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Benchmarking Analysis for a Tech Startup – Understand your Competition in 6 Steps
The road to success is never smooth, but by keeping a careful eye on your own business, your competitors, and your industry as a whole, you can collect all of the information you need to make the changes that will optimize your performance. Benchmarking analysis is an incredibly useful tool that can help you do just that.
What is a Benchmarking Analysis?
Benchmarking analysis is a process that many companies use to optimize their practices and achieve their business goals.
Benchmarking analysis consists of identifying weak spots in your business strategy, carefully observing the competition to see what they do differently, and developing and implementing improvements based on your findings.
Specifically, a benchmark is a point of reference or standard you can compare and measure yourself against. Whether the benchmark you choose is a competitor, your industry as a whole, or even a company in a different sector, collecting information on their processes and comparing them to your own can help you make the adjustments you need to succeed.
Why is Benchmarking Important for Tech Startups?
Benchmarking analysis has one main purpose—to help you optimize your business in a strategic, quantitative way. Particularly early on, it’s all too easy for the passion you bring to the business to cloud your decision-making. As a data-driven process, benchmarking can provide you with a more objective view of your industry and your place within it, allowing you to approach problems logically.
For a startup to succeed, particularly in a competitive industry like tech, it’s vital to use every tool at your disposal to build a strong, streamlined, effective, and profitable business. Figuring out how your competitors do what they do and what they do better gives you a remarkable competitive advantage you can use to surpass them.
Technology startups have an advantage when analyzing the competition. Many tech companies link their success to their online presence. Based on the available tools, we can precisely analyze the numbers related to their success, compare the available features of the application, the way they provide customer service, and much more. This allows the startup to avoid many mistakes and prepare improvements that will prove crucial to satisfying users and winning a share of the market. CEO, ASPER BROTHERS Let's Talk
How to Perform a Benchmarking Analysis in 6 Steps
1. Document your current methods
The data you collect as a benchmark won’t be useful unless you have something concrete to compare it to. Putting together a complete and detailed picture of your company’s current performance will help you figure out what you need to focus on and provide numbers you can use as a baseline for comparison.
Make sure to continue keeping track of these numbers as you finish your benchmarking analysis and implement changes so that you can see how effective your adjustments are.
2. Decide which metrics to analyze
There are many different ways to measure the success of a business. Particularly if this is your first time doing a benchmarking analysis, it’s best to select just a few metrics to focus on to avoid being overwhelmed by data.
One good strategy is to start with your main weaknesses. These are where you have the most room for improvement. If you’ve followed step one and created a clear picture of your company, it should be simple enough to determine where things are going wrong. Then, you can use benchmarking analysis to figure out how to solve the problems you’re experiencing.
Another option is to assess which processes are most critical to your company’s success. Prioritize the metrics that are most important for your business and use benchmarking analysis to figure out how you can improve them.
Metrics and KPIs to consider
General business metrics include factors like revenue, market share, productivity, and customer retention. However, you’ll probably want to go more in-depth than that and choose a few specific KPIs to analyze for more targeted, actionable results.
For example, if you’d like to improve your digital marketing, you might want to focus on KPIs such as organic rankings, backlinks, click-through rates, dwell time, social media mentions and ad performance. If you’re not sure how to go about improving those factors, you can always enlist the help of a professional web agency.
3. Define your benchmarks
The next step is to decide which benchmarks you want to use as comparisons in your analysis. There are several different types of benchmarking used, including:
- Internal benchmarking: Comparing the metrics of different teams, locations, or processes within your own organization in order to improve performance and efficiency.
- Competitive benchmarking: Looking at the metrics of direct competitors to see what they are doing well and how you can learn from them.
- Industry benchmarking: Using industry averages as a point of comparison to assess your chosen metrics and compare your company to how your industry is doing overall.
- Strategic benchmarking: Looking beyond your own industry to see what strategies, methods, and best practices world-class companies use to succeed.
4. Collect data and use benchmarking analysis tools
Gathering data isn’t always easy, particularly when targeting direct competitors because a lot of information is confidential. Fortunately, when it comes to digital marketing, there are plenty of online tools available to help you assess how your competitors are doing and how you measure up. Note that some competitors may run scripts that prevent their data from being accurately crawled and collected by certain tools, but they are very much in the minority.
Third-party competitor analysis tools
Here are some of the best tools to use when collecting data for a competitive benchmarking analysis focused on digital marketing metrics:
- SEMRush is one of the most popular SEO tools available. You can use it to check out your competitors’ backlinks and see which keywords they rank for.
- Ahrefs is another useful SEO tool you can use to check which keywords your competitors are ranking for and how much traffic they bring in.
- Similarweb can tell you a lot about where your competitors’ traffic comes from and what topics their visitors are interested in.
- SpyFu provides a lot of information about the competition in your industry, with both organic ranking and paid advertising data available.
- iSpionage is a great option for those focusing on paid advertising metrics. It analyzes multiple aspects of PPC campaigns, including target keywords, estimated monthly budget, and more.
- Mailcharts collects email marketing data from competitors and compares your email campaigns using metrics like timing and frequency.
- Sprout Social can create reports that compare your performance on each social media platform to that of competitors in your industry.
5. Analyze the data and create a plan
Once you have collected all of the benchmarking data you need, compare it to the information you gathered on your own company. If you let yourself be guided by the numbers, you should be able to find gaps in your performance and processes and brainstorm ways to fill them. If you are doing a competitive benchmarking analysis, feel free to take inspiration from your competitors to help you improve your methods.
With all of this information in hand, you can set SMART goals for your tech startup. Grounding your objectives in concrete data will help ensure that they are specific, measurable, and achievable within a given time frame. Create a plan to achieve those goals, and get to work!
6. Implement your findings
When you’re ready to implement your changes, make sure to give all of your employee’s clear instructions to ensure that everyone is on the same page and working towards the same goals. Monitor the process carefully, and give it time to work—results won’t happen instantly! However, if you find after a while that things aren’t going as well as you hoped, don’t be afraid to tweak your strategy. Adaptability is a crucial part of the business!
Don’t Forget to Rinse and Repeat!
Benchmarking analysis isn’t something you only do once. Ideally, you’ll want to continue to do regular benchmarking analyses over the lifespan of your business. Periodically assessing your performance and comparing it to your competitors will help you keep your company on track for the growth and objectives you want to achieve.
Try assessing various metrics and using different benchmarks over time to obtain a more complete picture of your company’s strengths, weaknesses, and position within the tech industry.
Benchmarking analysis is an incredibly useful strategy for assessing your business performance and finding ways to improve. By choosing specific metrics and comparing your own data to the information you gather about your competitors, you can easily find weaknesses in your business and ideas for improving them. Relying on data provides an objective, quantitative basis for coming up with solutions and setting achievable goals. In a context where tech startups are under increasing pressure to prove ROI, having such quantifiable guidelines for success is a significant advantage.
So start by taking a good long look at your startup’s internal processes and performance. What are you doing well? Where is there room for improvement? What’s most important for your business? Pick out a couple of aspects you want to focus on, then decide what you want to compare them to. Is one of your teams having more success with a process than another? Do you want to check up on what your competition is doing? Is there a major company that you have always idolized and want to emulate?
Collect as much data as you can about your benchmarks, and compare them carefully to your own. What are they doing better? How can you close the gap? Create a plan based on the information you’ve gathered, and set specific goals that are achievable within a given time frame. Implement your plan and keep an eye out for any tweaks that need to be made. Remember to conduct benchmark analyses regularly to keep your startup on track for success!
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