Most businesses set goals to grow revenues, increase quality, decrease costs, and turn a profit. One of the ways companies achieve these goals is to measure the quality and performance of their products. Sounds like a solid approach, right? Not quite. These measurements don’t add much value on their own. To provide insight, this data must be compared against some sort of standard – a benchmark. Product benchmarking is one of many tools a company can use as part of a continuous product improvement model.
Benefits of product benchmarking
Regularly scheduled product benchmarking can help your company become more competitive in its market. Benchmarking can benefit your organization, as it can help you:
- Improve feature sets: Benchmarking identifies which existing features are performing well and which features need to be further developed.
- Raise customer satisfaction levels: Benchmarking uncovers pain points that can be improved on and reveals customer satisfaction levels in general.
- Understand relative price position: Benchmarking reveals a company’s relative price position in relation to its competitors.
- Gain strategic advantage: Benchmarking helps companies focus on capabilities that are key differentiators and building strategic advantage.
What metrics should be used for product benchmarking?
Companies use a variety of metrics for product benchmarking. Metrics can be customized to specific products and product strategies, including:
- Go-to-market strategy: Identifying product messaging, target audience and sales distribution.
- Features offering: The various product features that are offered to customers – watch out for special features that are offered to customers at different pricing levels.
- Features adoption: A measurement of usage for a product’s particular features.
- Technical product specifications: Everything from design specs to product functions.
- Customer satisfaction levels: Satisfaction around product or feature levels.
- Customer metrics: Metrics around customers by segment, region, etc.
- Customer retention: How existing users return to and remain active in the product.
- Product pricing: The cost to customers for each level of the product offering and the strategies around the product pricing such as premium, bundle, etc.
How do I choose which companies I should benchmark against?
Unfortunately, there is no clear answer when it comes to which companies you should benchmark your product against. Deciding which competitors your company will look at depends on the time and capital investment that your company is willing to spend on a benchmarking exercise.
One approach is to benchmark against your closest competitors. These companies are the most similar to your company in terms of size and product offering. This approach gives you a good view of the companies you’re directly competing against and the ones most likely to eat into your market share.
Another approach is to benchmark against “best practice companies” in your industry. The industry views these companies as the gold standard.
A more futuristic approach is to look down the line to see what’s coming. There are always smaller, more agile companies that are taking a more innovative approach to gain market share. Depending on how disruptive the market you operate in is, this approach involves looking at the smaller players who stand out for their innovative products and approaches.
As for which approach HelloInfo recommends, we suggest a fulsome approach where your company benchmarks against a few leaders or best practice companies as well as some up-and-coming innovators to provide you with a holistic view of the competitive market.
Can HelloInfo help me with my product benchmarking?
Yes! HelloInfo designs competitive product benchmarking around your business. It can be as broad or as granular as you would like. There is no set approach to product benchmarking, the process comes down to your company’s goals and what areas are most important to the organization.
An example of a step-by-step process for product benchmarking might include:
- Your company selects a product or service to benchmark.
- HelloInfo collaborates with your company to identify the key performance metrics for the product or service, including determining a rating criterion for each performance metric.
- To strengthen analysis, HelloInfo can conduct a first few interviews with customers to get a sense of what they really want, informing which criteria your company should benchmark.
- HelloInfo assess your product market and collaborates with your company to decide which competitors to benchmark against.
- Your company provides HelloInfo with background information on your product or service. Before assessing your competitors’ offerings we like to gain as much insight into your product and approach as possible.
- HelloInfo collects data on competitors’ product performance and practices via primary research (interviews) and secondary research.
- HelloInfo analyzes the data and identifies opportunities for improvement.
- HelloInfo provides recommendations on where your product falls short, what best practices you can adopt and where your company can gain a competitive advantage.
Schedule a meeting to learn more about how we can help you assess your product and identify your competitive advantage through product benchmarking.