Performance benchmarking is usually the first step organizations take to identify performance gaps. What you get: Data that informs decision making. This form of benchmarking is usually the first step organizations take to identify performance gaps. Practice benchmarking involves gathering and comparing qualitative information about how an activity is conducted through people, processes, and technology. What you need: A standard approach to gather and compare qualitative information such as process mapping.
What you get: Insight into where and how performance gaps occur and best practices that the organization can apply to other areas. What you get : Internal benchmarking is a good starting point to understand the current standard of business performance. Benchmarking can help identify effective marketing strategies, inform product development and encourage new business ideas. Benchmarking can also be used to collect data to inform long-term business strategies, including reviewing critical functions to increase efficiency and improve performance.
Benchmarking can occur both internally and externally. Internally, companies can compare teams and departments to determine which processes are generating the best results. Externally, companies can compare themselves to their competitors in the marketplace.
Some of the most popular benchmarking methods include:. Companies look at their closest competitors and establish whether their products or services are in line with what else is being offered in the marketplace.
Businesses examine the process of the companies that they aspire to be like in their industry, usually those at the cutting edge of their sector. This allows them to compare results, establish best practices and identify areas in which they can improve their own processes.
Likewise, companies can compare internal departments to determine best practices for the company as a whole. The SWOT process of benchmarking against competitors has a broader scope and works by establishing a business's strengths, weaknesses, opportunities and threats.
By taking a more holistic look at competitor activity, you can get an accurate picture of the sector's landscape and how you fit into the wider market. Larger businesses can look internally to obtain process benchmark data by comparing metrics from different branches of their operations or even different methods of completing the same process.
Organizations usually look at one particular aspect of their business to establish performance metrics that allow them to measure their output against their own previous results, as well as seeing how they compare to their competitors.
Some industries have trade bodies or consumer groups associated with them and these are an example of how collaborative benchmarking can work. These associations collect and publish data from all their members, allowing them to identify industry-wide trends and enabling effective reviews of best practices.
Related: The 10 Steps of Benchmarking Accounting. Different industries use benchmarking in a variety of ways. Here are some examples of ways companies can use benchmarking to achieve specific results:. A call center might benchmark its customer satisfaction rating by asking customers to rate their service based on their experiences.
They might also collect data about waiting times, call lengths, first contact resolution rating, occupancy and shrinkage. These figures could be used to boost performance by improving processes and systems and also as a tool to help improve motivation among the staff.
A technology company may monitor the specifications of their competitors' products and compare them to their own, or measure their product life cycle against industry averages to ensure that they stay competitive. Medical settings often collect benchmarking data about their patients, including assessing waiting times, the quality of care, recovery times and patient satisfaction.
These metrics can be collected internally to establish the rate of progress in each area, and the results can also be compared to those of similar organizations to assess their position in the wider landscape. Benchmarking is key to staying competitive in the hospitality industry where everything is recorded and compared, from details of bar consumables and food costs to employee benefits and retention rates.
Bars, diners, restaurants and hotels also use customer satisfaction ratings for benchmarking purposes to ensure that their staff training is effective and check that their processes are robust. An e-commerce business uses benchmarking to establish an average cost per conversion across different product categories, measuring and predicting seasonal trends in sales and identifying their key customers and target markets using their analytics data and customer records.
There are several important benefits that can be gained by using a benchmarking method. Among the most common advantages are:.
Discovering new ways to set your product or service apart in the marketplace. Benchmarking is an interesting process in its own right as it gives some insight into the way markets work. This pride leads to better performance and higher-quality end results.
Benchmarking identifies where your company is right now compared to where you want it to go. If you are looking at improving any process in your business, benchmarking is a way of looking at how you can excel and become more successful through outlining the steps needed to achieve your goal.
The first stage of benchmarking is the most important in the process. Planning includes highlighting what you want to improve, who you will benchmark yourself against, and how you envisage success. Only once this step has been completed will you be able to move onto the next step as the results of planning will focus on the information you need to collect and what success will look like. After planning, benchmarking is about collecting information on your processes and how competitors do them.
If you are looking to improve your customer service satisfaction rating you should understand the processes involved in the department, how calls and communication are dealt with, and also how it differs from your competition. Maybe you can talk to someone in another call center, or call the center directly to gain first-hand knowledge of their processes. At this point, it is important to gather as much information as possible.
Once you feel you have all the information you can gather, you can start to plot it and begin to understand the shortcomings you may have. It is important to remember at this point in the process that no business is perfect and you must have an open mind to be able to analyze information objectively. Once findings start to be uncovered you can draft a report and start discussing the next steps to achieve better performance in this area.
Presenting findings to a department is never an easy thing, especially when you are proposing changes. Gathering and analyzing information is only worthwhile when you can implement changes and better the company in the process.
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