identifying weaknesses and opportunities with greater ease.

3. Competitive Benchmarking Data

Competitive benchmarking is a form of external benchmarking that compares processes and metrics to those of direct competitors. Rather than looking at the industry as a whole, the data derived from competitive benchmarking will typically paint a clear picture of how a company stacks up to its direct rivals.

As a result, this is one of the only real ways to truly determine the effectiveness of a company in any given market since it is possible to compare and contrast their success against companies competing for the same consumers within the same segment.

Some examples of competitive benchmarking data include:

●       Financial data (revenue, growth)

●       Sales figures (including product launches and audience buzz around them)

●       Industry-related indexes

●       Pricing policies

●       Marketing strategies

●       Research and development

With such a wide scope of potential benchmarks, companies need to first consider their core KPIs and figure out what metrics they want to measure and why. To do so, you can use a KPI management tool, helping you set goals for your metrics and track them over time. On top of this, competitive benchmarking can focus on the business as a whole or a specific department.

The beauty is that companies can be as broad or as granular as they like with their research, tracking the performance of their rivals across multiple channels and discovering their competitive advantages. Of course, private data is much harder to get a hold of, making many aspects of competitive benchmarking difficult to measure. After all, most companies can be very cagey about the data they release, especially as it relates to what drives their market share.

This means that the benchmarking company may have to rely on some proxy metrics and data services that use extrapolated indexes to piece together the missing parts of the puzzle.

Conclusion

Effective benchmarking allows companies to identify potential areas of growth within their business through the facilitation of continuous improvements and a constant strive to drive more efficiency throughout the organization.

It has become an integral part of strategic planning since it helps companies better understand their position in the market while measuring themselves against direct competitors. With the use of these three benchmarking data sets - strategic, digital, and competitive - business leaders can reach better-informed decisions and ultimately secure the all-important advantage over their rivals.