Competitor benchmarking is the method of understanding how competitors are doing on a specific aspect or overall product.
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UX designer, UX writer, Product manager, User researcher, Developers
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.
Intent: Define the reason or purpose for which you are doing the competitor benchmarking.
Identify and select your competitors: Make a list of your direct competitors, which may be businesses or organizations that offer similar products or services to your target audience. Select 3-5 most relevant competitors based on the reason for benchmarking.
Determine key performance indicators (KPIs): Identify the KPIs that are important for your business, which may include metrics like market share, revenue, customer satisfaction, employee satisfaction, and social media engagement.
Collect data: Collect data on your competitors’ KPIs, which can be done through primary or secondary research.
Analyze the data: Compare your KPIs to those of your competitors and identify areas where your business outperforms the competition and areas where you could improve.
Summarize: Based on the detailed analysis, summarize the overall strengths and weaknesses of all competitors. Also, identify areas for improvement that could be incorporated into your product.
Take action: Use the insights gained from the analysis to inform your business strategy. Make changes to your product or service offerings, marketing strategies, or customer experience to improve your competitive position.
Based on the comparison, here are different types of benchmarking:
Usability-based: Evaluating products based on their heuristics, interaction design, etc.
Features-based: Evaluating products based on their features.
Strategy-based: Evaluating products based on the vision, mission, design philosophy, solution approach, uniqueness, etc.
Visual Design based: Evaluating products based on the usage of grid, components, colors, fonts, styles, etc.
Based on the existence of competitors in the market, the types of benchmarking are:
Direct competitor benchmarking when your competitors exist in the market. Evaluate the competitor's product/service offerings.
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.
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. |
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