I had an overwhelmingly positive response to my post the other day entitled “Identifying Competitive Threats.” In fact so much so that today’s post is somewhat of a follow-on piece based upon some of the questions that were submitted. As I read the comments and e-mails it became clear to me that while many of you understood that staying abreast of your competition is of critical importance, most of you just didn’t know how to go about getting the job done. So in today’s post, I’ll provide the two key foundational elements of competitive assessments; research and benchmarking…
Step one on the way to dominating your competition is to conduct competitive research. This is the easy part of the process in that you have several options for how to accumulate the data you’re seeking.
These days you can purchase pre-packaged industry reports by sector, vertical, and in many cases by micro-vertical for most any business line. Alternatively, you can opt to conduct the research internally, hire a research or business intelligence firm, use a consultant, subscribe to third party data services, or anyone or combination of the aforementioned options. Regardless of how you go about gathering your data the important part is that you stop and take time to decide what data you want to gather and have a plan (resources, time frame, and budget) for how you intend to turn that data into meaningful and actionable information which is a nice segue into step number two…Benchmarking.
How many times have you heard someone refer to themselves as or their company as “Best in Class?” If you want to have a bit of fun and silence even the savviest sales professional try using my response to such a claim which is always: “how did you arrive at that conclusion and by what objective standards do you benchmark against for validation?” Nine times out of ten you’ll find that “best in class” is just a buzzword being used in a sales pitch, but every now and then you’ll find that the claim can be backed up by solid third-party research and benchmarking.
While benchmarking can be made to be extremely complex and expensive by using enterprise-class software and analytics here are a few tips for keeping it simple:
- Open up an Excel spreadsheet.
- Take every single competitor that you desire to measure yourself against and create an individual worksheet for that competitor.
- Create rows in each worksheet for items you want to measure (business units, service lines, products, etc.).
- Now create columns for each benchmark which you choose to measure against. The benchmarks can be as simple as estimates of where you think your competitors will be in the next twelve months based on any number of variables that are determined based upon what’s important to you…The variables could be financial metrics like operating expenses as a percentage of gross margin to facilities costs per square foot or variables like customer loyalty, brand recognition, market penetration, revenue growth, etc.
The only way that you can truly become best in class is to understand where your competitors are in various objective categories and then work to refine your organization to best the competition in any category of importance to you. Properly implemented research and benchmarking will allow your company to become a disruptive force in the market-leading by innovation. You will be able to convert formerly unusable data into actionable information that will allow you to refine pricing, roll-out new products, open new markets, increase brand equity, and bottom-line margins. Understanding your competition is a very, very good thing…
