What is Competitive Benchmarking? How it Helps Your Business

In the ultra-competitive construction and trade industries, it’s important to stay one step ahead of the competition. 

One of the best ways to measure your company’s standing among its rivals is through competitive benchmarking. Competitive benchmarking refers to the process of comparing your business’s performance against the performance of your competitors. By analyzing the strengths and weaknesses of other businesses in your industry, you can identify your own company’s key areas for improvement. 

Types of Benchmarking

Competitive benchmarking is one of several versions of the benchmarking process. Here are brief descriptions of the four most common types of benchmarking. 

Competitive Benchmarking

Competitive benchmarking measures your business against competitors in areas such as financial performance and customer satisfaction. Competitive benchmarking involves gathering data on your competitors and running a series of comparisons. 

Internal Benchmarking 

Internal benchmarking compares different sets of results within the same company. This may involve comparing recent results to previous time periods or comparing the performances of various departments or individuals within a company. 

Functional Benchmarking 

Functional benchmarking compares a function of your business to the same function in another business. For example, you may compare your sales team’s win rate to the win rate of a competitor’s sales team. 

Generic Benchmarking 

Generic benchmarking involves taking a step back in order to evaluate your company’s performance against the performance of companies outside of your industry. 

Generic benchmarking may compare your company as a whole against other companies or may explore specific financial metrics. Generic benchmarking is similar to functional benchmarking but looks more broadly at best practices across different industries. 

How Competitive Benchmarking Helps Your Business

Competitive benchmarking improves your understanding of your company’s industry and its leaders. Benchmarking helps business owners to:

  • Identify areas for improvement
  • Improve performance and profitability
  • Enhance customer satisfaction
  • Remain competitively viable

It’s easy to avoid thinking about the competition, but doing so means missing out on key insights about your business’s performance. Taking a look at your competitor’s strengths and weaknesses helps you better understand your company’s niche. The process can also reveal gaps in the marketplace that you may be able to fill by offering new or expanded services. 

Competitive Benchmarking Steps

Identify Competitors

To find competitors for your benchmarking process, use online business databases like Dun & Bradstreet Hoovers to find businesses like yours. You can include companies that offer similar services, serve a similar geographic region, and/or are of a similar size to your company. 

Determine Metrics

Along with choosing appropriate businesses for comparison, choose metrics that will help you gain the insights you’re looking for. For example, if you’re interested in comparing customer satisfaction data, you may choose the percentage of five-star reviews earned as a benchmarking metric. 

Collect Data

Next, collect the best available data from your benchmarking competitors. The data you need may be publicly available on their websites or on third-party business tracking databases. 

Analyze Data

After collecting your data, perform your benchmarking analysis. Compare your business to the competition based on the data and metrics you selected. How does your company stack up? 

Identify Areas for Improvement

Use the results of your benchmarking analysis to identify parts of your business that need more attention or investment. Be as objective as possible and willing to embrace the results in order to bring renewed focus to your company’s areas of weakness. 

Implement Changes

Use the knowledge gained from benchmarking to improve underperforming aspects of your business. Implement changes to help your company catch up to the competitors in your weakest areas. 

Best Practices for Competitive Benchmarking

For best results from benchmarking, be sure to:

  • Clearly define your objectives at the onset of the process
  • Use reliable data sources
  • Focus on measurable and relevant metrics
  • Conduct benchmarking regularly over an extended time period in order to track progress

Thorough benchmarking procedures are somewhat time-consuming. However, if you’re partnered with an accounting team like Stratlign, you simply identify your goals, provide the relevant data from your records, and we’ll perform the analysis for you. Then, we’ll help you interpret the results so you can develop an informed action plan for addressing your company’s areas of need. 

Get Industry Benchmarking for Your Construction or Trade Business

Stratlign is a full-service accounting firm for small and medium-sized companies in the construction and trade industries. 

Are you unsure of how your business fits into its competitive marketplace? Would you like to invest funds and energy into jumpstarting new growth, but you’re unsure of where to start? 

Stratlign can help. Our industry benchmarking services can help you zone in on your competitor’s strengths and weaknesses, helping you make more informed business decisions. 

Contact Stratlign today to schedule a 15-minute call with our small business accounting experts. 

FREE RESOURCE

Your Guide to Set Up Subcontractors the Right Way

Are you having trouble collecting information from your subcontractors? Download our “Subcontractor Checklist Packet” to know what you need from them for 1099’s, workman’s comp, and liability audits. We’ve even included a contract for reduced liability!

Justice Bragg

Business Development Specialist, Florida

At work, Justice is passionate about helping the team make decisions and connections that propel the business forward. He prioritizes client satisfaction by serving as a medium to facilitate communication to the proper channels making sure every issue is properly addressed.

Outside of work, Justice enjoys exercising by going to the gym and playing pickleball with his friends. He is a self-proclaimed foodie who can’t say no to trying a new restaurant, sometimes even immediately regretting it.

Zachary Williams

Staff Accountant, Florida

At Level Accounting, Zach is responsible for bookkeeping & payroll. He is dedicated to ensuring financial success for our clients.

Beyond the office walls, Zach’s weekends are filled with adventure, whether he’s exploring Florida’s hidden gems with his wife or battling it out in tournaments. When it’s time to unwind, you’ll find him at the movies or casting his line out for a relaxing fishing session.

Melanie Jerome, MBA

SENIOR STAFF ACCOUNTANT, FLORIDA

Meet Melanie J, one of our senior staff accountants! Melanie ensures your financial health with precision and expertise. Beyond the office, she’s a true crime enthusiast who loves traveling and outdoor adventures. Whether she’s balancing books or exploring new trails, MJ’s dedication and skill set the standard for excellence in our team.

Seren Lunsford, MBA

STAFF ACCOUNTANT, INDIANA, QUICKBOOKS ONLINE PRO-ADVISOR

Meet Seren, one of our dedicated staff accountants here at level accounting! She is responsible for bookkeeping & payroll. Outside of the office, you can find her on the sidelines of a soccer pitch, karting track, or baseball diamond, cheering on her two active boys. Seren is also a proud owner of two gentle giants, her beloved Great Danes. In her downtime, she channels her creativity into baking and decorating sugar cookies, always eager to experiment with new baked goods ideas and recipes. With her expertise in accounting and her passion for family, pets, and baking, Seren brings a unique blend of professionalism and warmth to our team.

Ivette Rivera

EXECUTIVE ASSISTANT, FLORIDA

Ivette Rivera is our Executive Assistant at Level Accounting, juggling schedules and keeping things running smooth.

When she’s not crushing it at work, Ivette is an avid participant in her church community. As a mom, she’s all about those quality moments, whether it’s baking up a storm, hitting the water for some kayaking fun, or just chilling with a good book or binge-worthy show. And let’s not forget her partners in crime at home: Harley Quinn, the fridge-raiding pit bull, and Atlas, the cat who rules the roost. Ivette’s all about that balance between work hustle and personal bliss.