You cannot effectively run a business in a vacuum. In order to know where your company is going and how it's able to compete, you need to measure and analyze performance both internally and externally. This is why benchmarking is vital for driving business excellence.
Overall, the goal of benchmarking is to:
- Determine what improvements are needed
- Analyze internal and external data on targeted areas of improvement
- Use gathered information to make strategic business decisions
A great example of benchmarking in action is in the sports arena. A team or athlete measures and analyzes statistics to see where they fall in the rankings and what they need to do to improve. The same principles apply in the business world, but it is much more complex than tracking batting averages or yards scored.
A company can benchmark everything from financial statements to the emotional intelligence of employees. Yet, many businesses only focus on benchmarking their bottom line. This omission can have disastrous consequences to the growth of the company.
Benchmarking digital performance
Aside from ad revenues and profits, what should a business benchmark to drive excellence? My answer to that question is digital performance. How does your company stack up against the likes of Nike, L'Oreal, or UPS? Is your office still reliant on paper? Are you aware of the latest trends in A.I.? Do you still run ads in printed newspapers?
If a company is not actively measuring its digital performance, then it becomes highly susceptible to disruption in today's digital world. Case in point: I doubt the music industry was benchmarking digital performance before Spotify, SoundCloud, or YouTube emerged and now it's scrambling to catch up.
So, how do you measure digital performance? And what is that you're measuring? While every company has different benchmarking needs, it's best to approach this process from both a macro and micro perspective.
The macro approach to benchmarking digital performance provides a bird's-eye-view on where the company is in the market. Is your company more traditional or is it digitally mature? When taking a macro approach, you'll want to look at your entire business model in order to:
Monitor trends inside and outside of your industry
Keeping your finger on the pulse of tech trends could breathe new life into your business. Take the growth of Uber and the sharing economy. This was a trend the restaurant industry should have been keeping a keen eye on. While ridesharing has little to do with food, this trend bled over into the restaurant world with the emergence of Doordash, Postmates, UberEATS, and more. Had a savvy company in the restaurant world benchmarked this particular trend, they could have created a food delivery app and dominated the field before anyone else could.
Track the competition's digital innovation and adoption
When FitBit started the fitness industry's wearable trend, apparel companies took notice. Nike saw the potential in wearables and released their fitness device, FuelBand, in fall of 2013. The problem, however, is that FuelBand wasn't radically different from FitBit and simply tracked users' physical activity, steps taken, and energy burned. Sales for FuelBand were disappointing and, in less than six months, Nike discontinued the tech.
Under Armour, on the other hand, watched the rise and fall of Nike's attempt and acted accordingly. Instead of developing another fitness wearable that functions the same as FitBit, Under Armour created HealthBox--a more robust system of wearable health trackers. HealthBox not only tracks steps and activity but also measures sleep, resting heart rate, workout intensity, body weight, and body fat percentage. It also sends alerts, works as an alarm clock and workout log, and allows users to control music volume and selection. Considering this product has been on the market for over a year now, it's safe to say it's already performing better than Nike's initial wearables attempt.
Analyze the digital methods in which you serve your customer
Are you still sending paper statements to customers? Is your competition creating seamless omni-channel experiences? Can you afford to invest in VR tech to attract more prospects? Evaluate the current digital state of your offerings, research options for improving, and decide if (and how) you can use those options to better serve the customer.
After measuring your company's digital performance at a macro level, you'll also need to monitor specific digital platforms or channels within your business. This type of benchmarking provides a company with granular data on performance.
The main micro digital performance areas to benchmark revolve around web, social, and mobile app analytics. Benchmarking Key Performance Indicators (KPIs)--such as usage, traffic, time spent on site, bounces, etc.--will give your company valuable insight into the customer experience. This will also provide your company with concrete data regarding performance.
For companies that want to remain agile and competitive in our Digital Age, benchmarking must go beyond tracking the bottom line if the goal is to drive excellence. Companies need to benchmark digital performance and progress in order to avoid disruption, gain a competitive edge, drive innovation, make informed predictions and decisions, and ultimately, improve performance.