Sunday 13 February 2022

What is benchmarking in simple words | Types and Stages

In recent years, various business tools have been actively used in Russia to help increase revenue, improve management, and systematize income.

There are many tools, all of them are effective and allow you to increase competitiveness in the market. One of the most profitable and interesting tools is benchmarking. Let's see what it is and what it manifests itself in.

What is benchmarking in simple words

Benchmarking is a continuous process of assessing the quality of services, goods, various methods of work, based on the proposals of competitors or market leaders.

Thanks to the use of such a tool, doing business becomes open and at the same time effective. Benchmarking answers many questions that somehow arise in the process of campaign development.

What advantages can benchmarking have for an entrepreneur?

  • A businessman can profitably overcome stagnation in leadership positions, pointing out that he has a wrong idea of the real state of affairs.
  • You can play on the strengths of the organization, while strengthening the weaknesses.
  • It is possible to motivate businessmen to improve the quality of the goods and services offered.
  • Conducting benchmarking can predict in advance the company's lag behind competitors.
  • Allows you to analyze processes and include the best and most effective ones.
  • Brings together different strategies and efforts to improve performance.
  • Allows you to create a culture of quality improvement.
  • Increases financial performance and so on.


Why benchmarking is carried out?

Benchmarking allows you to profitably study the qualitative, and not as it is done with other tools, the quantitative essence of all competitors' processes.

If the right analysis has been done, it can not only show how far behind you are, but also draw conclusions about success factors that can positively affect the work in your company.

Discoveries can await at the level of management decisions, marketing service, production workshop or logistics structures.

This is a kind of technique of someone else's positive experience, which allows you to create new opportunities for your business.

Thus, you can feel more confident in the services markets, declare your ideas, which is actively promoted by your company.

You can create a realistic picture of your niche, determine your place and share in it, also imagine how much you are overtaken by competitors and by what parameters. You should work ahead of the curve, even if you do not have enough experience or some resources necessary for a single time period to catch up with competitors and, if desired, overtake them.

The Essence of Benchmarking

Benchmarking refers to a set of specific actions.

  • Search for examples of developed business in your niche.
  • The process of measuring any of the indicators of its competitors.
  • Learning from their experiences.
  • Borrowing effective technologies and methods of influence.
  • Constant qualitative comparison with the leaders in this industry.
  • Conducting marketing reconnaissance.

Perform competitive analysis.

The process of increasing the competitiveness of the company in relation to representatives of the same niche.

Based on all of the above, we can conclude that benchmarking is a systematic activity, which is characterized by a continuous process of finding a reference company in order to study, and most importantly, adopt positive experience and introduce it into its production.
Thus, competitiveness in the market increases, the quality of goods and services grows, which is useful not only for consumers, but also for businessmen themselves.

Goals and objectives of benchmarking

Benchmarking is a complex multi-level process. However, it has one very clear goal. This is an improvement in the position of the company in any indicator or in general, in the direction of activity. To achieve your goal, the head of the company or employee must set himself several tasks.

Carefully examine all your indicators that are available in the area in which there are problems.
Further, in the market it is necessary to identify leaders, that is, the best, who have the highest performance in a particular industry.

  • In one way or another, you need to get access to the necessary information for analysis.
  • The analysis is carried out carefully or superficially.
  • The experience gained is recorded, analyzed, adapted to your reality, and only then implemented in the company.
  • Benchmarking Tools
  • Benchmarking tools are a set of step-by-step actions that include the stages of the procedure. The main purpose of the tools is to pursue the goals and objectives set for the company.

The main tools include the following names.

  • Marketing intelligence.
  • Search for business case studies.
  • A continuous process of changing various indicators.
  • Study of best practices.
  • Competitive analysis.
  • The process of qualitative comparison.
  • Types of benchmarking of the company
  • Benchmarking has a huge number of definitions and mainly because it is divided into several types at once. Therefore, you should consider each specifically to have an idea of the nuances.

Internal benchmarking

Internal benchmarking is a comparative analysis performed by various departments and services of organizations. The main goal is to identify all the best indicators and the most effective business processes that occur within a particular organization.

This type of benchmarking is widespread and actively used.

Competitive benchmarking

This type of benchmarking should be carried out on the basis of information about competitors-enterprises that are located in the same industry, or on the basis of the experience of their business partners.

Functional benchmarking

Benchmarking, which involves not only qualitative, but also quantitative comparison of all the main indicators of the company's action. This includes operations, methods and processes used. All these indicators should be compared with similar parameters of successful companies that work in your field, having identical conditions.

For example, they produce the same products or provide the same service within a region or city.

Such benchmarking involves the rapid identification of the niche leader, as well as access to all his significant indicators, which are often publicly available on the Internet.

In the analysis there are wide opportunities, as well as numerous techniques and technologies that will help to quickly find functional differences and implement them in your company.

There is one negative feature of this kind. Unfortunately, sometimes it is impossible to adapt to your company the results that are obtained in the course of research work due to different conditions created for companies.

General Benchmarking

This type also implies a qualitative and quantitative comparison of the process of sales, marketing, production and management. Everything is compared with the company that has achieved the best results and conducts exactly the same activities.

Upon comparison, a plan should be developed that is aimed at effective development, as well as the introduction of the technologies obtained and the identified processes. Sometimes this allows you to activate various investment processes. This is a complex benchmarking that should be carried out by professionals, based on the inaccessibility of information that is necessary for consideration.

Business Process Benchmarking

This benchmarking should stand out depending on the existing problems. Its main task is to reduce all costs, as well as to remove cost-forming factors. Based on the analysis, the differences that develop around the cost of the company leading in the niche and you are seen. As a result, tasks in a specific area of the company's functioning should be solved.

Strategic benchmarking

The analysis is carried out on the basis of the processes and experience of other companies, the end result is the ability to find unique opportunities, methods and methods that will allow the enterprise to gain a competitive advantage and improve its performance.

Principles of using benchmarking

Benchmarking is carried out on the basis of principles that affect the process of comparison.


Reciprocity involves the interaction that develops within the company, as well as discussion and the possibility of coming to a common opinion and agreement. Representatives of the company should effectively exchange data, the purpose of such communication should be the same. It is the benefit to which each of the participants contributes.

If the action takes place blindly or is not complicated, then such reciprocity is quite difficult to achieve. Therefore, first you need to understand what range of information you are interested in, and only then set the correct order for the exchange and transfer of information. And also offer a logical concept for your future research.
Each of the representatives of the company must be sure that the behavior of the benchmarking participants is within a strictly stipulated framework. It is important that the rules are observed by all, and this is where the principle of reciprocity is manifested.


The analogy helps to quickly orient oneself, to observe similar processes that are used by the participating companies. Value judgment should be subjected to almost any process, the main thing is that the results are identified and also applied within your company. Success in this case will be guaranteed, but only if the partners are correctly selected, based on the established criteria.


When a decision is made to benchmark, a plan is drawn up that includes certain parameters. And on the basis of these parameters, an analysis of organizations is made. It turns out why these parameters are different for two, three or more companies, and also offers options that will allow you to achieve better results.

To determine the main parameters of the process, it is necessary to correctly study them, and most importantly, to make measurements.


You can not conduct benchmarking using approximate data, far-fetched by the ears. This should be factual data that has documentary evidence, which is when it is possible to conduct an accurate analysis and study the main processes. However, if the study is based on intuition, in this case it will be impossible to achieve good results.

Stages of the company's benchmarking


At the preparation stage, you need to be well-versed.

  • Determine the object during which competitive benchmarking will be carried out. It is studied why this object is relevant for your research, which perform the main functions and tasks. Difficult stages are highlighted, interesting areas of knowledge are built.
  • Establish threshold values that will determine the success of a particular company in these indicators. When considering these objects later, certain aspects will be taken into account by measuring financial units and quantitative and qualitative indicators.
  • To get very accurate results, you need to use not only the main sources of information, but also additional ones. For example, various reports, fairs, surveys, exchange processes, cooperation with suppliers, seminars, available business plans, production facilities, publications in the media, reference information, sources from literature and so on should be subjected to thorough research.
  • A search is underway for organizations with which a comparative analysis will be carried out.
  • You can search both in your segment and in your niche, and by going to others to apply as many tools as possible and get more information.


At this stage, processes, technologies, methods, services and goods are determined, their effectiveness is revealed, as well as possible inefficiency based on the selected measurement values and factors that are important for the enterprise.

The second step is the choice of the main directions that allow you to effectively improve various business processes and technologies used. At the same time, here you will need to carefully find out what is the reason for the advantage of competitors over you.

What information to collect and analyze

Information is collected from a variety of sources. Of course, official information, which is in the public domain, is of paramount importance. However, do not forget about additional sources, which also make a significant contribution. This can include various publications, mentions, posts in social networks, business plans, cultural events and so on.


The implementation phase assumes that goals are defined that plan changes and further development of the strategy.

You need to discuss in detail all the results that you expect. It is important to realize that changes are necessary in the future. To raise certain indicators, it is necessary to apply new standards and requirements.
It is necessary to carefully draw up a detailed plan that will include the actions to be taken. Be sure to calculate the financial costs and expenses of various reorganization processes, and acquisition. New work schedules are being developed, and a forecast is also being made when it is worth waiting for the first improvements.

All developed changes that have been made to the plans must be implemented in accordance with the schedule and plan prepared in advance.


Market processes and methods that are introduced in order to increase the efficiency of companies are used very intensively. They are constantly in the process of changing, and innovations are moving into the category of standard. And this means that it is necessary to constantly connect the improvement process based on the activities of the enterprise.

It is necessary to constantly repeat the processes, constantly supplementing them with new and new features in order to improve the effect.

How to conduct a company benchmarking on your own

There is no single algorithm of the procedure that would suit every company. Therefore, benchmarking should be developed independently, individually for each organization.

Choosing a company

You need to choose for comparison services or built processes, the quality of which you are unsure and evaluate as unsatisfactory. If you compare indicators that, in your opinion, are at a high level, then in this case you will uselessly spend money and a lot of time.

You should not choose a very large list of indicators, you can get confused or do not pay attention to important aspects.

Collection of information

To collect information, you should use special programs that will help you quickly and efficiently collect data. Information is processed from both public and private sources. Only information that is directly related to your case is analyzed.

Analysis and adaptation

The analysis of the information received should be carried out by an assembled group of highly qualified specialists. All the information received is analyzed, the possibilities of their application in your conditions are discussed.

Typical mistakes of benchmarking a company

  • Following the standard. It must be remembered that the results obtained may not be applicable to your company, you need to discuss them carefully.
  • The interests of a potential buyer are forgotten. Wanting to improve the work of the company, the interests of the consumer are put on the background.
  • Complication. There are too many areas that were tried to be touched upon during the analysis, resulting in too many tasks.
  • It's a strange direction. The topics chosen for the study were incorrect.
  • Industrial espionage. Data should be obtained from open sources or from closed sources, if possible. Engaging in industrial espionage is unethical.

Pros and cons of benchmarking


  • The quality of services is improving.
  • Learning from experience.
  • Expansion in the market.
  • Processes are optimized.
  • High competitiveness.
  • Not a costly way of analysis.


Time and money costs.

Not always the experience gained during the analysis can be implemented.
Old chips and actions may not work.

Where you can use benchmarking tools

Benchmarking can be useful in any area of the economy. It is used by shops, municipalities, service companies, private and public corporations.

Both managerial activity and production sphere are investigated. In Western countries, internal benchmarking has long been used. Thus, companies exchange experience and improve the quality of services.

If you want to raise your business to a new level, overtake competitors and offer your potential consumers the best, then benchmarking is just the method that will help you get out of the general mass and become a niche leader.

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