Best Business Benchmarks for Boosting Company Performance
Kelli Harrison July 30, 2022.
Benchmarking is a common term used across industries. In fact, many businesses use benchmarks to help them make decisions about how to best operate their business. In this blog post, we'll explore how benchmarking can be used to improve business performance.
Common Types of Business Benchmarks
There are different kinds of benchmarking, each suited to different situations. Here we'll look at five main types:
1. Strategic Benchmarks
These benchmarks help you set targets and track progress towards achieving them. Strategic benchmarks are usually used to assess how well you're performing against your strategic goals.
2. Operational Benchmarks
These are used to check whether your organization is meeting its day-to-day objectives and can include things like productivity levels, customer retention and satisfaction scores, and sales figures.
3. Performance Benchmarks
These are designed to show where improvements can be made. Performance benchmarks may focus on specific processes, such as product development, or they might take a broader approach, looking at the operation as a whole.
4. Competitive Benchmarks
By studying the practices, standards, and conversion rate benchmarks used by similar businesses, you can learn what works well for those organizations and implement it into your own operations. This helps you avoid costly mistakes that could lead to failure.
5. Digital Benchmarks
If your company has a digital presence, then digital benchmarking is a must. This includes keyword analysis, conversion rates, and return on investment (ROI). A digital benchmark is simply a way to measure what matters most about your digital activity—whether it's social media, email, mobile apps, etc.—and how well it's performing compared to direct competitors.
Benefits of Benchmarking
Consistent benchmarking can help businesses:
- Improve processes and procedures.
- Examine past performance to determine its effectiveness.
- Identify best practices to increase performance by gaining a better understanding of how the competition operates.
- Make your business more profitable by increasing efficiency and lowering costs.
- Enhance the quality of customer service and improve customer satisfaction.
Improve Performance With Benchmarking
Benchmarking is essential to running a successful business. Business owners can continually identify performance problems by utilizing a standardized benchmark process. The goal of benchmarking is to evaluate how other businesses achieve high levels of performance and how they maintain those levels. Without it, you could miss out on opportunities, make mistakes, and waste money.
Typically, a benchmark is defined as a set of criteria against which a particular business operation is measured. These criteria include things like customer satisfaction, employee productivity, financial metrics, product quality, user metrics, etc.
Consistently monitoring your performance in relation to your benchmarks is key. Make sure that you regularly track key performance indicators like revenue, customer satisfaction, employee retention, and so on. Once you’ve collected enough data, you can analyze it to see if there are any trends. If there are, you can adjust your strategy accordingly. For example, you might want to focus on improving customer experience rather than increasing sales. Or maybe you need to optimize your marketing efforts rather than focus on product development.
Either way, knowing how you stack up against other companies helps you define your priorities and allocate resources efficiently.