The downside of benchmarking
What is benchmarking in business?
Benchmarking is the process of comparing how your business is doing against the performance of other leaders in your industry. For example, if you ran a technology company and wanted to see how your sales compared to industry benchmarks, you’d most likely run your numbers against big companies like Google or Apple.
Companies use benchmarking as a way to identify gaps in processes and sales and to examine how leaders have been able to accomplish their goals. By identifying where your company is falling short and seeing how much others have achieved, you can make strides when it comes to internal growth. Benchmarking can also be useful when it comes to finding new ways to increase profit and how to deal with crises like economic downturns or employee retention issues.
The downside of benchmarking
The act of benchmarking can be useful when it comes to setting goals and identifying competitors, but it can also serve as a deterrent. How big is your business? Sure, it can be encouraging to set lofty goals and track the progress of industry giants, but it can also make you feel like you’re not doing enough.
Making your own goals is crucial, but getting so wrapped up in how you measure up against others will never be helpful. This is where benchmarking sometimes becomes harmful to entrepreneurs. Your focus must be on finding ways to improve your business and achieve your own mission rather than competing with others for market share or sales. What got you into your industry in the first place? It wasn’t that you wanted to knock out Google. You had an idea that would provide real value to the lives of your clients and you found a way to turn that passion into a business.
As a business owner, you should never forget that your motivation and goals are unique and the comparison that is inherent in benchmarking can make you lose sight of that.
Focusing on what matters
If you really want to make improvements in business, start by assessing how well you know your customer. Developing buyer personas can be very helpful in this area so you really understand the ideal audience for your products or services. Are you still offering them value? Are you not only meeting but anticipating their needs? Your customers need to be raving fans of your business. Without people who are dedicated to following and making purchases from your brand, your company will crumble. Instead of using benchmarking as a way to compare yourself to other companies in the industry, use it as a tool to help yourself provide more for your customer. What are other brands doing to successfully retain current clients and attract new ones?
Staying true to your mission
For an emerging technology company, Apple will always serve as a point of inspiration. However, you didn’t launch a company to constantly talk about how Apple is incredible – you did so because you want to make your own strides in the industry. Instead of using benchmarking as a way to compete with companies like Apple, use it as a springboard to create new and better customer experiences. When you find yourself spending too much time thinking about what doesn’t serve you, you lose valuable time that you could be using to better your own company. Connect back to your original purpose – how can you build the life you dreamed of by making your company run more efficiently?
Understand that expectations change
Benchmarking can be useful if taken at face value. That is, measuring your present success by how the industry is performing today can prove useful. But what benchmarking doesn’t account for is the changing nature of any industry. Every day, the needs and desires of humans can change. If Henry Ford had modeled his transportation company after the success of the railroad, then would Ford cars even exist? Instead, he looked ahead and found new ways to provide reliable transportation. Market expectations can shift in an instant. Be aware of current customer expectations, but be knowledgeable enough to anticipate the changing needs of your target audience so that you can continue to make your customers happy in the future.
Benchmarking is a common marketing practice to help you determine where you stand in comparison to your competitors. But when you focus too much on the efforts of other businesses, you lose sight of your personal business goals.
When you answer the question of “What is benchmarking in business,” you’ll see that it can prove useful in some ways but can be detrimental in others. Remembering why you started your business in the first place, staying true to your brand identity and always putting your clients and customer needs first allows you to utilize benchmarking without letting it disrupt your mission.
Discover how to effectively use benchmarking
As with most business strategies, benchmarking can be helpful if you learn to use it in the right ways. You should not disregard the positives simply because you are worried about the negatives. Learn methods to systematically optimize your business through methods like benchmarking with Tony Robbins’ complimentary Seven Forces content series.