Benchmarking is key to revealing the critical actionable insights that will boost your business performance and increase your profits.
What is benchmarking?
Albert Einstein said: “Insanity is doing the same thing over and over again and expecting different results.”
This is as true in the business world today as it was for Einstein in science decades ago, yet many business owners are guilty of clinging to the same old operational processes and management strategies that consistently fall flat in the modern economic environment.
But the economy is not the only thing that is constantly changing – your competitors and customers are too.
Your competitors are evolving not only their product and service offerings but also the way they do business, and your customers’ expectations are now completely different to what they were just a handful of years ago.
Benchmarking is fundamentally about keeping pace with these shifts, and gaining the insights you need to step ahead.
It’s the process of comparing your business performance to that of your key competitors and to best-practice industry standards using specific indicators to reveal the critical actionable insights that will boost your business performance and increase your profits.
What can be benchmarked?
Generally, benchmarking is divided between two major categories: financial and operational performance.
Benchmarking can be used to track your financial performance via measuring revenue focused aspects of your business such as sales volume, market reach, price points, stock movement and variations between territories.
Operationally, benchmarking is used to measure internal processes and expenses such as staffing costs and turnover, production costs and overheads, customer feedback and rates of repeat business.
Ultimately, your benchmarking analysis and reporting will compare your financial and operational performance to draw insights into your overall profitability and help you establish the margins that will be competitive in your market and ensure sustainable profit growth.
What are the benefits of benchmarking?
Frequent benchmarking comes with a wide rage of benefits. It will not only ensure you are staying relevant in your market, but it can also spark new ideas, inject fresh energy into your management strategies, and identify specific areas of opportunity.
But perhaps the most valuable benefit of benchmarking is its power to define your current market position and illuminate the pathway towards your goals through clear and targeted strategic planning.
Think of benchmarking as a series of bright street lights along a dark highway. It reveals your current position while also lighting the way forward.
And at the same time, it reveals any obstacles that may lie in your path and helps you to arrive at your end destination faster and without expensive wrong turns.