When you’re immersed in your business’s marketing dashboard it’s easy to overlook the external perspective. One of the most important factors that you can include in your monitoring activities is a view of what’s going on in the wider world.
Your business needs to stay aware of what’s happening in the market, and what your competitors are doing. It’s the only real way to put your own performance into context, and hopefully to improve it.
Benchmarking involves tracking how your business performs relative to others in your industry.
Not only does it help you understand how you’re performing relative to competitors in the same market, it also helps you understand your own potential.
Although you might think you’re growing, the overall direction of the market could indicate an expanding trend that shows your growth is only relative to market expansion.
Perhaps your competitors are even growing faster, meaning that you’re falling behind in terms of market share. That’s why it’s important to benchmark, to make sense of your own performance.
How to approach benchmarking
Understanding your external environment requires you to use market research techniques to understand your competitors and the wider business landscape.
You’ll want to start by identifying what’s valuable to track. Whatever competitor analysis tools you use, you’ll need to apply them regularly.
Competitor analysis is not a one-off activity, and you need to regularly monitor what’s going on.
Fortunately, it’s become a lot easier to monitor the external environment thanks to the arrival of some handy tools to track the digital performance of other players in the market.
Social media channels often help you compare against other businesses, and services such as Simply Measured and Sprout Social offer report-building tools.
There are competitor analysis sites such as SimilarWeb, Hitwise and Alexa to consult. MailChimp will give you an overview of how your email performance compares to similar senders. Google Analytics also offers benchmarking tools, and there’s also the Google Trends tool.
You can set up a range of alerts that monitor what competitors are up to and let you know when something changes.
On a more technical level, you can install the free Moz bar into your browser for more insightful browsing of you competitors’ websites. It adds another layer of information to your browsing and supports your SEO strategy by unveiling things such as their link metrics and keyword difficulty.
On a simpler level, you can check the reviews and ratings your competitors are getting and see how yours compare. It’s always worthwhile following their marketing communications, reading their business reports, and buying their products where possible.
If you have the budget for further market research, it’s worth asking audiences how they perceive your competitors to see if it reflects your perceptions of the market position.
But all this data needs to be gathered purposefully. Whatever performance analyses you collect needs to result in action on your part in response.
If your competitors are getting good traction with a particular type of content, then you’ll need to start thinking how your business might include that in your own content strategy.
Your KPIs may need updating, or you may even need to reconsider your positioning.
The classic SWOT analysis approach gives you a framework for understanding the landscape for your own business, and it’s also a good way to assess a competitor.
Using this approach you’ll look at a competitor’s strengths and weaknesses, the opportunities open to them and the threats they face. This may indicate their future strategy and possibly you’ll gain insights into your business’s own opportunities. Their weaknesses may benefit you, and you’ll learn from their strengths.
SWOT analysis is helpful because it helps you take a long-term view of the competitive landscape.
Although you should aim to incorporate your analysis of the external landscape into your business’s own strategy, it’s important not to just be reactive.
An understanding of external forces should help shape medium and long-term strategy, not dictate a panic-driven short term approach. And despite the fact that it’s very valuable to know what your competitors are doing, their approach may not be right for your business.
Sometimes you need to observe their success but understand that isn’t an avenue that is right for your business to pursue.
Understanding the broader economy
Wouldn’t it be fantastic if businesses could get reliable economic forecast data that would help them take decisions about the future?
Knowing the likely future health of the domestic and world economy would help businesses predict demand, and hence take decisions where to focus resources.
Unfortunately, accurate data of this nature is pretty hard to come by and it’s hard to identify which data can be relied on.
Businesses often chose to pay for economic forecasts but after the 2008 crash blindsided most people, economic forecasting became somewhat discredited as a profession.
Business Insider shows in 8 graphs the perfidy of economic forecasts, concluding that ‘economists have no clue about the future’!
It’s tough for businesses to make decisions when they can’t have confidence in data about the wider economy.
But your performance can’t be measured in a bubble – it’s vital to take external factors into account so you can make smarter decisions and put your own performance into perspective.