Why Competitive Benchmarking Is Essential for E-Commerce Success

Competitive benchmarking is one of the best ways to get insights into your direct competitors' performance and business strategies. Learn more about it here.
By 

Kelli Harris

 on July 31, 2022. 
Reviewed by 

Joel Taylor

Competitive benchmarking is one of the best ways to get insights into your direct competitors' performance and business strategies. By comparing yourself against them, you'll gain valuable insight into their strengths and weaknesses, allowing you to improve your business strategy and ultimately succeed.

Competitive benchmarking is divided into three categories:

  1. Strategic benchmarking Analyzes and compares business models and strategies against your competitors.
  2. Process benchmarking Compares your business processes to your competitors.
  3. Performance benchmarking Compares your business's performance across a set of metrics such as social media engagement, brand recognition, revenue, and more.

Benefits of Competitive Benchmarking for E-Commerce

There are many reasons why you might choose to perform competitive benchmarking. Perhaps you're looking to increase sales, reduce costs, or simply learn more about your industry. Whatever your reason, benchmarking competitor analysis can provide you with invaluable insights into your competitors' success.

Here are the key competitive benchmarking benefits:

  • Identify areas of strength and weakness, and recognize opportunities
  • Gain a deeper understanding of your market and industry trends
  • Learn how to improve your business strategy
  • Improve customer satisfaction by identifying an accurate retention rate benchmark
  • Reduce operational costs and increase profitability
  • Understand your competitors' business model
  • Create a measurable plan to achieve your attainable goals

Best Practice for Effective Competitive Benchmarking

To perform successful competitive benchmarking, you need to follow these basic steps:

Choose Your KPIs

Firstly, decide which key performance indicators (KPIs) you want to monitor, such as inventory turnover, client retention, and sales cycle duration. A competitive benchmarking analysis should focus on KPIs your sales team already measures.

Identify Your Competitors

Begin by selecting competitors who are similar to your business in the criteria you are analyzing, like scale, geography, service and product offering, or market. Compare your business to immediate competitors, best-in-class competitors, and industry disruptors.

Define What to Measure

Depending on your goals, you will measure different metrics. The most important thing to remember about measuring your KPIs is that you are looking for trends that will give an accurate picture of your performance.

Track Your Performance

If you want to track specific goals, such as increasing sales, or improving conversions, it is wise to create separate reports.

Remember to revisit your strategy periodically. Are you still focused on the right thing? Is your plan working? Do you have enough resources allocated to reach your goals? These questions require ongoing monitoring and evaluation.

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