The marketing dictionary defines a benchmark as a standard by which all products, items, services or ideas of similar nature can be compared against or used as the basis of assessment. Such a benchmark is often used to compare products within the same industry, between other businesses and competitors and between products produced at different times. Benchmarking when it comes to marketing can therefore be defined as the process of assessing the quality or quantity of a product, service, business or idea relative to a set standard.
How does benchmarking help businesses?
Benchmarking is very important for businesses, especially new startups that need a reference point to set targets and objectives. Benchmarking helps businesses in many ways including:
- Benchmarking helps new and established businesses have clear views and ideas on ways that they can handle the marketing aspects of the business by emulating or comparing the practices of successful companies. It gives new and existing business an opportunity to expand and succeed.
- Since benchmarking is also putting in more organized flow of operations for the business, it also plays a significant role in producing better results from production, more sales, greater profits and smoother running of the business. In short, the business will be more productive.
- When a business adopts an effective benchmarking strategy, the procurement, productivity and sales benchmarks of a business will make it easy to find problems and bottlenecks in the system faster. The individuals in charge of such benchmarks will better monitor the people under them.
- Benchmarking is a surefire way for a business to measure its profit margins and compare their performance with past productivity to make any necessary changes to make the business more profitable. This approach strengthens every point of the business and every department in the business.
- Benchmarking helps people working for or in the business because it makes work easier and eliminates all the red tapes that hinder fast decision making from the point of input to the point the product reaches the buyer.