You believe you have a great product because you have done research. You know who your direct competitors are and what they are doing. You can quickly determine how their product is different from your product, how your product is better, and who your audience is. But is this enough?
Table of Contents
- Competitive Benchmarking
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The crucial next step to success is an ongoing competitive benchmarking process – that is, the process of measuring and tracking long-term strategies and outcomes of other companies. Why? Because you want to keep up and outmatch the competition and exceed your key performance indicators (KPIs).
What is competitive benchmarking?
Benchmarking against competitors means collecting data on the digital performance of similar websites or apps and comparing them against yours. You then use this information to uncover marketing and sales blind spots, underperforming marketing strategies or content optimization efforts plus find areas to improve business processes and discover new market growth. The method of competitive analysis and benchmarking helps you understand your position versus industry leaders, the industry average, and specific competitors.
The benefits of competitive benchmarking
You are well aware of your company’s performance metrics. Google Analytics provides you with complete visibility into your site’s performance; sales metrics help gauge revenue and growth, and financial reports measure economic outcomes. But your own metrics are not enough. Competitive research is key.
Let’s say your traffic is growing at a rate of 10% each year. At first glance, that may seem excellent to you. But if your competitors are growing at 2 times that pace, it’s not sufficient, and you’ll soon fall behind.
Viewing your data in context is crucial to evaluate your opportunities, threats, and strengths and weaknesses in the market.
Competitive benchmarking analysis is a tool that effective businesses use to pinpoint where they stand across various engagement metrics. You can also use it to measure performance relative to any KPI and take stock of your outcome compared to any other site. If done right, it provides you with indispensable insight to evaluate your position in your industry and grow your market share.
How to do competitive benchmarking effectively?
1. Choose your KPIs
The first step to a successful benchmarking effort is data collection to identify the KPI you are measuring. Do you want to improve your SEO performance? Grow in a new market? Increase traffic to your site? Find the representative metrics and set goals that are 1) measurable and 2) realistic.
Here are some KPI ideas that can function as competitive benchmarking metrics:
- Increase web traffic
- Launch x new products into a new target market within the next ½ year.
- Engage users – improve session duration or growth rate
- Reach top 2 results on ranking on (define keywords)
- Improve share of voice.
- Increase brand awareness – improve branded traffic share
2. Identify the right competitors
The next question you need to ask is not how to benchmark against competitors, but who to benchmark against?
After you’ve established your goals, how do you determine which specific companies fit your benchmarking strategy? You should always be aware of your immediate competitive set and the most significant players in your industry. But you also need to dig into the individual metrics, especially the ones that represent your KPIs. You may discover companies that are closer to you or more of a threat than you expected and are worth keeping an eye on in specific areas.
Start off by identifying the competitors that are similar to yours in the area you measure, such as size, location, product offering, or audience. For example, it might not be helpful to compare overall revenue to companies with a significantly larger range of products than yours. You might, however, compare revenue increases.
On the other hand, benchmarking against an industry leader is indicative of your market position and, therefore, beneficial in other ways. The possibilities of who to choose are ultimately limitless.
Let’s look at a few types of competitors and when to focus on which:
When analyzing how to improve your brand voice or evaluating specific topics, it’s best to choose your closest competitors –namely the ones that offer similar products to the same target audience. This is your immediate competitive set, and you’ll want to monitor and gauge their performance against yours continually.
Since their numbers are likely similar to yours, you’ll want to identify trends in the data indicating changes that may either harm you or present an opportunity. This lets you quickly adjust your course of action accordingly.
Though we dream big, it’s more likely you’re not the biggest and best site in your category (yet!). When looking to improve your long-term growth goals and methodology, aim high and compare yourself to the sites that win your industry.
Starting with the best in class helps you position yourself and everyone else in the market. You can place each of your competitors in relation to the industry leader and create a comprehensive market map.
More in-depth market research allows you to understand and learn from the industry leader’s strategies.
It’s easy to “look up” for inspiration, but sometimes, you also need to look below. Companies that are much smaller than yours might be growing faster than the industry average and could pose a threat in the near or far future. Keep an eye on exceptional performances and performers. This type of strategic benchmarking is essential because it may be the next big thing in your industry. Analyze what innovative methods they use for growth and how you can continue to stay ahead of them.
How can you identify who’s getting the most SEO traffic and who’s growing the most? There are several tools that can provide visibility into one metric over another. With Similarweb, you gain insights into a wide range of data and easily find the right companies to benchmark against continuously.
3. What to measure and how
The specific metrics you measure will vary based on your goals.
For example: To improve SEO, you want to analyze the competitive traffic on keywords and keyword groups; increasing brand awareness requires monitoring direct traffic to a site. Expanding share of voice may be represented by traffic share across specific pages of a site.
Remember to keep it simple! You want to track the relevant metrics over time, so keep the number of metrics per KPI low. Use tools that provide analytics to help you get a clear picture.
Let’s take a closer look at which metrics align with which goals and the tools you can use to measure, track, and benchmark against competitors:
- Achieve website growth: Track site traffic using Google Analytics and Similarweb Digital Research Intelligence.
- Improve SEO rank: Use a capable SEO tool such as Similarweb Digital Marketing Intelligence to identify competitors that are increasing SEO traffic and the keywords they use. Track their landing pages to see how they achieve this.
- Increase social following: Benchmark competitor’s social pages, including the number of likes and followers. Some excellent tools are Mention, Hootsuite, Sprout Social, and Socialbakers.
- Expand product offering: Follow competitors in the news to keep informed about changes in their products. Make it easy on yourself and enter the relevant company names on Google Alerts. This will notify you every time it gets mentioned across the web. You can also use Talkwalker or Brand Watch to keep an eye on company press releases and websites.
- Improve sales profitability: Use Similarweb Sales Intelligence Solution to find ways to improve ROI. Investigate competitors’ pricing structures and see what works best for them. For public companies, you can view quarterly financial reports. Also, use sites like Crunchbase to see if your competitors have raised money and how much.
Of course, there are other options like paying for a report from companies like Nielsen or running your own survey; however, these are usually very expensive or complex. Try a few different types of benchmarking until you find the one that works best for you.
4. Now what? Track!
You’re all set. It’s time to start tracking! To keep things organized, create separate benchmarking reports for each goal and type of competitor (gauging against much smaller or much larger companies on the same report can lead to confusion).
Set a routine for measuring, which should be at least every quarter. Periodically reassess if the metrics are still relevant and if they help you achieve your goals. Be sure to keep a finger on the pulse. If your company adds or changes existing goals, update your competitive benchmarking analysis by adding the relevant metrics.
Level up your digital research strategy
The process of competitive benchmarking is an essential part of every business plan. The technique enables you to view your performance in the context of the market and avoid blind spots. It lets you identify specific areas to improve and spot opportunities for change and growth. Regularly conducting competitor benchmarking evaluates if you’re on track with business goals and ensures they still make sense.