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How to do competitor benchmarking?

Competitor benchmarking is the method of understanding how competitors are doing on a specific aspect or overall product.

Duration

2-3 weeks

Complexity

Advanced

Contributors

UX designer, UX writer, Product manager, User researcher, Developers

 

Getting Started

Competitor benchmarking is a process used to compare and contrast your company's offerings to those of your competitors. It could be evaluating a single aspect and functionality of the complete product. This analysis helps you better understand your market position, competitive advantages, and potential areas for improvement.  In short, it is the process of setting a benchmark to guide the design. 


How to?


Types of competitor benchmarking

Based on the comparison, here are different types of benchmarking: 

Based on the existence of competitors in the market, the types of benchmarking are:

  1. Direct competitor benchmarking when your competitors exist in the market. Evaluate the competitor's product/service offerings.

  2. Indirect competitor benchmarking is when you don’t have any competitors in the market. Evaluate the competitors who offer a similar kind of product or service, but their USP is something different from what you have.

Competitor Analysis vs. Competitor Benchmarking

Are Competitor Analysis & Competitor Benchmarking the same? No, there is a difference. Let’s see what that difference is:

 

Competitor Analysis

Competitor Benchmarking

1. Competitor analysis focuses on the broader competitive landscape and seeks to identify the strengths and weaknesses of your competitors, their strategies, and their market positioning.

1. Competitor benchmarking focuses on specific aspects of your company's performance and compares them to those of your competitors.

2. Competitor analysis is generally broader in scope, looking at a wide range of factors that impact your business and the competition, including macroeconomic trends, industry dynamics, and regulatory environment.

2. Competitor benchmarking is narrower in scope, focusing on specific metrics or processes that are relevant to your business.

3. Competitor analysis is an ongoing process that provides a continuous flow of information and insights about your competitors and the market.

3. Competitor benchmarking is a more structured and periodic process that involves setting specific goals and metrics and comparing your company's performance to those of your competitors.

4. Competitor analysis is typically used to inform strategic decision-making, such as market entry or product development. 

4. Competitor benchmarking is used to identify areas for improvement and drive operational excellence.

 


Do’s & Don'ts

 

Do’s

Don’ts

  1. Do benchmarking with a specific intention.

  2. Pick the most relevant competitors.

  3. Be specific on parameters for benchmarking.

  4. Do benchmarking periodically.

  5. Use various data sources for benchmarking.

  6. Focus on your strengths and weaknesses while doing benchmarking.

  1. Don’t pick random products for benchmarking.

  2. Don’t pick more than 5 competitors.

  3. Don’t rely on a single data source.

  4. Don’t ignore qualitative data.

  5. Don’t copy your competitors.

  6. Don’t share confidential information.

  7. Don’t become obsessed with your competitors.

 


Suggested Tools 

  • GoogleDocs

  • Office365 


References 


Other Related Best Practices

  • User Research Basics