How to Benchmark Against Competitors
Comparison may be the thief of joy, but it’s essential for the success of your business.
Running a successful business means having your fingers on the pulse of every aspect of your company. It takes hard work to create a unique business that appeals to competitors. However, if you put blinders on when it comes to what other companies are doing, you might miss out on essential opportunities to improve.
When you benchmark your company against competitors, also called competitive benchmarking, you compare your company against its competitors. While too much comparison may stunt progress, benchmark analysis can play an instrumental role in improving your business and reaching your goals.
What does it mean to benchmark against competitors?
Benchmarking is a strategy that helps you understand where other companies stand in your industry.
Externally, benchmarking a competitor will give you a window into their operations and allow you to see areas where they might be performing better than you — and in which areas you might be able to improve to surpass them. Internally, benchmarking is a critical tool to take stock of your company and internal operations.
The essential aspects of benchmarking your competition include finding valuable metrics for comparison and choosing what competitors you will analyze.
Finding metrics for comparison
To perform a benchmark analysis of your competitors, you need to choose metrics for comparison. Narrowing down what you want to focus on prevents your analysis from becoming overwhelming and not helpful for your business.
Some common KPIs for comparison include:
- Website performance: Many free online tools can help you gauge how a website performs, including search engine optimization (SEO) data. Using these tools on your competitor’s web pages can help you see where you need to improve your own website performance.
- Share of voice: Share of voice (SOV) measures how much of the market your brand owns compared to competitors. It gauges the percentage of media spending each company invests in.
- News articles and press releases: While businesses tend to guard their private data pretty closely, making certain metrics hard to measure, you can glean information from news articles and press releases about their quarterly reports and investments or strategies they use.
- Paid impression share: Calculate your paid impression share by dividing the number of impressions your ads receive by the total number of eligible impressions they could have received.
These metrics might also inform your choice of competitors — for example, if you want to compare the success of your competitor’s SEO campaigns against your own, choose competitors you know invest heavily in those strategies.
Choosing your competitors
Some industries are so large you could never hope to perform a comprehensive analysis of all your competitors. Even in smaller industries, it’s essential to narrow your benchmark competitors to those whose analysis will provide the most value for your company.
When deciding which of your competitors you will analyze, consider the following factors:
- Geography: If you have a physical location or tend to serve customers in a particular region or zone, consider similar businesses with the same geography or service area as your competitors.
- Size: While it’s good to have variety in your benchmarking reports, you may want to avoid businesses that are considerably larger or smaller than your company to get more accurate results.
- Niche: If your business operates in a specific niche, or you pride yourself on a special method or way of doing business, you might look for similar companies in your niche to compare yourself to. This strategy will give you a more concentrated view of your place in the industry.
- Values: You might also look to your company’s values to find benchmark competitors. After all, 71% of consumers prefer to buy from companies that align with their values. For example, if you value sustainability, choose competitors that also have an environmental focus.
You should consider three types of competitors — reach, immediate, and offline. Your reach competitors will be those who consistently outperform others in your industry. Immediate competitors rank for the same keywords you rank for, and offline competitors include any business you compete with outside of digital spaces.
The benefits of competitor benchmarking
Competitor benchmarking is important because it helps businesses accurately evaluate their position in the marketplace. Using specific metrics to measure performance can increase a company’s odds of gaining valuable insights from competitor analysis.
Utilizing competitor benchmarking to your advantage has many benefits, including:
- Stimulating a culture of continuous improvement.
- Encouraging actionable goal-setting.
- Identifying areas for improvement.
- Highlighting important organizational strengths.
- Preparing for changes in the market.
What are the 4 steps of benchmarking?
To create a useful benchmarking report for your business, follow these steps:
- Assess your company: Before you gather metrics and competitors, perform a thorough assessment of your company. Evaluate all aspects of your business operations to see where you might want to focus your competitor analysis.
- Identify your benchmarks: After a complete analysis of your company, you can identify your benchmarks to prepare for the comparison. Consider what metrics you’ll use and which businesses you’ll analyze.
- Perform a comparative analysis: The third step is to perform a comparative analysis. Doing this on your own can be extremely time-consuming, so you may want to consider using a digital marketing competitor analysis service or an automation platform.
- Strategize best practices: Once you have your data from the competitor benchmark analysis, you should use that information to strategize the best way to improve your operations. For example, you might invest in more digital marketing services to put you in a higher position in the industry.
Improve your positioning with expert digital marketing strategies from WebFX
To beat the competition, you have to know what they’re doing. A digital marketing agency can help you stand out from your competitors and reach your goals.
The expert strategists at WebFX take the time to learn about the unique elements of your organization so we can better leverage your marketing strategies. Get powerful insights to capture leads and generate more sales with the help of marketing automation platforms like MarketingCloudFX.
To learn more about WebFX and how we can accelerate your business to success, contact us today!
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