Online business is the most competitive industry on the market. Statistically, only 5% of startups develop into serious projects, while the majority don’t even reach the break-even point. It makes no sense for a modern company, like TonyBet or Netflix, to “go blind,” given that there are plenty of successful examples of similar projects around. Therefore, various spy services are some of the most important tools of the marketer. But you can learn a lot more from your competitors. Almost a complete algorithm for building a benchmark business, you just need to understand how to implement a comparative analysis. Let’s look at benchmarking for online store, service, any commercial project in the vertical of e-commerce and related.
What Is Benchmarking
Benchmarking means comparing with the benchmark. We choose companies, projects which are constantly modernizing their business strategies, expanding client bases. We select the most significant methods which they manipulate, we define the tools of implementation. And then we correlate this information with the existing mechanism in our own company. As a result, weak points and indicators with mediocre effectiveness become visible. And what is more important, we can trace the original cause, the key mistake, why our business doesn’t go the way our competitors do.
Often, benchmarking is used in a voluntary exchange of information with partners. This is not reconnaissance and espionage, unlike spy services. Therefore, the reliability of this information is often an order of magnitude higher.
The tasks of benchmarking can be divided into:
- Analysis of existing company resources, determining the rationality of their use. Search for possible potentials for scaling the resource and its redistribution.
- Search for analogues for benchmarking. Not necessarily competitors, we’ll mention that – analogy, not direct competition, is important for benchmarking.
- Obtaining extensive and detailed information about the actions of analogues, the systems, methods, tools used.
- Prediction of adaptation. Whether the identified methods and tools will be suitable for our company.
- Selection of specific points, industries and segments with the greatest need for change. As well as identifying the points that can potentially have a greater impact on the overall performance of the company than others.
- Identification of strategies that are negatively impacting the company’s growth and progress, the causes of losses.
- Identification of the budget to be used in business change activities.
Objects of Analysis
Benchmarking involves the analysis of a number of indicators that have a direct impact on the development and success of the business. These are:
- By this we mean any commodities, services and other commercial goods. We analyze the assortment, how wide it is, whether it’s ready to meet the existing demands of the target audience. Competitiveness – whether it’s better or worse than the companies operating in the same segment. Profitability – how big is the difference between the selling value and the total cost, which of the indicators can be changed for the benefit of the company.
- Our main selling tool, marketing lever, point of sale, product showcase. The effectiveness of the site, how well it retains traffic. Analysis of all the sections in the context of the sales funnel, how many people who come to the resource from different channels, drop out in one section or another. Program models, catalogs and convenience of sorting, order forms for goods and services are taken into account. The design in comparison with counterparts are compared. Landing pages fall into this category if traffic from advertising campaigns is sent not directly to the catalog or product positions, but to landing pages.
- Complete analysis of the sales funnel. Conversion is considered, both overall and by sections, segments. ROI indicator, return on investment (advertising costs). Total revenue for the period of time, the average receipt per customer per conversion, for a period with multiple conversions.
- Pricing strategy. Elasticity of price, whether it’s capable of changing, reacting to growth/decline in demand for certain categories of products or for the range as a whole. Whether systems of discounts, loyalty programs, bonuses, referral payments to partners are effective. Whether the product is promoted by means of traffic arbitrage.
- How effective the employees are in the field, the level of turnover and the reasons for personnel changes. The need or lack thereof for professional development.
- Marketing policy. On what sites are advertising campaigns launched, what methods are selected for this. At which audience the advertising company influences, how much this target audience costs, CPC figures (cost per click). The volume of the budget allocated to marketing is analyzed.
How Benchmarking Is Useful for an Online Store
Benchmarking for an online store has a number of significant benefits:
- The ability to grow your company and save a lot of money. No expensive market research, but instead pay attention to successful peers who have done it for you.
- Finding weak points in your own company, and more importantly, studying the reasons that have become the main cause of these vulnerabilities.
- Examining the effectiveness of departments, in comparison to others.
- Making qualitative changes in personnel policy.
- Instant adoption of new and trending techniques.
- Painless selection of a product to implement, really demanded in a given period of time.
Accordingly, benchmarking will allow you to act like the best and reference companies on the market. Without an exorbitant investment to adopt the most effective techniques, developed by a whole staff of world-class specialists.