What is Competitive Benchmarking?
Competitive benchmarking is the approach that compares the products, services, methods, and processes of direct competitors by using a number of metrics. Competitive benchmarking analysis is conducted to measure the performance of a company at different levels and keep it competitive. Competitor analysis done through competitive benchmarking helps in examining the strategy of competitors and compare it with their own strategy. A competitive benchmarking analysis program enables a company to compare its own products, services, business operations, and customer experience with that of its competitors. Furthermore, it helps in understanding the services that competitors offer their customers and their approach.
Benefits of Competitive Benchmarking Analysis
Benefit #1: Assists in Prioritizing Benchmarked Performance Gaps
Competitive benchmarking analysis data helps companies to target specific areas for improvement. Companies can utilize such data to identify the areas where results can be obtained quickly or such areas that can yield the biggest demonstrable benchmark impact for the business. This further helps in performance gaps to boost business outcomes.
Benefit #2: Helps in Implementing Best Practices
After prioritizing the performance gap, companies can utilize competitive benchmarking analysis data to analyze the best practices in the industry and the practices followed by their competitors. Implementing best practices can help companies become more competitive, boost sales, develop new markets, improve workforce skills, reduce waste, and improve quality. Also, it can help in responding quickly to innovations in the sector.
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Benefit #3: Helps in Gaining a Rational Perspective on Business Process Performance
Best practices identified through a competitive benchmarking analysis project helps in avoiding any assumptions. This helps in gaining a perspective in mind to avoid focusing on fallacious practices which can result in failure of the business process. Additionally, it helps to save money and time.
Benefit #4: Improves the Performance of Employees by Fostering a Competitive Culture
Competitive benchmarking analysis can help companies to set benchmarks in several areas and develop a competitive spirit in employees to improve their performance. It also helps in focusing on personal improvement and understanding the policies of the organization. Furthermore, competitive benchmarking analysis ensures the attainment of employee satisfaction, a competitive productivity-focused culture, and standardization of organizational practices.
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Benefit #5: Measures Progress and Impact of Process Changes on the Bottom Line
With the implementation of best practices derived by competitive benchmark analysis, companies can develop dashboards to gauge the impact of the operational changes accurately. Also, it helps in defining KPIs to measure the performance of business operations at every individual level. It helps in incorporating change to improve the bottom line results by gauging the past performance, current performance, and target performance.