What is Benchmarking & How to Do an Effective Competitive Analysis
Benchmarking is a complicated process that many large companies use to perfect their best practices and to outpace the competition. However, that doesn’t mean you can’t use benchmarking for your small online business.
In fact, you should use benchmarking, especially if you’re in the Knowledge Commerce market.
What is benchmarking? We’re going to get to that a little later, but for now, we want to paint a quick picture.
Let’s say that you’re a personal development expert who specializes in productivity. You know how to motivate people to get things done and achieve their goals.
You’ve created four online courses, two e-books, and a host of other digital products on productivity. Sales have been fairly steady over the last 12 months, but you’re not growing at the pace you expected.
Maybe your sales have stagnated. Perhaps you’ve already reached your target audience.
Whatever the case, it’s time to change things up.
If you want to maximize your revenue and brand awareness, you need benchmarking to figure out what’s working, what’s not working, and what your competitors are doing.
It sounds simple enough, but you need a clear, actionable strategy if you want benchmarking to yield positive results. That’s what we’re going to help you achieve today.
What Is Benchmarking?
Benchmarking is the process of determining the best processes, strategies, and techniques for achieving your business goals.
That sounds simple enough, right? You’re just trying to create the best business possible.
The problem is that you sometimes need outside data to measure success. While your online business might be more profitable than it was six months ago, is it profitable enough to stand up to your competitors?
We’ll talk about competitive analysis later, but keep in mind that you need to maintain one eye on your competitors at all times. If you don’t, they can easily steal your customers and your profits.
With benchmarking, you want to start with your primary weaknesses.
Do you struggle with lead generation? Have you struggled to retain customers? Do you get complaints about your online course content?
Sometimes it’s tough to view your business objectively. If you need to bring on a third party to help, do so.
Once you’ve identified your first focal point for benchmarking, figure out how your current process works. For instance, when it comes to digital marketing, maybe you focus on blogging, social media, and organic SEO.
Since you’ve discovered that your digital marketing strategy hasn’t yielded the results you expected, you now need to figure out how to tweak your process to make it more effective.
Maybe you need to add email marketing to your repertoire. That’s just one possibility — benchmarking will help you figure out other potential solutions.
Those are the basics of benchmarking, but we’re going to get into even more detail so you understand why benchmarking matters, how you can use it strategically, and what other businesses like yours have accomplished through benchmarking.
Why Is Benchmarking Important for Your Knowledge Commerce Business?
Think of benchmarking as a report card, a guidebook, and a competition comparison all in one. Conducting benchmarking can tell you what you're doing wrong with your online business and help you discover ways to improve upon past efforts.
In Knowledge Commerce, competition will always exist.
After all, we're talking about a $243 billion industry. That number is nothing to sneeze at.
If you want to grab for yourself a significant piece of this lucrative pie, you need to use every tool at your disposal to turn your business into an industry powerhouse. Otherwise, your competitors will do it instead.
Furthermore, since your business is likely not a member of the Fortune 500 list, benchmarking won't take as much time, energy, earn money. You have fewer factors to take into consideration so the process will move much faster.
If you're not sure why benchmarking will benefit your business, consider your last few months of sales. What if you could increase them by a significant margin? Would that make benchmarking worth your while?
You can gain a remarkable competitive edge if you're able to understand your competitors as well as businesses like your own outside your industry and figure out what they're doing better than you.
However, it's not about copying your competition. Rather, you want to surpass your competition through improved processes and internal policies.
Maybe you run your business by yourself. That's fine. You still have specific protocols you follow when it comes to marketing, sales, customer service, product creation, and everything else.
What Other Online Course Makers Should You Benchmark Against?
The first step in benchmarking is defined other businesses against which to measure your own. Think of these other businesses as yardsticks. They offer the measurements into data that you want to surpass.
Start with other Knowledge Commerce professionals to create online courses and other digital products within your industry. They don't have to offer courses that are exactly like your own, but they should create similar content.
Next, venture beyond your specific industry and find other businesses that are similar in size and revenue to yours. They might operate in completely different ways, but they can still teach you how to improve your processes, marketing techniques, revenue-generation methods, and more.
Once you have found competitors against which you can benchmark your own business, conduct as much research as you can on those businesses. Find out how they're targeting potential customers, managing customer service, and otherwise serving their target audience.
You might discover that one or more of the businesses you chose don't provide a reasonable benchmark for your company. That's okay.
Simply remove those businesses from your benchmarking study and choose other businesses to take their place. You don't want to spend time and energy on a project that won't yield actionable data.
What Are the Benefits of Benchmarking?
The benefits of benchmarking are quite diverse. If you conduct a little research, you'll find that some of the biggest brands in the world use benchmarking studies to improve their businesses and to find new ways to solve old problems.
First of all, benchmarking is a completely objective process. You're evaluating data and other critical information to determine how you stack up against your competition.
Your passionate about your business, which means that you might let your subjective opinion influence your decisions. Benchmarking removes the subjectivity and allows you to approach problems logically.
You can also use benchmarking to find new opportunities. During your research, you might find that your competitors or other benchmarking partners are using strategies that you never considered.
That happens to every business. You can't always think of every potential solution to a problem or technique to achieve a goal.
You might also have made assumptions about your business. Benchmarking allows you to either validate or invalidate those assumptions.
Obviously, you'd rather validate an assumption and know that you are right. That might happen. But even if you discover that your assumption was incorrect, you now have a way to correct the issue.
By the end of your benchmarking process, you'll have discovered new ways to approach a business and set goals for the future. That's a powerful advantage over your competition.
Once you've set those goals, you can proactively pursue them.
Every business needs performance expectations. In larger companies, for example, managers set performance expectations for their employees.
If you work alone, you need to set performance expectations for yourself. How many new digital products you want to release in the next 12 months? How much revenue do you want to generate in the next four years?
Benchmarking can help you figure out what expectations are reasonable so that you can set out to meet them.
How Does Benchmarking Relate to Competitor Research?
Benchmarking and competitor research are often misunderstood. They are actually two separate ways to approach issues within a business, but benchmarking offers several clear advantages over competitor research.
For one thing, benchmarking focuses on the future. It's not a way to find a quick fix for a temporary problem. You're looking for long-term strategies to help your business grow.
During competitive research might show you how to mirror your competition's approach, but it won't help you surpass their results. Additionally, competitor research usually involves spying on the competition and making assumptions about their approaches to certain problems or solutions. Benchmarking takes the opposite approach.
You're looking for companies and individuals who have achieved the kind of results that you want to make possible for your business. That's why it's helpful to find non-direct competitors because you might want to contact them directly.
During a benchmarking study, you might read case studies and articles written by the companies who have set the benchmarks that you want to emulate. It's not a covert operation — it's a way to take your business to the next level.
What Is the Benchmarking Process?
The benchmarking process can vary depending on your specific goals and the size of your business. The Fortune 100 company, for example, might spend years on benchmarking in different departments and on different policies and procedures.
For small businesses, though, benchmarking doesn't have to take as much time thinking while fewer steps. Regardless of the size of your business, however, you need to observe at least these steps if you want your benchmarking study to prove effective.
1. Analyze Internal Process
Start by taking a hard look at your own internal processes. How do you acquire new customers? How do you nurture leads? How do you retain customers and incentivize them to buy more of your products?
Asking these questions can help businesses in the Knowledge Commerce market to find ways to reach their target audiences.
You might also want to ask questions about your internal approach to creating new products. How long does it take you to create an online course from start to finish? What have the reviews been like? How does your course content compared to those of your competitors?
For every process, procedure, or technique that you want to benchmark, you need a comprehensive understanding of your current efforts and methodologies.
2. Decide How Your Benchmarking Study Will Proceed
Next, you need to create a game plan for your benchmarking study. You've already identified your competitors and other companies against which you want to measure your own, but now you need to decide how you will approach each benchmark.
Maybe you will read case studies, interview executives for owners of other businesses, conduct online research about web traffic and other digital marketing metrics, or something else entirely.
3. Decide How You’ll Measure Success
There are lots of ways to measure success, especially when it comes to online marketing. For example, one business might find that increased web traffic corresponds directly with increased sales.
Another company, perhaps even in the same industry, might notice that high rates of customer retention provide more revenue than high levels of customer acquisition.
With this in mind, you need to decide how you will measure success. What metrics are your benchmarking partners using to facilitate their own success, and how will you apply those same metrics in measuring your progress?
4. Research and Gather Evidence
This is perhaps the most important part of the benchmarking process. During this stage, you are gathering evidence and data to support your hypothesis about your benchmarking partners.
As mentioned above, you can gather information through a variety of sources. Case studies, interviews, data analysis, and other sources can help you paint a rich picture of your benchmarking partners' success.
5. Apply What You’ve Learned
Now that you know the steps you need to take to bring your business to the next level, you can begin implementing policies and procedures that will help you grow your online business and sell more Knowledge Commerce products.
Don't forget that this can be a long-term strategy. Don't expect results in the first few days after you implement changes.
6. Test and Regroup
It's important to note that what works for one company might not work for another. Even if a company has set the benchmark for a particular process or technique, it might not yield the same results for you.
We mentioned above that benchmarking and competition research are two different animals. This is one reason.
During competition research, you might decide to steal a strategy that has worked well for your competitor. But that's the end of the game. In benchmarking, your goal is to apply strategies that you believe will help elevate your business, then make changes based on the results you achieve.
What Type of Benchmarking Should You Use?
Believe it or not, there are several different types of benchmarking that you might use for your online business. Several of them, such as international benchmarking and internal benchmarking, are more suited for larger companies. However, the best benchmarking strategies for smaller businesses in the Knowledge Commerce market are competitive benchmarking and strategic benchmarking.
Competitive benchmarking involves studying another best practices for a particular strategy or technique and adopting it for your business. Meanwhile, internal benchmarking involves transferring a strategy you already use to another aspect of your business.
For instance, you could use internal benchmarking to expand your business into a new social media realm. Maybe you've only used Facebook and Twitter in the past, but you're interested in developing a presence on Instagram.
Using internal benchmarking, you can evaluate the best strategies that have worked on Facebook and Twitter, then adopt them for Instagram.
Instagram is a completely different social media platform, which means that you will continually have to tweak your approach until you find the best strategy for it.
You can use competitive benchmarking to apply someone else's approached Instagram to your own business. You might have seen a case study or other documentation online that matches what you want to achieve through social media.
How Can You Conduct a Competitive Analysis?
Benchmarking often begins with competitive analysis. You want to know what your competitors are doing so that you can do it better.
Competitor research is different from a competitive analysis because you're digging deeper into your competitors' overall strategies and finding ways to surpass them with your own business.
Ideally, you'll collect as much information about your competitors as possible. You want to know how they attract new leads, how they nurture leads through the sales funnel, how they maintain their online presence, and what share of the market they possess.
What competitors should you analyze?
It depends on your goals. If you want to boost brand loyalty and awareness, consider conducting a competitive analysis on an industry leader. You're looking for a competitor who has a large share of the market and who has a powerful voice online.
To put this into context, consider your friendly neighborhood grocery store. It is a small establishment that caters to only a few loyal customers. If that grocer wanted to conduct a competitive analysis, it might focus on a large brand, such as Kroger.
Even though you might conduct competitive analyses on brands that are much larger than yours, you can still learn from the data you collect and use it to help your own business become a stronger competitor.
How do you find this information?
You start by investigating them online. You can use a tool like SEMrush to collect data on your competitors. The type of data you collect will depend on the benchmarks in which you are most interested.
For instance, if you're interested and advertising your online courses, membership site, or other digital products, you might want to know how much your competitors are spending on advertising. You can then decide your budget for advertising based on the ROI you anticipate.
SEMrush also provides data about your competitors' web traffic, keyword rankings, and more.You can even set up brand monitoring to find out how often and in what context your competitors are mentioned online.
You can benchmark for many different channels, for email marketing and social media to organic web traffic and paid traffic. You might also want to track earned media if you're interested in improving brand awareness for your online business.
When conducting a competitive analysis, you can focus on channels in which you are already engaged or on channels that you would like to pursue in the future. Either way, you're looking for data that can help your business grow over the long haul.
This is why competitive analyses can often last for months or even years. You're not just conducting one-time competitor research; instead, you're looking for trends that stays static over long periods of time.
Interpreting The Results
After you have conducted your competitive analysis, you need to render the data in a way that makes sense to you and, if applicable, your team. You can use charts, graphs, spreadsheets, or any other tool that allows you to visualize the data and to draw conclusions from it.
For instance, let's say that you are conducting a competitive analysis to determine how often you should blog. You discover through the competitive analysis that your three main competitors blog at least once per day. Additionally, you find that each of your competitors' blog posts get at least three times the engagement that your blog posts get.
From that data, you can infer a few things. For one thing, you might want to blog more often or write longer, more detailed blog posts distill traffic away from your competitors. Additionally, you might want to incentivize your audience to engage with your blog posts, such as through commenting and social shares.
You might want to further investigate the types of blog posts that your competitors share. What topics to discuss? What CTAs do they use? What types of engagement are most common?
Over time, as you evolve your approach to blogging, you'll continually compare your results against those of your competitors. If you apply what you've learned effectively, you should see improvements in your results.
To help you get the most out of marking, let's look at a couple of fictional examples that you might use to model your own competitive analysis on.
Maybe you are interested in attracting more traffic to your Kajabi website. More traffic doesn't automatically result in more sales, but it will increase brand awareness and increase the chances of converting more people.
Web traffic, in this case, is your benchmark. You just have to tie that goal to a specific competitor or to a best practice in your industry.
For example, maybe you know that your closest competitor gets four times more traffic than you do. Now it's time to figure out why.
Investigate that competitor's website content, social media activity, organic reach on the search engines, and other data that might contribute to increased web traffic. You'll likely begin to see patterns that you can interpret and use for your own business.
Maybe you have decided to start an email marketing campaign. Good for you. This type of marketing campaign can result in high ROI and limited expense.
First, you need a benchmark. You might find a case study that indicates that the average Knowledge Commerce business has 5,000 email subscribers, for example.
You don't just want 5,000 email subscribers, though. You want to surpass that number so that your business becomes more powerful and you reach more people.
We mentioned above the competitor research often involves attempting to mirror the competitors. That's not what we want here. We're looking for ways to make sure your business performs better than others in your category.
If there is a dearth of information on email marketing in the Knowledge Commerce marketplace, you might have to look outside your industry to find strategies that you might use an email marketing. For instance, you might use data from online marketers to understand the best practices for improving email marketing.
Getting the Maximum Value for Your Business
Benchmarking has one goal: Make the most of every decision regarding your business. In other words, you don't want to waste time on marketing efforts, sales strategies, and product launches that won't result in high ROI.
During a benchmarking study, you get to know your competitors extremely well and you learn what businesses in other industries are doing to capture more market share and to improve revenue.
Both types of information can prove extremely valuable to your business.
Start by learning as much as you can about other Knowledge Commerce players in your industry. How much of the market share do they capture? What are they doing that you don't do? What can you do to make your business more attractive than theirs?
Set goals for your benchmarking study and decide what channels you want to investigate. If you're not interested in social media, there's no reason to collect data about it.
In Knowledge Commerce, data has become increasingly valuable across the board. The more you know about your competitors and about strategies that work for other businesses, the more equipped you become to compete.
Use Kajabi to Turn Your Knowledge and Content Into Products You Can Sell
If you haven't started an online business, or if you're struggling in the Knowledge Commerce marketing, you might need a new solution to carry your business to the next level. That's exactly what Kajabi provides.
Sign up for a free trial so you can explore the Kajabi platform from the inside. Learn how you can set up an email marketing campaign, a CRM, sales pages, landing pages, and dozens of other assets.
We believe in simplifying the Knowledge Commerce market. Instead of wrangling dozens of tools from third parties, you can get everything you need under one umbrella.
Once you've set up your business, you can use benchmarking to improve your processes, strategies, and techniques. Doing so will help your business grow faster.
What is benchmarking? It's a powerful strategy that allows you to compare your business to your competitors and to find better ways to solve existing problems. It might even open your eyes to strategies you've never considered.
Why benchmarking? It's always a good idea to know what your competitors are up to. Additionally, you don't want to miss the opportunity to gather more of the market share and to improve brand awareness.
You'll start by analyzing your own internal processes. What's working and what's not? Then you'll decide on your benchmarking strategy. What channels will you analyze? How will you evaluate the data?
After you’ve made those decisions, it's time to gather evidence and to research your competitors. Use graphs, charts, and other visual representations of the data you collect.
You'll then find yourself ready to apply what you learned, to test the new strategies you've implemented, and to regroup and make changes when necessary.
Conducting a competitive analysis can help with your benchmarking study and provide more insight into your competitors. Use our fictional benchmarking examples the set up your own study today.
Have you done benchmarking in the past? Do you plan to do any in the future?
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