Benchmarking your business is key to understanding how successful you are in comparison to other players in the market. You don't know how your business is doing in terms of its overall health and security until you know what normal looks like for your products, your industry or companies of your size and profile.
By examining businesses who are similar to you and determining what constitutes success, failure or average performance, you can ensure that your business is keeping healthy or has a good plan to get in shape! The good news is that benchmarking doesn't necessarily mean you have to wade through a huge amount of financial and performance data until your eyes bleed.
It's a little simpler than that, at least to get started. In order to benchmark your business, you need to go through a process of researching and comparing, finding averages and standards among your competitors and your industry and matching them to your business.
The most important categories to look at:
This should be the most important benchmarking metric. You need to know that your business is making as much money and generating as much income as it should be. The only way to know this is to learn about and understand the average profit benchmark in your industry. If you don't know what that is, the key (again) is to research it. You can normally rely on independent studies available through trade associations. If these aren't available, look to financial experts in your network who may have access to that level of data and information. Does the average industry profit match yours? If you're below it, that's a sure sign that there's something going on in your business that is holding it back!
Another important category is industry spend across a variety of areas. Marketing, IT costs, staff re-reimbursement, premises - you need to know whether you're spending above or below the average, and why. This will help you to analyse and understand where you're allocating funds and what effect that could be having on your operations. It could also highlight some vital areas that your business could have overlooked, where you're falling behind other industry incumbents and leaders. It's not a case of carrying on "cold-war" style spending where you match your competitors with no regard to purpose or direction - it's just giving yourself guidelines and status checks to understand your spending.
How does the client acquisition, retention or service strategy for your industry stand up to yours? If you can understand the general direction that other players are moving in, you can highlight any strategic opportunities you may be missing out on. If there are important strategic differences, question why that is. Have you already examined those strategies and decided they're a poor fit for your company? Or have you simply overlooked some important avenues that could lead to you losing out strategically? The flip-side of this is that by benchmarking strategy, you can also find any areas where you may be leading your industry - that's always a win!
This is one area where you'll definitely see some great information. Who your customers choose to do business with will often have very little to do with product or service development - it will all come down to the level of customer service and support you and your competitors are offering. When benchmarking customer service levels, you should be looking at information around industry wide customer satisfaction or experience, as well as what customer support options and strategies other players are employing. How does that compare with your own business? Again, if you're falling short, remedying it should be a high level priority.
You don't need to be on the bleeding edge of technology, but you do need to be keeping up with both industry and consumer trends. The real purpose of almost all the technology you'll use in your business is either customer service or communication, and those are two areas where you can't afford to be lacking. If you can find data around what technology is being used, from hardware to software to websites, you will be able to match it to your existing systems and determine where your tech resources are lacking - or, if you've been playing cards right, leading. The information here can guide your future technology decisions or show you areas and processes that could be improved through careful and measured tech.
Beyond these categories, there may be a wealth of other info points that you could be examining, depending on your industry. Whatever your focus, benchmarking is a process that will keep paying dividends well into the future, and when it's a regular activity for your business, you'll have one more way of keeping everything aligned towards your goals. Finding a benchmarking partner is only going to make this simpler. Financial and business service experts can be a valuable resource, or can work with you through every step of the benchmarking process, through research to comparison and conclusion!