What is a benchmark and what are its main benefits?

Analyzing your competition is key if your business is undergoing a digital transformation. In this post, we want to explain what a benchmark is and what are the main advantages it offers us.

The main utilities of a benchmark

In general terms, with benchmarking you intend to evaluate the main processes, products, and services of other companies that offer a service like yours.

The process helps companies stay ahead and innovate in an ever-changing business environment. For this, it will be necessary to have adaptability and undergo constant learning. At the same time, benchmarking also opens the possibility of designing what is known as a SWOT analysis.

We study the strengths and weaknesses of our competitors and compare them with ours. Subsequently, we will be able to identify opportunities to grow our business and differentiate ourselves.

Main objectives

When we try to elaborate a benchmarking, we must consider the following objectives (we would like to achieve them). The most prominent are the following:

• Identify the main areas for improvement and reduce the errors that are made.
• Reduce costs and improve processes.
• Understand how the market behaves and identify the characteristics of the main competitors.
• Set goals that are realistic and achievable.
• Propose new strategies to achieve greater added value.

The different types of benchmarking

There are different types of benchmarking that you should be aware of. For example, you have the possibility of doing an internal analysis to evaluate various areas of your business.

The analysis of direct competitors is the most common, but there is also functional or strategic benchmarking. In the latter case, you will take as a reference the strategies or processes of other companies that are not your direct competitors.

How to make it step by step

Once you know the advantages, objectives, and types of benchmarking, it is time to get down to work. We recommend the following steps to do it properly.

Study your business

The starting point should be your own company. Study the internal processes or business practices that require some improvement.

Select the type of benchmarking

Depending on the objective you have, choose the type of benchmarking that best suits your needs and can be useful to you. Subsequently, examine all those companies that meet the requirements of your analysis

Analyze and implement improvements

Conclude the analyzed data and implement any necessary improvements. In this way, the benchmark process will be completed, and you will be able to see positive changes.

In conclusion, a benchmark is one of the best solutions at your disposal to understand how the market and your competitors behave. Apply it and you will surely benefit from all its advantages.