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How to source data for benchmarking
How to Source Data for Benchmarking? Once you know what to benchmark the next step is actually to start the benchmarking process. Now it may sound easier than it is because the primary factor to an accurate benchmark is good data. Data of competing businesses can be sourced in various forms like from discussions, business meetings, annual statements, marketing representatives and even clients. Fortunately, for many companies, the internet provides many data gathering solutions not to mention database sources with listings from thousands of organisations. All of which can make benchmarking specific aspects of business easier but there are still challenges.
Another source of good data once you know how to use benchmarking for performance improvement is consultants. Consultants often charge a small fee depending on their niche and experience in exchange for providing you access to their database. Also, the internet is a great way to gather information for benchmarking purposes. It is also possible to directly approach so-called “Best in Class” organisations, but generally, it is more efficient to go through a consultant.
Getting Benchmarking Cooperation vs. Expert Approach
Now yours isn’t the only business that knows why do organisations benchmark; there are many others. Usually benchmarking is used as an instrument for change and improvement in medium to large companies. That’s why some businesses despite being competitors will willingly provide you with data needed to benchmark certain aspects of performance, revenue, and production. However, that is usually in exchange for sharing your own business’s data. When companies share data to run benchmarks, it’s labeled a ‘partnership approach’ (explained in more detail below).
The partnership approach generally used either within a particular sector, within the business itself or against the competition. However, all parties mutually agree to share data with each other for benchmarking purposes. That said some types of data may not be shared like R&D spending, particular procurement, angel investment sources, potential patent figures, etc.
At times an independent or unbiased party may be in charge of running benchmarking. The party will gather data, from all participating businesses. However, the job of the independent party will be to make sure that the interests of all companies are equally represented by carefully handling the information supplied by each business.
The expert approach is generally one where other business may not be aware that your business is running benchmarks. It usually takes place within a database where individual case studies are analyzed. However, the effectiveness and accuracy of the results mainly depend on the size and type of database. If there is a best in class business included in the database, it further improves the results.
The big issue that many businesses have with the expert approach is that for some industries data can be difficult to source. Consultants may not have as much data about certain niche businesses as they do about more established industries. That’s why to some companies identifying specific benchmarking goals is imperative to drawing successful conclusions from the results.
How to Partner with Other Organisations?
Once you know what to benchmark, the next step is to understand how to partner with otherwise competitor organisations. Partnering to ensure that you can run benchmarks can be tricky and take some time to develop a relationship, but it is well worth the effort.
There are a number of ways in which you can run quality benchmarks across all businesses in your industry which includes:
- Wait for the trade association in their sector to run a benchmark.
- You can urge the trade association to run benchmarks.
- Find a benchmarking consultant who has a pool of information relating to other businesses in your industry.
The advantage of using a consultant to run benchmarks is that they already have a lot of experience with businesses in your industry. Plus, consultants can set up benchmarking tasks to measure specific metrics within your organisation. Both types of benchmarks can be beneficial when trying to identify points of improvement.
Working with Trade Associations
Trade associations can help businesses find the right partners with which they can benchmark. Most trade associations have direct access to dozens of members many of which may be within your industry. However, that’s something you’ll discovery by speaking to a representative from the trade association.
The upside to running competitor analysis via trade associations is that it can be anonymous. Which means that other competing businesses may not know which benchmarks you’re running.
Most if not all large organisations like SMEs often hire a benchmarking consultant to run the benchmarks. The reason they hire consultants is that they find it challenging to conduct partner benchmarks mainly because they are having such a tremendous impact on the industry. Also, their benchmarking methodology and metrics are a lot different from smaller businesses because often they are the biggest in the industry with little competition. So, a consultant can identify areas where benchmarking can be favorable and then run them accordingly.
Tip: Call up the trade organisation in your industry and find out their benchmarking schedule. Also, ask them what types of benchmarks they run. You should also find out what type of data they require from participating businesses within the industry. All of this information will allow you to start collecting the necessary data which can be sent in when the next benchmark is scheduled.
Generally, companies in their first year of business don’t have to worry about benchmarking. However, the earlier they start collecting data, the better it is since it allows them to chart how much progress they have made. That progress can also be compared to competing businesses.
Benchmark Everything You Want to Improve
As a business, you’ll want to improve every aspect of it from production to supply chain and finance. Benchmarking allows you to do just that by comparing you to competitors within your industry. However, that does not mean that you should start with benchmarking every possible thing you can think of since that will be arduous and pointless.
What you’ll want to do is to start with internal benchmarking and then move to competitor analysis, with the idea of comparing with the best in the industry. That said sourcing data from reliable sources to ensure efficient benchmarking can be difficult. That’s why there is an increasing number of groups comprised of numerous businesses with the goal of running annual benchmarks.
Even if you’re in a unique niche, you can still learn a lot from benchmarking against the nearest industry competitor. You can learn from the experience of other businesses even if they are from a different industry. So, why do organisations benchmark may differ but they all stand equally important? That’s why in some cases it may be a good idea to save time, money and effort by hiring a benchmarking consultant. He or she will take care of all the required steps to ensure that the benchmarks provide actionable data. Plus these consultants can be a reliable and up-to-date source of competitor data.
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