How to use benchmarking to set your standards for success
Summary
How do you know when your work is successful? Benchmarking is a data-driven process that helps you create your own standards to measure success. Setting benchmarks is a simple way to set clear expectations for your team. In this article, learn the different types of benchmarking and the steps to create your own benchmarks.
Success is a vague term—what is it? And how do you know when you, your projects, and your business are successful? The truth is, everyone measures their success differently. This makes success hard to define, especially when you’re managing a team or growing a business.
That’s why it’s so important to set your own standards for success, which you can do through a data-driven approach known as benchmarking. With benchmarking, you use competitors and internal comparisons to create reliable points of reference for your success.
What is benchmarking?
A benchmark is a predetermined standard, and benchmarking is the process of setting those standards. To determine benchmarks, you need to measure your work against something else. There are a variety of things you can set benchmarks against, including:
Competitors. Comparing your work or desired results against your competitors shows you what’s normal in the industry and what customers expect. Once you know this, you can adjust your business, product, or messaging to remain competitive.
Previous results. Using previous results as your benchmarks shows you if you’re improving internally and helps you identify gaps in your processes and workflows. If you’re improving, you can double down on what you’re doing (because it’s working). If you’re not, this is a great opportunity to make changes.
Goals. Using goals as a benchmark shows if your results are what you expected or initially wanted when you began. If you’re falling short, you might need to adjust your goals to make sure they’re achievable.
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What’s the difference between benchmarking and setting goals?
You can use both goals and benchmarks to analyze project outcomes, but they’re slightly different in practice. The fundamental difference is the target. Goals are what you want to achieve and tend to be growth-oriented, while benchmarks compare your actual results against a reference. Put another way, goals are what you aspire to achieve, while benchmarks compare your performance to another reference point.
For example, imagine you’ve set a business goal to hit $500K in recurring revenue this year. This goal illustrates what you want to achieve in order to grow and expand your cash flow. On the other hand, your revenue benchmarks would show you the amount of money you earn compared to competitors or what you made last year. Usually, you can use benchmarks to inform goals. If you know you hit $200K in revenue last year and you’re growing exponentially, then $500K is a realistic goal.
Benchmarking versus competitor analysis
Both benchmarking and competitor analyses use competitor research to determine how other companies operate. The difference between the two is scope—benchmarking is smaller and focuses on individual business processes, while competitive analysis is larger in scope and focuses on big-picture strategies and goals.
With benchmarking, you use competitor research data to review your own processes and best practices. You record and save these as benchmarks, and use them to set the standard for how you work. This is slightly different from a competitive analysis, where you use the data to review your overall business strategy. Whether you decide to use benchmarking or competitor analysis depends on the scope of your project. If you're only looking at processes, benchmarking works fine. If you’re looking for data on larger strategies and goals, you might want to use a competitor analysis.
Why is benchmarking important?
Benchmarking helps you set the standards for how you work. But instead of choosing standards based on opinions or ideas, benchmarking is data-driven. This ensures that your work standards are targeted and focused on things that have the greatest impact.
Benchmarking also shows employees the rationale for workplace expectations and goals. It gives you data to demonstrate why your team's daily tasks are important, so everyone knows what they're working for and why.
There are many benefits to benchmarking, including:
Define and determine success. With benchmarking, you get to decide what success looks like for your company. For example, if your benchmark for success is a consistent 10% increase in lead generation YoY and you’re on track to hit 11%, you’ll know you’ve exceeded expectations.
Identify gaps. Benchmarking reveals gaps as compared to your competition. For example, it’s hard to stay competitive if you’re producing three new product features in the same timeframe your competitors are producing eight.
Set higher standards for product quality. Benchmarking results in higher-quality products or services that improve customer satisfaction. When your benchmark is to host four community events every year, for example, you’re setting the standard to interact with your customers more regularly.
Here’s how setting benchmarks can help you
Setting benchmarks is simple, but it’s a process. Before you begin, collect relevant benchmarking data to use for your comparison. This can be data on your competitors, previous work, or your goals. The metrics from this data collection will be the baseline for your benchmark analysis.
For example, let’s say you’re tracking product launches. You find it takes you three months to go from ideation to launch. That timing might sound long or short to you depending on your perception, but perception isn’t an accurate way to track if this is the best timing for your launch. Instead, you can use benchmarks to answer how long each product launch should take. For example, you might look into:
How long does it take your competitor to launch a similar product?
How long did the last product launch take?
Have we made improvements to our processes that will save us time during this launch?
Note that other details will come into play here as well. Your competitor might launch a product faster than you, but that’s not relevant if their team and budget is double your size. Consider how relevant your benchmark is to your current situation and choose one that makes the most sense for each specific scenario.
Types of benchmarking
There are three different types of benchmarking: internal, competitive, and strategic. The type you use will depend on what you’re measuring, and what you’d like to get out of it.
Internal benchmarking
If you’re new to benchmarking, internal benchmarking is the easiest benchmark to start with. Like other parts of project management, internal benchmarking uses organizational knowledge to answer questions. Also, because you’re reviewing internal information, data collection is entirely within your control. For internal benchmarking, review business performance indicators for other departments, teams, or even previous work. Look for best practices or effective processes you can apply to your current work.
You can collect internal information by:
Using questionnaires and asking colleagues or direct reports what they achieved, and how.
Reviewing past projects and looking for business processes that have given your company a competitive advantage.
Studying high-impact initiatives—what made them work? If you can reuse and standardize the processes or best practices that made these projects successful, then these are good candidates for performance benchmarking.
Looking at previous goals to see if your work matches your expectations.
As you collect this information, take note of any desired results (i.e., processes you’d want to replicate and that could become a standard). At the same time, keep an eye out for any performance gaps—the difference between your actual performance and what you intended. This process is similar to a gap analysis, which compares your current performance to your desired performance. Except with internal benchmarking, you’re comparing your current performance to past performances or other team's performances.
Once you've identified what’s worked and what hasn’t, you can end the internal review, benchmarking the processes and workflows you’d like to standardize.
Read: How to capture lessons learned in project managementExecutive reporting guide: Universal reporting for today’s leaders
Learn strategies to monitor business performance in real-time—so you can make better, more informed decisions for your team.
Competitive benchmarking
This is the flip-side of an internal review, where you look outwards to the results from other companies in your industry. Competitive benchmarking is trickier, because it’s harder to find reliable data. You need to rely on your competitors to share information, or get data from a third party which you may not be able to verify.
But it’s worth figuring out. Once you get past the collection hurdles, competitive research is one of the best ways to gain a competitive edge. It helps you spot patterns or themes common to your industry, which you can use for benchmarking and overall process improvement.
For example, let’s say you discover that a direct competitor gets more social media engagement than your accounts. Using this information, you can set a benchmark for your own company’s social media engagement. In short, you’re deciding what social media performance metrics your company should hit to stay competitive in your industry.
Strategic benchmarking
Sometimes you know something isn’t working, but you can’t seem to figure out why. Maybe you’re just in a problem-solving rut, or maybe you’re expanding into new markets and developing an entirely new way of working. Strategic benchmarking is a creative way to stretch beyond industry knowledge. For strategic benchmarking, you’re looking for best-in-class performance. Often, this means looking to other companies, industries, or even cultures to see if you can create a new strategic benchmark for your work.
Strategic benchmarking has been used throughout history to foster innovation. For example, when an escalator company moved to shopping malls, it had to solve the problem of helping people to rise quickly and steeply, against gravity. It was unprecedented in their industry, so they looked outwards. In the end, they used techniques from the mining industry to design mall escalators. When done successfully like this, strategic benchmarking can catapult you well beyond the competition.
The 8 steps in the benchmarking process
By following these eight simple steps, you can use benchmarking to make continuous improvements to your workflows and processes.
Decide what you’re benchmarking. Determine what you’d like to benchmark. If you’re new to benchmarks, start by creating benchmarks for projects, processes, or desired results that have the highest impact on your work.
Decide your benchmarking type. In other words, determine if your data will come from competitive, internal, or strategic benchmarking.
Review and record. Look at what you’re creating the benchmark for. Record all related processes and document related workflows so you have a good idea of where you are now, before you start.
Collect data. Depending on the type of benchmarking, data could come from competitor research or internal data. When using competitive research, be careful with secondary information on competitors (i.e. from websites or news articles) which can be hard to fact check.
Analyze data. Measure data against your own performance or work to identify gaps, patterns, and opportunities for improvement.
Make a plan. Data won’t do much on its own. Once you have a full analysis, use project planning to decide how you’re going to set and use these benchmarks.
Implement changes. Now, you can move into the project management stage to fully implement your benchmarks and create a new standard for your work, team, and company.
Rinse and repeat. Benchmarking is an ongoing process, but it’s specific to each new idea or workflow. Restart the process from the beginning for every new project.
Benchmarking sets the gold standard
Benchmarking processes, workflows, and results gives you a baseline for measuring your success. Benchmarks clarify expectations and let your team know how they can produce the best results.
Benchmarking helps you to find the work standards that push your business, but it won’t help you get that work done. With Asana, you can track, automate, and build out workflows that let you do better work, faster.
Executive reporting guide: Universal reporting for today’s leaders
Learn strategies to monitor business performance in real-time—so you can make better, more informed decisions for your team.
