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Benchmarking refers to the competitive advantage that enables businesses to grow, adapt, and prosper through change. It is the method of measuring vital metrics and comparing such organizations with a competitor or other organizations outside the industry to understand where the organization needs to improve its performance.
Benchmarking is about finding the best-performing companies in your industry or others that involve similar processes, then comparing their processes and results with the processes and results of your organization. This allows an organization to identify the performance of those other companies and how they achieve their results. Therefore, it is imperative that companies use this survey tool to enable operations run faster, better, and more profitably.
Below are six benchmarking types used in market research through online survey software:
1. Performance Benchmarking
This form of benchmarking involves collecting quantitative data (for example, KPIs, or Key Performance Indicators). It is often the first action companies take in identifying performance gaps. To do this effectively, you need some standard measures or KPIs as well as a means to extract, collect, and analyze this data. With this process, you can obtain data that dictates the decision-making process.
2. External Benchmarking
It compares an organization's metrics or practices with one or more others. One or more organizations must agree to participate. A third party may also be needed to facilitate data collection. This approach can be very valuable, but it usually takes a lot of time and effort. What you achieve through this process is an objective understanding of your organization's current state, allowing you to set baselines and goals for improvement.
3. Internal type of Benchmarking
This compares metrics or practices of various units, departments, product lines, programs, geographies, etc., within the organization. To effectively execute this, you would require a minimum of two areas within the organization that share metrics or practices. This form of benchmarking is a starting point for understanding the current business performance model. It is primarily applied to large companies where some business areas are much more effective than other areas.
4. Practice Benchmarking
This form of benchmarking survey has to do with business practices and processes. It requires that procedures are in place to collect and analyze business data, such as how employees and teams complete their tasks or use certain technologies. Process mapping is one way to start benchmarking, and you can quickly identify and fix any performance gaps in your business.
5. Competitive Type of Benchmarking
This is a form of benchmarking that involves an organization focusing solely on comparing its own metrics and processes with those of its direct competition. This benchmarking type is very significant because it can help identify the reason a competitor is thriving or what promotes customer satisfaction in a particular industry.
6. Strategic Benchmarking
It is typically external and looks specifically at how other companies have been successful. For example, how successful are they in their marketing campaigns? What kind of business strategy do they employ? Benchmarking how you work out a strategy can help you understand what worked to win business inside and outside your industry. This is particularly useful for startups or startups.
Ultimately, benchmarking means willingness to admit that other companies or organizations are better at some business activities and smart enough to get the necessary knowledge on how to match or surpass them. You will not get this knowledge or understanding if you don't look to the world outside your department or organization.
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