on February 3, 2022 (last modified on February 1, 2022) • 13 minute read
Want to understand what your competitors are doing well and where there’s an opportunity for you to overtake them? You need competitive benchmarking.
This involves studying and setting benchmarks against industry leaders, disruptors, key competitors, and others. The reason? To get a full picture of where you stand against competitors while finding opportunities to improve.
Ready to learn more about it? Dive in as we discuss the following:
Competitive benchmarking is a process of researching competitors, industry leaders – in short, anyone who serves the same audience or offers the same product as you do.
The aim? To study the strategies and practices competitors use and get a comparative overview of how well you’re doing in the market.
The key to successful competitive benchmarking, however, is to stay in charge of the process by pre-defining competitors to analyze. Typically, folks get carried away because they study one too many competitors.
So what’s the ideal number of competitors you should be studying? Over half, 54.3%, of our contributors benchmark against 4-5 competitors. 31.4% do so against 2-3 competitors and only 14.3% compete against 5+ businesses.
Related: Benchmark Reporting: How to Prepare, Analyze and Present a Good Benchmark Report?
Competitive benchmarking brings a plateful of benefits. These include:
With the basics done, let’s look at how you can set up benchmarks for yourself and how to excel at competitive benchmarking.
Here’s a quick list followed by the details:
This one’s a hat tip to Daniela Sawyer from FindPeopleFast. Market research is helpful because it stops you from missing out on studying important names in your haste to start competitive benchmarking.
In this regard, Sawyer explains the process they follow: “I will follow the following steps to choose competitive benchmarks:
“After a long list is analyzed in the last steps,” Sawyer continues “I target 3 to 5 competitors to benchmark against. It takes time to choose these 3 to 5 competitors because they are the real competitors for my business. I ensure a minimum of 1 final competitor to benchmark against from each category.”
“To avoid getting overwhelmed with all the data we could potentially benchmark against competitors, we honed in on our specific brand goals to assess which KPIs to focus on benchmarking,” comments Stephen Light from Nolah Mattress.
Put another way, in addition to market research to jump-start competitive benchmarking, you need to get clarity on your goals. For instance, if you are focusing on customer loyalty, there’s no point in studying a competitor’s brand awareness metrics.
Light shares their example too. “There are tons of social media metrics we could focus on, but we knew that engagement on those channels isn’t the most important for our particular eCommerce brand.”
“We knew that for a mattress brand like us, brand awareness and share of voice is where we needed to focus, and that benchmarking traffic trends in certain periods – like the traffic we get from different sources compared to our competitors – was of greater importance,” Light explains.
Leanna Serras of FragranceX takes the same approach. “We choose our competitive benchmarks based on our current brand goals.”
“If we are focusing on our brand awareness, we will compare our social media posting frequency and engagement rates with that of our competitors,” Serras notes. “If we are focusing on sales, we will compare our website traffic and average visit duration with that of our competitors.”
In short, “you have to benchmark for your goals, not for everything, or you’ll get lost” in Light’s words.
Related: Goals Based Reporting: Everything You Need to Know
The clearer you are on this, the better your competitive benchmarking. Take CocoSign, for example, they have a thorough plan of who to study themselves against and what to study.
Explains Stephen Curry: “Our competitive benchmarks are based on research on the competition and the identification of critical competitive metrics.
Usually, we benchmark against three to five competitors depending on the objective. The list will include top performers in our industry, immediate competition referring to those we rank equally, and competitors who operate offline but with a sizable market share.”
Curry isn’t alone in benchmarking against these folks. 42%, the majority of our contributors, benchmark against close competitors.
31% have a mixed selection as Curry’s team has and over 25% study themselves against key industry players. Only 9% keep tabs on the industry disruptors in particular.
“In addition, we include pertinent competitive metrics mainly depending on the services we offer and those offered by companies against which we benchmark,” Curry goes on.
“That’s because benchmarking paints a more realistic picture when we include companies that don’t necessarily compete with our services but for the same audience. It also adds value to focus on ratios and rates rather than absolutes, especially when starting.”
Continuing on what to analyze among competitors, Purrweb’s Sergey Nikonenko recommends not making the decision in isolation.
At Purrweb, for example, Nikonenko writes, “we use pre-existing KPIs for a competitive benchmark and we usually benchmark four to five competitors. We choose our KPIs and determine what metrics capture them.”
“In the last few years, we have been choosing competitive benchmarks by identifying the competitors that are similar to our industry. Our marketing team measures their products offering, audience, size, location, etc.,” Nikonenko elaborates.
To top that, Nikonenko shares: “We also consult with all parts of the business to see what would be useful to include.”
Consulting with your team and other business departments on competitive benchmarking is critical for ensuring you don’t miss any important pointers to benchmark against. Doing so means your benchmarking metrics are likely more thorough and, as a result, your competitive study will turn out useful.
Essentially, your marker reputation can make a lot of difference. In fact, a positive reputation drives word of mouth, referrals – even brand awareness. It also slips social proof into the picture, convincing prospects to buy from you for the name you’ve built.
Considering the role that reputation plays, it makes sense to dive into reputation benchmarking.
At HouseCashin, for example, Marina Vaamonde observes: “We compare our reputation with those of our competitors by gathering data related to how customers perceive us and our competitors.”
The metrics they look at? “Customer satisfaction rates, social media engagement, brand awareness, net promoter scores, and more.”
Speaking of metrics to study in competitive benchmarking, our respondents reveal most of them – 74% to be specific – study growth assessment metrics.
Some 50% also look at product success and little less than 50% study social media research.
“Regarding product benchmarking, we look at the product offerings of competitors in the marketplace and look at how well they provide value to their customers,” adds Vaamonde.
“However, we also look at what customer segments our competitors are targeting. If they’re targeting very different segments from ours, it doesn’t make sense to benchmark products. Success for them is different from success for us because it’s no longer an apples-to-apples comparison.”
Meaning: if you and your competitors serve the same audience, you’ll want to see how they provide value to their prospects and customers. To this end, study their marketing campaigns, social media messaging, customer service, product onboarding process, and so on.
After all, the more value you can provide, the better you can convert prospects and the more loyal customers you’ll have.
On that note, Andrew Raso from Online Marketing Gurus Australia also goes on to say that they “track the performance of companies that target my audience but are not my direct competitors.”
The reason: “It helps me catch fresh ideas for my market or innovative methods they use for growth. I do it because I feel that I know my market inside and out,” highlights Raso.
“Analyzing this data gives me valuable insight into the needs and expectations of my target audience. That allows me to recognize new business opportunities and areas for improvement.”
Related: Direct vs. Indirect Competition: Most Important Things You Can Learn from Monitoring Both
“We almost exclusively benchmark on qualitative data, messaging, and positioning,” outlines Alex Birkett.
“In terms of quantitative data – revenue, traffic, leads – we’re running our own race,” Birkett notes. “It’s nice to know where to aim, but at the end of the day, it’s not useful to benchmark to others when we have a different strategy.”
“However, the language people use to describe us versus competitors, the value propositions competitors use on their homepage, and qualitative comparison data we collect in our sales calls and surveys help us take action.”
“They help us optimize our copywriting, invest in unique channels, and inform our sales enablement materials and sales process,” explains Birkett.
In your competitive benchmarking too, note down key competitors’ value propositioning, messaging, and other qualitative data so you can continue marketing and converting better.
Like most marketers and marketing managers, you want to know how well your efforts are translating into results each month. How much traffic and new contact conversions do you get? How many new contacts do you get from organic sessions? How are your email campaigns performing? How well are your landing pages converting? You might have to scramble to put all of this together in a single report, but now you can have it all at your fingertips in a single Databox dashboard.
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“As for specific tools,” Birkett notes “we use Wynter very heavily. We also do our own heuristic audits of competitive websites to determine what the key benefits they’re leaning into are and how we can differentiate our positioning in the market.”
Other tools used include Ahrefs, SEMrush, and Google Keyword Planner – the top 3 most leveraged competitive benchmarking tools used by 74%, 53%, and 40%, respectively of our contributors.
While you might be too busy looking to your left and right, Ronen Yuval from Karma recommends monitoring the biggest market players at the top.
“I won’t replicate what they can afford with multi-million budgets for product development and marketing,” Yuval admits. “But I can learn from their strategies.”
“Their actions provide insight into where the market is heading and help me gain clarity about industry trends.”
Yuval also points out: “Larger companies also spend tons of time and resources on consumer research to identify the preferences, attitudes, motivations and buying behavior of targeted customers.”
“So if you carefully monitor the changes in their product, the site navigation, email marketing content, etc., you can get free insights to inform your marketing strategies.”
So you know what to do, right? Here’s your checklist. Study industry leaders’:
Related: How to Do an SEO Competitive Analysis: A Step-by-Step Guide
Why? Because Zenpost’s Dave Polykoff says “they often come to the market with an offering that they expect may close a gap in a vacant niche.”
“Their brand-new products and strategies may even change the face of the niche,” adds Polykoff.
It’s why Polykoff shares, “I monitor new players on the market, especially small, emerging businesses that have received funding. These are likely new industry disruptors that might be growing faster than the industry average.”
The take home message? “Benchmarking against new smaller companies in your field can help you better understand potential threats and be ready to use some of their ideas to your advantage.”
In short, when it comes to competitive benchmarking, it’s best to start with being clear on your goals and researching your market to understand who your direct and indirect competitors are.
From there, go on to identify who to benchmark against and what metrics you want to analyze.
Databox’s Benchmarks feature allows you to see how your company compares to others like yours and helps you set better strategy and business goals. Opt-in now to get free access!
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