Benchmarking is a method for judging your business by objective standards. It's a step beyond setting goals: In benchmarking you use your industry's top performers to set standards -- benchmarks -- for evaluating your company and your employees. When appraising how well your company works and how much you can improve, benchmarking gives you more than a gut feeling to go on.
Your first step is to decide what you want to benchmark, notes intelligence consultant Arik Johnson. Be as specific as possible. For example, if you're in retail and you want to benchmark sales, decide if your priority is total sale volume -- dollar value per transaction -- or "upselling" customers to buy more than they planned to. You can study all of these sales factors, of course, but you'll gain better data by benchmarking different metrics -- standards -- separately.
To set your benchmarks for a particular objective, Johnson recommends looking at competitors in your field that perform at the top of their game. If your concern is the dollar value per sale, you can talk to clients, competitors and trade associations or read trade journals to determine whose salespeople bring in the biggest sales. You can also look for top sellers in other fields or at branches of your own company that consistently outperform the rest.
Data and Analysis
The next step is to gather detailed data on your own company and the benchmark company. Gather statistics on how well the benchmark company performs and how your own people perform at the same task. Then research why the difference exists. Survey your customers and the benchmark firm's, for example, to find out what the difference in selling tactics is or send your benchmark team to watch your salespeople in action.
Once your benchmark team has gathered and analyzed the data, you'll have to figure out how to turn it into a workable action plan. Writing on the Multichannel Merchant website, Kate Vitasek recommends you look over your team's conclusions, see which of the benchmark company's policies you could adopt and then prioritize them, rather than trying to change everything at once. Set targets for improvement with specific deadlines and monitor your company's progress.