How do you assess business success? Let’s say Nike just dropped a new running sneaker and sales skyrocket this quarter. Successful, right? But what if Adidas also launched its own running sneaker at around the same time, outperforming Nike in sales. Would you still consider Nike’s sneaker a success? The truth is you won’t be able to measure the success of any brand, your own included, without comparing it to industry averages and competitors. In other words, you need to see how good you are against the rest. Enter benchmarking data.
What is external benchmarking?
External benchmarking is a realistic view of your business in the race for success. If you keep up a consistent pace of, let’s say, five miles per hour, but your competitors ran twice that speed, you’ve found yourself facing the sharp truth of external benchmarking. A valuable form of benchmarking, it compares your performance to the performance of those similar to you and if used wisely, helps you pinpoint areas for improvement.
Let’s say you produce a show for netflix.com. You’d want to know how your show performs compared to competitors so you’d benchmark your traffic against others and make a note of the top Netflix shows.
But if the external benchmarking definition considers anything, it’s specificity. You can’t compare your general business performance to any other similar company without considering a comparable cohort. In other words, you have to find commonly measured metrics between two companies before conducting research into a general comparison.
So, we’ve covered a couple of general external benchmarking examples. But let’s narrow the scope and look at tangible external benchmarking examples with a focus on competitive benchmarking for your business.
3 examples of external benchmarking
1. Product benchmarking
If you can’t access competitor data, why not take a piece of their product? Product benchmarking entails purchasing a competitor product similar in price, size, and purpose to your own offerings.
Once you have both products in hand, you can measure all sorts of things for external benchmarking – when to start, runtime, efficiency, weight, price, design – you name it.
2. HR and salary benchmarking
Do you pay your employees too much? Not enough? Or just the right amount? Salary benchmarking helps you compare your offered salaries to industry averages within a certain geographic region. If you find that your salaries are consistently higher than industry averages, you better hope that the output you’re getting is comparable.
Salary benchmarking helps companies maintain appropriate labor budgets and employee engagement.
3. Financial performance benchmarking
Companies should compare their financial performance with competitors. This includes overall revenue, expenses, and profits. While competitors might not hand this information over easily, you can access it through publicly available information, such as annual financial reports.
Get an edge with Similarweb
External benchmarking can be pretty difficult if you don’t have the right tools at your disposal. A lot of important data is simply unattainable, and without these digital insights, it’s impossible to know how you compare.
Similarweb benchmarking tools allow you to perform external benchmarking in just a few clicks, using the most granular and fresh data that’s constantly being updated in real-time.
Here are some handy features you should be using when performing external benchmarking research:
- Industry Analysis: Get a big-picture overview of your industry, including top leaders, marketing channels, demographics, and audience loyalty.
- Website Analysis: Discover how you compare directly to your competitors using data on traffic and engagement, new vs. returning users, and marketing channels.
- Segment Analysis: For more advanced external benchmarking, focus on a particular segmentation of a competitor’s website to surface insights most relevant to you.
- Conversion Analysis: Benchmark your conversion data against the competitors and the industry average.
Pro Tip: In Similarweb industry analysis, filter by date range and country to view benchmarks in a specific region and over time.
Within a few minutes, your team will have access to a mountain of valuable data, and you’ll be able to see exactly where you stand with your competitors.
Click here to start benchmarking your performance and discover how you stack up against the rest.
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