6 Types of Benchmarking Your Business Needs to Know About
There are a few types of benchmarking organizations should utilize, including internal, external, and performance. Here’s why they matter.
You may already know the importance of tracking important business key performance indicators (KPIs) and creating SMART goals: those that are Specific, Measurable, Achievable, Relevant, and Timely. But are you actively benchmarking to get the best outcomes possible for your business? Do you understand all the ways in which setting benchmarks can set you up for continuous improvement?
Here’s a quick look at what we’ll cover in this article:
- A brief overview of what benchmarking is: Setting a standard for a team, process, or the organization as a whole
- The six most significant types of benchmarking:
- Internal: Comparing processes within the organization
- External: Comparing to other organizations
- Competitive: Specifically comparing to direct competitors
- Performance: Analyzing metrics to set performance standards
- Strategic: Evaluating how successful companies strategize
- Practice: Process mapping and addressing performance gaps
- Where feedback fits in: Gathering feedback helps you address weaknesses and set internal benchmarks
What is benchmarking and why does it matter?
Benchmarking is a way to measure business and team success by comparing a process or the organization as a whole to other internal processes or to competitors. Benchmarking helps you understand industry norms and analyze how your company stacks up. You can also compare a process within one department to that of another to evaluate productivity or efficiency.
Benchmarking allows you to continue to improve the business or business functions by creating a specific standard for performance. Any team or employee not meeting this standard can then be flagged for additional training or observation, or the operational process can be completely revamped.
Businesses of all kinds use benchmarks to help meet performance goals, keep tabs on important metrics, and continue growing and improving.
6 types of benchmarking to integrate
1. Internal benchmarking
Internal benchmarking is pretty straightforward. You compare a process or task to a similar process or task within the company. This requires the ability to track metrics for these two comparable systems or departments so the KPIs can be assessed and compared.
This type of benchmarking is effective because it helps set and meet standards across the board, establishing consistency and ensuring that each department is as efficient as possible.
2. External benchmarking
External benchmarking is comparing an internal process to that of a competitor or even several other organizations. This approach can be a little trickier because it requires access to industry data or specific company data, which may not be available unless the other organization has agreed to share it with you.
External benchmarking is extremely valuable. You can better understand where your business fits into the wider market and identify areas of weakness that you should be focusing on.
3. Competitive benchmarking
Competitive benchmarking is a type of external benchmarking that solely focuses on comparing your own processes and metrics to those of direct competitors. This form of benchmarking is significant because you can identify exactly why a competitor is succeeding or what drives customer satisfaction in your industry.
4. Performance benchmarking
Another important form of benchmarking is related to business performance. By tracking metrics and KPIs within the business, teams can continue to compare past outcomes to current standards, continuously updating the standard for improved performance.
This type of benchmarking is focused on improving key business functions over time, since the idea is that benchmarks will continue to be raised and strengthened.
5. Strategic benchmarking
Strategic benchmarking is typically external and specifically analyzes how other companies got to be successful. What kind of business strategies do they employ? For example, what is successful about their marketing campaigns?
Benchmarking the way you strategize can help you learn from what has worked for winning businesses in and out of your industry. This is especially helpful for new businesses or startups.
6. Practice benchmarking
This form of internal benchmarking relates to the practices and processes of your business. This requires you to have procedures in place to gather and analyze business data, like how employees and teams are completing their tasks or using certain technologies.
Process mapping is one way to start practice benchmarking, and you can quickly identify and address any performance gaps in the company.
Where does feedback fit into benchmarking?
Never underestimate the value of feedback when you start benchmarking. Gathering customer feedback can provide you with actionable insights into how the business is performing and which teams and functions need work. Putting a process in place for collecting feedback helps you set internal benchmarks for departments that interact with customers.
When you need a solution for customer and employee feedback collection, try the Crewhu platform. We offer innovative ways to reward and recognize your employees when they successfully meet goals. You can also integrate contests and gamification techniques to better motivate your teams.
Our one-click customer surveys help you connect with your audience and improve processes based on your customers’ actual experiences and perspectives.
Contact Crewhu to schedule a demo now and start seeing big improvements.
Topics: Business Strategy, KPIs, Benchmarking