What Does Benchmarking Mean in Business?

Today’s marketplace is ever-evolving, causing membership and association professionals to adapt continually. As a result, organizations are constantly searching for new ways to improve their operations and increase their bottom line. To accomplish this, benchmarking is a great place to start.

Benchmarking in business can help you achieve a competitive advantage by evaluating your organization and comparing it to top competitors. There are four different types of benchmarking, which we will discuss in detail. By the end of this article, you will have a thorough understanding of what benchmarking is, the benefits, and how you can begin benchmarking.

First, let’s answer the question, “What does benchmarking mean in business?”

What Is Benchmarking?

Benchmarking is the process of comparing a company’s performance against industry peers, competitors, or itself. The purpose of benchmarking is to identify areas for improvement to close the gap between an organization and its competition.

As Peter Drucker says, “What a business needs most for its decisions–especially its strategic ones–are data about what goes on outside it.”

What Is Benchmarking Data?

What is benchmarking data? Benchmarking data focuses on measuring key performance indicators (KPIs) and other metrics such as profit, quality, time, customer satisfaction, etc. But the data that benchmarking membership reports collect depend on the benchmarking type.

5 Types of Benchmarking

The results gleaned from benchmarking initiatives can suggest that organizations make various changes throughout the business, but change doesn’t come easy. Therefore, when investing resources into benchmark marketing, prepare your organization for a strategic overhaul.

Below we’ve listed five types of benchmarking to consider and what they entail.

1. Performance Benchmarking

Performance benchmarking is a relatively complex type of benchmarking. It involves collecting and analyzing quantitative data from your organization and that of competitors. Once compiled, those benchmarking metrics are compared to find performance gaps. Executing the changes revealed in a performance benchmarking report may not be possible without implementing a long-term change plan.

2. Process Benchmarking

This type of benchmarking involves gathering qualitative information about how your processes and practices compare to others in your industry. However, process benchmarking can be challenging to facilitate because it requires access to industry or specific company data, which may not be public. By analyzing how your competitors conduct certain activities, you can improve your internal processes, making them more efficient and cost-effective.

3. Internal Benchmarking

Internal benchmarking is simplest because the data is readily available. It compares metrics and/or processes within an organization. You need to select at least two areas within the organization that share metrics and/or practices that are comparable. This type of benchmarking helps improve organizational efficiencies, establishing new and often higher standards and better operating procedures.

4. External Benchmarking

External benchmarking is a broad type of benchmarking that looks outward, comparing key metrics or practices of an organization to one or many others. You can perform external benchmarking against several organizations whether they are competitors or not to see where your business fits into the wider market. This allows you to identify areas of weakness that you should focus on improving.

5. Strategic Benchmarking

Strategic benchmarking is a form of external benchmarking, specifically analyzing how other companies became successful. It’s about identifying “winning” businesses in and out of your industry, then asking questions like, “What kind of strategies did they employ to get where they are today?” and “What makes their marketing campaigns so successful?” Strategic benchmarking results in organizations creating an action plan that allows them to be more competitive.

Benefits of Benchmarking

Benchmarking is an ongoing process that enables organizations to stay up to date on industry trends and keep a close eye on competitors. Here are a few benefits of investing in benchmarking association services.

Identify Areas for Improvement

One of the biggest benefits of benchmarking is that it helps you identify areas for improvement in your organization. Benchmarking metrics capture what’s working and what’s not from an internal and external perspective. A thorough analysis of your organization’s past compared to its current performance and how it stacks up against competitors will allow you to spot trends and patterns that may have been overlooked.

Increase Efficiencies

Continuously benchmarking your internal processes and procedures can help your organization become more efficient and productive. Benchmarking encourages companies to become nimble by automating manual tasks, simplifying processes, cutting costs, and generally streamlining operations to help retain more revenue.

Gain a Competitive Advantage

When studying the competition, you’ll learn where they succeed. As a result, you can use benchmarking data to optimize your position in the market by improving upon your competitors’ practices. Comprehensive benchmarking also exposes the gaps in your competitors’ strategies and performance, allowing you to excel by taking advantage of those opportunities.

In this article, we’ve answered questions like, “What does benchmarking mean in business?” and “What is benchmarking data?” Now, it’s time to find a partner specializing in associations to begin benchmarking your organization against the competition.

Let us introduce ourselves.

Benchmarking Association Services for Membership Organizations

Marketing General Incorporated (MGI) is the largest association-focused direct marketing agency in North America. We partner with associations to increase new membership counts, dues revenue, and non-dues revenue streams.

If you’re interested in benchmarking, our experienced research team is equipped to collect and quantify best practices used in the industry so that you can benchmark your membership organization against competitors and peers.

With over 40 years of experience conducting quantitative and qualitative research for membership organizations, we can enable you to make data-backed decisions that help you reach your goals. Additionally, for 14 years, MGI has produced the annual Membership Marketing Benchmarking Report with thousands of participating associations. MGI offers a custom analysis to compare an individual association with like groups.

From survey design and development to execution and interpretation, you can expect answers to your toughest questions. We deliver actionable data paired with the next steps you can execute immediately. Request a membership consultation and download our latest Membership Marketing Benchmarking Report to learn more.

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