Benchmarking is a valuable tool that you can use to improve the performance and profitability of your business. You can benchmark almost all the areas of your business that are important to your success.
For example, financial data could help you to benchmark:
- billing and payments
- accounts receivable days
- accounts payable days
- percentage outstanding bad debts per time period
- ordering and purchasing
- average order value percentage rejections per time period
- quoting and pricing
- percentage quote acceptance per time period
- percentage quote rejects per time period
- number of quotes using formal pricing schedule
- staff recruitment and selection
- staff turnover
- recruitment costs
- stock control
- stock turnover days (find out how to calculate stock turnover)
- percentage damaged or lost stock
- cost per time period
- percentage downtime per time period.
You could also use benchmarking data to compare:
- customer feedback
- number of complaints per time period (find out how to manage customer complaints)
- number of return visits per customer
- products and services
- average job lead time
- percentage quality failure per time period
- percentage capacity utilisation
- design and development
- number of prototype rejections per time period
- number of prototype acceptances per time period
- average development time.
To help you decide which areas of your business you want to benchmark, you could:
- review your business's performance
- consider which areas of your business you would like to improve
- ask your staff for ideas
- reflect on customer feedback.
Decide who to measure your business against
To get the best results from benchmarking, you should carefully consider who you want to measure your business against.
Start by identifying the areas of your business that you want to benchmark, and then seek out businesses that perform consistently well in these areas. These businesses may not be competitors – in fact, they may even operate in a different industry.
You could benchmark your business against:
- industry leaders
- similar-sized businesses in your industry
- similar-sized businesses in a related industry
- industry standards.
You can identify business leaders through observations, word-of-mouth, reading published surveys, industry and business publications, and searching the internet.
Depending on your industry type, a range of benchmarking data is available by searching online.