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Last updated: Nov 03, 2022

What is a Benchmark?

A benchmark is a standard for assessing or comparing something, usually used by companies. Benchmarking is a company's effort to measure and compare the performance of a product, strategy, or marketing program with competitors in the same field.

The purpose of using benchmarks is to evaluate the company's performance by using competitors as benchmarks of achievement so that companies can improve their competitiveness.

If you have a company or website, using benchmarks is important. By knowing what benchmarks are and how to determine them, you can compete with your competitors.

Why are Benchmarks Important?

To find out how important benchmarks are in improving company performance, you can listen to the list of functions and uses of the following benchmarking application:

Making Planning and Performance Goals

Benchmarks are performance targets that are used by companies when doing strategic planning for a certain period. Later, the results from benchmarking are used as metrics or KPIs, and the results will be evaluated at the end of the period.

Recognizing Competitive Advantage

When benchmarking, you will compare your company with other companies. During the process, you can find out the company's position in the industry and your advantage over competitors. By recognizing competitive advantages, you can use them to compete. 

Identifying Improvement Opportunities

Not only does benchmarking provide a competitive advantage, but it also allows you to find gaps or weaknesses in the company. Find out what your competitors have that your company doesn't. You can use this information to identify improvement opportunities.

Monitoring Company Performance

You can monitor the company's performance through benchmarking activities that are carried out regularly. With regular monitoring, you will get valuable information about the growth of the company's performance and be able to compare it with competitors.

Cultivating a Sense of Ownership

The benchmarking process will involve various aspects of the company, such as employees. You may need employee opinions to set benchmarks. When the results obtained from the benchmark are positive, of course this will be a matter of pride for employees, so that their sense of belonging to the company increases. 

Types of Benchmarks

Before determining a company's benchmark, it's a good idea to first identify the types. A benchmark consists of several types grouped by subject and object. A complete description of the types of benchmarks is as follows:

Based on Subjects

  • Internal benchmarking: Comparing the performance of subsidiaries or branches of the same parent company. The goal is for each branch or subsidiary to have the same performance standards.
  • External benchmarking: Comparing a company with other companies, be they in the same or different industries.
    • Competitive benchmarking: Conducted with companies in the same industry.
    • Non-competitive benchmarking: Conducted with companies in different industries.

Based on Objects

  • Strategic benchmarking: Observing the implementation of competitors' strategies and comparing them with the company.
  • Process benchmarking: Comparing competitors' operations, such as their company's processes and systems.
  • Functional benchmarking: Comparing the functionality of your competitors' work with yours.
  • Performance benchmarking: Comparing competitors' performance, such as sales or other business growth.
  • Financial benchmarking: Observing the financial condition of competitors and comparing them with the company.
  • Product benchmarking: Identifying the strengths and weaknesses of competitors' products.

Stages in Benchmarking

Benchmarking is a process that you need to do if you want to outperform your competitors. The way to do this is not difficult. The process is divided into seven stages. The benchmarking stages are as follows:

  1. Define benchmark metrics such as products, strategies, departments, or other aspects that you want to compare against your competitors.
  2. Choose the best company that can be used as a comparison to your company's performance goals.
  3. Do research to collect data and information related to the performance of competing companies.
  4. Compare the performance data of your company and its competitors, then identify the gap between the two companies.
  5. Make the points that are the advantages of competitors into performance targets.
  6. Plan to improve achieving performance goals. You can apply competitor strategies, processes, or policies that you feel are able to improve company performance.
  7. Monitor the process and results of the plans that have been set.


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