5 Benchmarking Best Practices Guaranteed to Help You Succeed [With Examples]

With the digital world as fiercely competitive as ever, benchmarking is your key to staying ahead. 

In its most basic form, benchmarkingcompares your business to others in your industry, giving you context to understand performance relative to the market. It’s the only way to get an accurate picture of your performance.  

When you benchmark and analyze your data like a pro, you’ll be able to detect new market trends, pinpoint your biggest competitive threats, and gauge and grow your market share. 

Keep reading for five benchmarking best practices that we swear by for continuous improvement and growth. Let’s get started.

5 benchmarking best practices 

1. Measure what’s relevant, not what’s easy

The easiest way to benchmark would be to focus on performance metrics and publicly available information, like social media followers, the number of employees, or quarterly revenue (for public companies). While this information can be important, it doesn’t cut it if you want to reap the benefits of benchmarking.

Start with your key business questions and the metrics you need to answer them. Let’s say you’re an analyst for a top eCommerce platform and you notice that you’re losing many prospects along the conversion funnel journey, but you don’t know where or why.  

The first map out the entire buying journey, benchmarking each customer touchpoint against industry norms and your past performance. Instead of benchmarkingconversion rates, benchmark the steps with the highest value, this will allow you to determine where you have the best opportunity to optimize. Other powerful metrics to benchmark for better context to answer this question:

• Engagement rate
• Website Traffic 

2. Always ask “why” after answering the “what”

Defining what to benchmark is straightforward. Figuring out why the result came about is a lot more tricky.  

Take the gaming sector as an example. What should we measure? Traffic. Over the holiday season, you may find that certain sites experience increased traffic at night, while others receive higher engagement during the day. Whereas you may see little to no change in time spent on your website, your competitors could see dramatic increases or decrease in session duration.  

Why the erratic and unsynchronised shifts in behavior? We’re looking at an industry that is exceptionally diverse in terms of website demographics. And that’s one place to start digging and benchmarking. 

If you skip this best practice, you may try to solve an issue that isn’t an issue at all. Only when you find explanations for discrepancies can you benchmark successfully and create an action plan.

3. Benchmark often 

Benchmarking data has little meaning as a one-time project and should be an ongoing process. So what’s the right frequency? That depends, but the bottom line is that different metrics need to be handled differently. Some require continuous monitoring, others periodically. 

For example, your market share most likely won’t jump over the course of a week. Checking quarterly would be sufficient under stable market conditions. Conversely, referral traffic from your various affiliates is something you want to keep a close eye on. You’ll have to create different benchmarking strategies and timelines depending on what you’re tracking. 

Having said that, the speed of business is accelerating together with the agility of the markets. You may consider benchmarking more frequently, in general, to stay agile and ahead of your competition. 

4. Don’t try to be the best at everything

Define the areas in which you strive to be the best because you can’t be the best at everything. Find out the areas in that you excel and focus on highlighting your unique offering and capabilities.  

Acknowledge your position, analyze, understand it, and be open to changes. A lot of times, “that’s how we’ve always done it” or “that’s what characterizes us” stands in the way of improving your strategies. Focus on your research and let the data be your guide. 

5. Apply different types of benchmarking

Benchmarking is about identifying opportunities. Different types of benchmarking enable you to drill down into your data for different purposes. Here are a few types to try:  

• Competitor benchmarking– Compare your data to the industry average, the best-in-class, or a few selected competitors.
• Internal benchmarking– Evaluate sections or pages of your site compared to the whole or specific competitors’ pages.
• Performance benchmarking– Focus on performance metrics over time 
• Process benchmarking – Compare the results of different processes to reach the same outcome.

Best practice benchmarking examples 

When you are benchmarking you want to pay attention to the season and big events and how your competitors (and industry) capitalize on these high-opportunity moments in time. Here’s an example of how it’s done:

The holidays provide extra opportunities for almost any business with an online presence. Before the holidays, eCommerce and retail earnings are up as consumers shop for gifts, clothes, food, etc. 

For these industries, the holiday season is a goldmine waiting to be exploited. 

If you look at the performance of the top 100 eCommerce websites in the U.S. since December 2018, the chart shows that visits typically begin to climb in November as consumers purchase presents and plan for the holiday season, before dipping back down at the end of December.  

From here, you can hone in on your specific competitors to analyze how much traffic they gained during the holiday season previously and how you stacked up. Let’s say you are etsy.com. Amazon.com is an industry leader in the set. 

Your next step would be to investigate the site’s holiday-specific marketing tactics by honing in on channel performance to find opportunities. 

Amazon.com wins during the holiday shopping months in terms of direct and organic search traffic. Etsy.com can benefit by allocating resources to search optimization and brand awareness to boost organic and direct traffic.

Benchmarking in 3 steps

Step 1: Use historical data  

Historical benchmarking lets you compare changes over long periods of time, from a regular timeframe to a more seasonal one. Identify which metrics fluctuate and by how much over time. Stating that “desktop use increases” isn’t good enough. A proper evaluation requires measurable results. 

Step 2: Benchmark your metrics vs. the industry average 

Identify if and where your company is affected by certain market conditions more than others. Make sure that you are tracking different metrics, from engagement rate and website traffic to marketing channel performance, to ensure you’ll get the full picture. 

Step 3: Learn from their strengths and weaknesses

Once you’ve identified your biggest competitive threats, dig into their marketing data to investigate what they do and how they do it. Find out which factors impact behavior and how you can adapt your activity. How can you adjust your offers and strategies to accommodate your target audience’s behavior? What are the demographic factors that weigh in? Which other opportunities are hidden in user behavior?  

Benchmarking best practices in action

We don’t want to hand over all that data with just a theory in our heads. So, here are a few helpful tips on how to do seasonal benchmarking with Similarweb.

Year-over-year comparison –  Do you know how well this year’s Thanksgiving strategy worked compared to 2020? Use a year-over-year (YoY) comparison for a full picture of your website performance from past holiday seasons? 

Drill down into specific time frames so that you can pinpoint which digital marketing strategies led to successes, and which others might have flopped. You can also examine how someone else’s strategy worked or benchmark against the industry average.

Most popular keywords – What will your users be googling over Halloween next year? You can benchmark keyword performance, discover trending keywords, and analyze cost-per-click to uncover new customer preferences, and more importantly, capitalize on them. 

Competitive analysis – An in-depth competitive analysis between your business and your closest competitor can make the difference between the remaining average and your company’s success. Similarweb lets you compare key metrics from apples to apples. Find discrepancies and uncover opportunities. The way to the top sometimes comprises mini-steps, one competitor at a time. 

Click here to start benchmarking your performance and discover how you fared.

Benchmarking best practices FAQ

What is benchmarking?

Benchmarking is the act of evaluating your company’s performance to a standard or point of reference. In the digital world, you compare website metrics, results, and other data against specific reference points called benchmarks. This could be the industry average, the best-in-class, or a particular competitor.

Why is benchmarking important?

Effective benchmarking lets you identify areas of growth and supports continuous improvement. It is an important part of strategic planning as it helps you understand your position in your specific market and measure yourself against direct competitors.

How can I benchmark like a pro?

Follow these best practices to make sure you’re getting the most out of your benchmarking strategy: 

1. Measure what’s relevant, not what’s easy
2. Always ask “why” after answering the “what”
3. Benchmark often, but not excessively
4. Don’t try to be the best at everything
5. Apply different types of benchmarking