{"id":116683,"date":"2022-04-05T06:41:42","date_gmt":"2022-04-05T06:41:42","guid":{"rendered":"https:\/\/www.similarweb.com\/corp\/?p=116683"},"modified":"2025-03-30T13:43:11","modified_gmt":"2025-03-30T13:43:11","slug":"benchmarking-in-business","status":"publish","type":"post","link":"https:\/\/www.similarweb.com\/blog\/research\/business-benchmarking\/benchmarking-in-business\/","title":{"rendered":"Why Do Benchmarking in Business?"},"content":{"rendered":"

How do you know if you\u2019re doing a good job?<\/p>\n

Let\u2019s say you\u2019re a runner training for a 5K. The first time you run the distance, it takes you an hour. The next time you do it, it takes 45 minutes. You must be doing great, right? With such a huge improvement, you think you\u2019re ready to win a big race! Not so fast\u2026(pun intended!)<\/p>\n

You may think you\u2019re a fast runner, but what does fast mean without comparing your results to someone else\u2019s? If you\u2019re training to win a 5K, it would be helpful to know how fast the other runners will be. You might be disappointed to learn that 45 minutes \u2013 while a significant improvement from your previous trial \u2013 will barely put you in the top 50% of runners. In fact, if you want to win, you need to be doing it in about 15 minutes!<\/p>\n

\"Benchmarking<\/p>\n

This is benchmarking. The term has become a buzzword recently, so while everyone is throwing it around, let\u2019s get down to the nitty-gritty. What exactly does it mean and why is it so important?<\/p>\n

Why do business benchmarking?<\/h2>\n

Benchmarking in business tells you how successful your efforts are. It\u2019s an important tool for continuously improving performance and staying ahead of competitors.<\/p>\n

If you\u2019re still wondering why business benchmarking is so important, keep reading for the top seven ways it sets you up for success.<\/p>\n

\"Why<\/p>\n

1. Set business goals<\/h3>\n

Imperative for every business initiative, goals give you something to work toward and know whether your activities have been successful. However, goals must be realistic in order for them to be useful for your organization. How do you know if a goal is realistic? (You can have one guess) By benchmarking!<\/p>\n

Benchmarking in business can help you define what\u2019s possible and what\u2019s considered a success.<\/strong> Let\u2019s say you want to set a business goal for generating qualified leads from your website. Is 100 leads a month a good goal?<\/p>\n

To answer this question, create an internal benchmark<\/a> based on the number of leads generated in previous months and the month-over-month growth rate. You\u2019ll then create a second benchmark based on how many leads your competition might be generating from their websites. These company benchmarks will help you determine a reasonable goal for how many leads you can generate in a month.<\/p>\n

2. Understand your industry and competition<\/h3>\n

While every business strives to be unique, let\u2019s face it, being too unique is risky. In every industry, customers have certain expectations and companies tend to have similarities. It\u2019s important to do your market research<\/a> to understand these expectations and similarities because they exist for a reason. Competitive benchmarking<\/a> helps you understand what is expected and what is the norm in your industry.<\/p>\n

Let\u2019s say you decide to benchmark customer service among your competitors. Your research reveals that all competitors have 24\/7 phone support. This could be because customers expect around-the-clock support and avoid companies that don\u2019t offer it. This is important information for you when you develop your own customer service strategy. Make sure you\u2019re providing customers what they expect and that your offerings aren\u2019t lagging behind your competitors.<\/strong><\/p>\n

3. Improve efficiency and effectiveness<\/h3>\n

No matter how great your business is, it can always be better. You can always generate more sales, lower your marketing costs, or improve your processes. But you\u2019ll never know how to do these things without performance benchmarks<\/a>. You probably already track several metrics in your business \u2013 maybe you look at your click-through rate<\/a> or other website metrics<\/a>. Anything you track is a benchmark and can be used as a starting point for improvement.<\/p>\n

If you see that any of your metrics are stalled month-to-month, or any seem to get worse, you know that it\u2019s time to make some changes. For example, let\u2019s say you notice your website\u2019s bounce rate<\/a> increasing. This benchmark notifies you that it\u2019s time to figure out why people are leaving your website and what you can do to make them stay.<\/p>\n

4. Discover new opportunities<\/h3>\n

Ever felt stuck? Sometimes you try several different things to improve sales or any other metrics we discussed earlier and nothing works. You\u2019re not sure what else you can do.<\/p>\n

Instead of brainstorming for new ideas, you can create a strategic benchmark<\/a> for new ideas.<\/p>\n