Understanding Competitive Benchmarking to Achieve Market Leadership

Having the right know-how is half the struggle in becoming a market leader, regardless of which industry you’re in. That’s why you’ve got to know all about a highly useful tactic for elevating yourself above the competition: competitive benchmarking.

We’re going to walk you through all the most important things to know on the topic so you can become an expert by the time you finish this article.

Stick around to learn about what competitive benchmarking is, why it matters, how you can do it, and what the best practices are.

What is competitive benchmarking?

On its own, benchmarking is all about setting goals and measuring progress against pre-established targets (benchmarks). 

How does competitiveness factor into that?

When you use competitive benchmarking, what you’re doing is setting your benchmarks according to the performance and/or progress of your competitors. For example, if you’re focusing on sales, competitive benchmarking would mean setting goals based on how many sales your competitors are making, alongside similar KPIs.

In practice, competitive benchmarking is a lot more complicated, as you’ve got to take many different factors into account to do it right. When considering your competition, you want to pay attention to their market share and adjust their importance accordingly, for example.

Why is competitive benchmarking so important?

There are about a million tasks a business can devote its attention to daily, and only so many that are worth the effort. That’s why we’re going to show you exactly why competitive benchmarking should always make your list.

The following reasons make it clear why competitive benchmarking is a must, regardless of the size or scope of your business.

It keeps you on track

When you’re busy running a company, it can be easy to get lost in the details and focus only on meeting deadlines; this can make it difficult to keep up with your competitors.

For instance, if you’re stuck asking questions like “what is event tracking?” while your competition is already tracking events, they have the upper hand. 

Competitive benchmarking can tell you how much progress your competitors have made in tracking and executing their events optimally.

After all, there’s always someone out there who’s trying to do what you’re doing. The difference is that you want to do it better.

By implementing competitive benchmarking in your business, facilitated by a robust product discovery tool, you’ll naturally orient yourself towards what others in your sector are doing. This helps you stay on level footing with your competition, so customers never see you lagging behind or struggling to catch up.

It can also show you how other businesses are performing regarding events-related KPIs. Based on your key metrics, you then know whether to put more effort into catching up in your events management approach.

It lets you grow your business sustainably

Every business professional wishes they could adopt a method of infinite growth with a snap of their fingers, but that’s sadly not realistic. You need to know how to balance your goals with the demands of your reality if you want to achieve observable, sustainable growth.

Additionally, understanding competitive benchmarking opens up various career options in strategic planning, data analysis, and market research, which are crucial for scaling any business efficiently.

This applies to both revenue growth and company upscaling.

Competitive benchmarking can show you exactly how your competitors are growing, and which ones can keep that trend going for longer. By taking lessons from your most successful competitors, you can secure that same growth.

It helps you learn from others

In a similar vein, competitive benchmarking is a wonderful tool for learning from others’ achievements and shortcomings.

For example, your benchmarking work might reveal that most competitors are enjoying the same high volumes of sales as you, except one. Further analysis might show that this is happening to them because they’re neglecting their customer satisfaction, which is driving valuable customers away, potentially due to a lack of effective customer satisfaction tools.

You can then take this knowledge into account to ensure that you don’t fall into the same trap.

This is also why it’s a great idea to benchmark against at least four competitors, as this will provide a clearer picture of the state of your industry.

Which metrics are best for competitive benchmarking?

Next, we’ll discuss the top metrics you should use to ensure your competitive benchmarking is as impactful as possible.

Please bear in mind that there are plenty of industry-specific or even company-specific metrics that would be well worth tracking, depending on the nature of your business. The ones we’ve put together below are universally useful, which is why we feel comfortable recommending them to just about any business.

Time to market

How much time passes between the initial conceptualization of an idea and its release to the public as your newest product?

Time to market (TTM) gives you an idea of how long your products spend in development. While it can be a good thing to dedicate more time to getting each item right the first time, you don’t want to have a significantly slower TTM than your competitors, or you risk losing out on trends.

That’s why it’s a great idea to benchmark your competitors’ time to market. You’ll want to aim for a roughly average TTM so you can stay competitive without rushing development.

Sales velocity

If you’re asking “what does high velocity mean?”, we’ve got your back.

Your sales velocity is simply the speed at which you’re able to turn leads into paying customers, and it applies to both B2C and, less commonly, B2B companies. The latter types of businesses tend to favor slower sales cycles, but that doesn’t universally have to be the case—in fact, applying high-velocity tactics can help you stand out in the best of ways.

By benchmarking the velocity of your competitors’ sales (or the lengths of their sales cycles), you can gain insight into how long it should take for leads to bite the bait and start buying. This can show you whether you need to accelerate things, or whether you’re going at a good speed.

Website and social media traffic

It’s impossible to get quality leads if you don’t have enough interested parties to choose from. And if you want to get a higher volume of interested parties, you need them to come into contact with your business first, ideally via your company’s website or social media.

The more traffic you get, the better, especially if you can check your benchmarks and confirm that you’re seeing more footfall than your competitors.

It’s also helpful to know where your traffic is coming from. While it’s true that nearly 60% of web traffic comes from phones, your competitors may see more of an influx of laptop or desktop users accessing their digital platforms. If that’s the case, you need to know so you can make adjustments for your customers’ comfort and convenience.

How does competitive benchmarking work in practice?

It’s also crucial to know exactly how to set about competitive benchmarking. Let’s get you started in five quick, easy steps.

Step 1: Choose your competitors

As mentioned above, you’ll want a minimum of two, and likely not more than six. This is so you can get an accurate picture of how your competition is performing without creating an average of everyone in your industry.

It’s a good idea to choose some of the businesses with the biggest market shares in your sector, as you’ll likely learn from them. Selecting a competitor in a very similar niche to you is also helpful, since this lets you guarantee you’ll stand out within your niche.

Step 2: Select metrics

Once you’ve decided which companies you’d like to learn from and keep pace with, you’ll want to choose how you’re measuring everyone’s performance. You can do this by finding the best metrics for your business goals.

We’ve listed some examples of metrics already. All you need to know in order to pick useful metrics is that they must be measurable or quantifiable, and that they should be directly relevant to your overall business aims.

Step 3: Gather data

The next step is more or less an ETL process, which is short for Extract, Transform, Load. That’s because it’s all about collecting your competitors’ data from multiple sources, then putting it into the software you’ll be using for your competitive benchmarking.

In addition to gathering data on metrics like time to market and sales velocity, it’s essential to include data related to enterprise email marketing, such as open rates, click-through rates, and conversion rates from email campaigns. This comprehensive approach ensures you have a holistic view of your competitors’ marketing strategies.

Remember that more is better when it comes to data. You’re better off having too much information than having to extrapolate based on too little data, as this can lead to incorrect assumptions and throw off your benchmarking accuracy.

Step 4: Create your benchmarks

Now that you have the information you need, it’s time to transform it into something you can use for competitive benchmarking.

As mentioned, you should use dedicated software for this, so you don’t have to manually comb through and process large quantities of data. Your chosen tool will draw up benchmarks based on weighted averages, so your strongest competitors’ data influences the final values more strongly.

Step 5: Compare your progress to your benchmarks

This is an ongoing step in which you’ll repeatedly hold your own measured progress up against the benchmarks you’ve already established.

Ideally, you’ll find that you’re exceeding your benchmarked goals more and more steadily as time goes by. Bear in mind, however, that your competitors’ performance is also not static. Their progress will also grow and change with regard to your chosen metrics, so what you’re doing is getting ahead of them in a systemic, ongoing sense.

For example, you’d want to steadily improve your sales win rate, as opposed to matching the rate your top competitor had at a given point in time.

Best practices for competitive benchmarking

Lastly, we’ll provide you with some of the top tips for starting competitive benchmarking the right way.

Get plenty of data

We already mentioned that collecting plenty of data is key, but it definitely bears repeating. That’s because a small amount of data has a higher probability of consisting of outliers or other unreliable types of data, particularly if there’s any chance your data has spent time in a silo.

Have you ever wondered “how does identity resolution work?” This practice is all about combining customers’ data points to give you a more holistic picture of those customers.

With identity resolution, your understanding of your customers specifically expands because you’re collecting more data, as this lets you see them as 3D people instead of a few disparate data points. The same goes for your competitors.

In addition to gathering data on metrics like time to market and sales velocity, it’s essential to include comprehensive email marketing statistics, such as open rates, click-through rates, and conversion rates from email campaigns. This ensures a well-rounded understanding of your competitors’ marketing strategies and enables more informed benchmarking decisions.

Keep an eye on emerging trends

Most business leaders benchmark their progress against that of their closest competitors, while comparatively fewer people pay attention to the companies disrupting the industry:

This is a logical choice; everyone wants to know that they’re shining brightly enough next to the companies that are the most similar to them. But what it doesn’t account for is the fact that, broadly speaking, industry disruptors are the ones setting the most cutting-edge trends.

In other words, in order to stay on top of trends, you’ve got to keep an eye on both the trends themselves and the people or companies setting them. That way, you can ensure you’re able to keep pace with changes in the industry as they’re happening.

Use the right tools

If you were working on creating the best possible cloud migration strategies, you’d think about which cloud migration software you want to use as one of your first steps.

Many organizations turn to professional cloud migration services to ensure a smooth transition and minimize disruption to their operations.

That’s because your chosen software has the potential to make the migration process much easier—or much, much more difficult.

In the same way, you need the right tools for competitive benchmarking.

Data processing software is particularly important. You need tools that can work with huge volumes of data, but you also need ones that can auto-gather new information whenever it becomes available. This guarantees that your benchmarks are always up-to-date and achievable.

Final thoughts

Competitive benchmarking is, in a nutshell, a great way to gauge how your company stacks up against its competitors. This helps you stand out within your industry, while preventing you from falling behind or missing out on important trends.

It’s a great idea to start small but right away to take advantage of the benefits of competitive benchmarking. Use a tool like Unkover to get a quick overview of your competitors’ strategies and learn from their successes and failures. This will help you save time and resources by avoiding common pitfalls and focusing on what works best for your specific business.

If you only have the resources to benchmark a single metric right now, that’s not a problem. Simply pick your most important one, and make a list of metrics you’d like to add later. That way, you can ensure you’re getting started and creating helpful comparisons as soon as possible.