Is your company performing well? An effective way to know your business’s progress is through benchmarking. Benchmarking is the process of comparing your company’s performance against other companies in your industry. This lets you know how well or how poorly your company is doing compared to others.
It can be challenging to know how and where to start when benchmarking your business. You can compare many factors, such as financials, customer satisfaction, employee productivity, and more. Plus, if your company transitioned to working remotely, you must also use digital strategic benchmarking tools to ensure you’re still on track.
Whether you’ve shifted to a digital workplace or not, here are some essential tips for benchmarking your company’s performance:
Find Relevant Data Points
The first step is finding the relevant data points for your industry. You can do this through online research, surveys, or contacting trade associations.
Relevant data points include:
- Financial metrics (revenue, profit, market share, etc.)
- Productivity metrics (output per worker, cycle time, defects per unit, etc.)
- Customer satisfaction metrics (NPS, CES, CSAT)
- Social media metrics (engagements, followers/likes, sentiment scores)
Look at Financial Ratios
Financial ratios are one of the most commonly used types of benchmarks. They compare two numeric values found in a company’s financial statements. This way, you can measure your company’s financial health and performance.
Some common financial ratios include:
- Liquidity ratios (current ratio, quick ratio)
- Profitability ratios (gross margin, operating margin, net profit margin)
- Asset management ratios (inventory turnover, accounts receivable turnover, total asset turnover)
- Debt management ratios (debt-to-equity ratio, debt service coverage ratio)
- Compare against Industry Averages
After you have gathered all the relevant data points, it’s time to compare your company against industry averages. This lets you know how you perform compared to other businesses in your industry.
Compare Customer Satisfaction Scores
Customer satisfaction is a critical metric for any business. After all, happy customers are more likely to stay loyal and continue doing business with you. Some ways to measure customer satisfaction include Net Promoter Score (NPS), Customer Effort Score (CES), and Customer Satisfaction Score (CSAT).
Check Employee Productivity Levels
Employee productivity is another essential metric to benchmark. You can measure this in several ways, such as output per worker or cycle time (the time it takes to complete a task). You can also measure employee productivity by tracking the number of defects per unit.
Compare Operational Metrics
Operational metrics can give you a good idea of how efficient your company is. If you track things like customer acquisition costs, employee turnover, and product defects, you can start to see where you need to make improvements.
You can find benchmarking data for operational metrics from research firms or industry associations. You can also compare your own company’s data over time to see if you’re making progress.
Use Benchmarking Tools
A few different software tools can help with the benchmarking process. These tools can automate some steps, like collecting data and calculating ratios.
Some popular benchmarking tools include Birst, Tableau, and IBM Cognos. Other free options, like Google Sheets and Microsoft Excel, are also available.
If you’ve shifted to a digital workplace, you should implement an effective workplace and intranet strategy in the first place before measuring your progress.
Join an Industry Association
It’s always best to join an industry association to connect with other companies and compare benchmarking data. Many associations collect data from member companies and publish reports on various topics.
You can also use the association’s website or forums to ask questions and get feedback from other members.
Hire a Consultant
If you want more help with the benchmarking process, you can hire a reputable consultant like Digital Workplace Group. These professionals can assess your company’s performance and help you develop strategies for improvement.
Look for consultants with experience in your industry or who specializes in benchmarking. You can find these professionals through research firms, industry associations, online directories, or simply click the DWG homepage to learn more.
Attend Industry Events
Consider attending industry events to learn about benchmarking and connect with other professionals. Many events offer sessions on benchmarking, from data collection to interpretation.
Read Industry Reports
Another great way to learn about benchmarking is to read industry reports. These reports are usually published by research firms or industry associations and can be a great source of information.
Make sure to read reports from reputable sources and look for relevant ones to your industry.
Talk to Other Businesses
If you want to benchmark your company, it’s always a good idea to talk to other businesses in your industry. Many companies are happy to share their data and experiences with others. You can find businesses to speak to through industry associations or online directories.