Benchmarking, or how to learn from others' mistakes?

Many times companies are confronted with the problem of competition. In such a situation, there is often the simplest question management can ask itself: what are they better than us?". This is a good start to the considerations necessary for the first stage, which is benchmarking, followed by an avalanche of questions such as: "What makes our market rival perform better in sales?", "Why would more consumers recommend their product?", "Why do they enjoy greater satisfaction among employees?" or "How do they actually function?". Answer the questions mentioned above with the help of a process like benchmarking! Such, and many similar questions, are answered by benchmarking - a method of comparative analysis of one's own company with the currently established market leader in a given industry. The purpose of this is to improve the quality of products and services offered. At first glance, it might seem that the quoted definition is merely euphemistic imitation. However, benchmarking is not just about copying the processes of a competing company - it is the ability to learn from other people's mistakes, rather than duplicating the wrong scenarios.

Before you judge others, start with yourself

For members of individual departments in a corporation, some processes that are routine for a particular department are only superficially understood by other teams. Benchmarking makes it possible to fathom the meaning of these activities and thereby increase the efficiency of the company as a whole. You should start by selecting the issues that the analysis will cover. For example, when wishing to benchmark consumer satisfaction with a product, it is necessary to consider, among other things, the quality of the product and factors affecting the price, the marketing setting and service, which is a guarantee of brand authenticity.

When considering these issues, we create an initial analysis plan, then choose the most appropriate data collection methods. They will help us find out whether a competitor sells its products better due to the right approach of the salesperson to the customer, or perhaps due to the way the product is advertised and the fact that in the eyes of the consumer it is perceived better than ours. This can be either a SWOT analysis, a TOWS method or any other, allowing us to illustrate the advantages and disadvantages of the object of research.

By more than one method you will reach your destination

For this purpose, we have a full range of indirect and direct methods for obtaining data. Here are a few ways to directly collect information that can be useful when conducting benchmarking:

  • publicly available competitor's internal reports and publications,
  • telephone surveys of employees or consumers,
  • Personal contacts with partners,
  • Biographies of prominent managers.

Indirectly, on the other hand, we can reach for the opinion of a consulting agency or commission an analysis of scientific journals in which a rival places its publications.

Having already had a collection of information about our own as well as a competing company, we can move on to the final phase of the benchmarking process. This is the creation of a list of recommendations to improve the functionality of the company and bring it closer to the performance of the leader. It is worth noting that with this method we can cover every area of a company's operations, starting with marketing and promotion, through customer satisfaction, production technology, ending with the company's finances and management methods.

Benchmarking, or compare more than once and in many ways

Benchmarking is like a technical inspection of a car - it should be done regularly. And even if the car runs after the deadline, we should not blame anyone for the fact that the engine refuses to serve at the least expected moment. However, in order not to fall into a rut, comparing the same processes with the same company year after year and come to identical conclusions, wasting time and money, several general types of the very juxtaposition of companies have been created:

Internal benchmarking

- for large corporations is the easiest method to implement. It involves comparing processes between subsidiaries, analogous positions or segments of the company dealing with different issues, but using the same tools. This method is so easy that the problem of obtaining data for analysis is practically nonexistent.

Competitive benchmarking

- most associated with benchmarking; analyzing a competitor within one's own industry. It may not be very effective, as our market rival is unlikely to want to share its experience.

Functional benchmarking

- Considered one of the most effective types of benchmarking. It involves analyzing the processes of a company that covers an industry unrelated to our own. The analyzed company loses nothing by providing information on, for example, internal communication between departments, and both sides can gain unprecedented ways of dealing with problems.

General Benchmarking

- is also a simple, but less effective method. It addresses universal issues implemented similarly in many companies, such as employee satisfaction levels. Also easy in terms of obtaining data, but rarely leads to unexpected discoveries.

Introduce benchmarking into your business!

Benchmarking can extend its activities from a small manufacturing plant to a multinational corporation. Regardless of whether the project team intends to take a large area of the company's operations under the magnifying glass, or just one of the many processes taking place in it, it is important to be systematic. The method should not be just a one-time attempt to compare and improve the production processes taking place in the company, but a regular study leading to self-improvement of the company.

Find out how you can analyze your competitors' actions with our competitive analysis service!

Konrad Kulakowski

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