What Is External Benchmarking & How To Do It

No matter the success of your company, there are always ways you can improve your everyday business operations – especially when it comes to trade shows. But when you’re so close to your company, it can be hard to assess performance in an objective manner. That’s why many business owners choose to perform external competitive benchmarking.

External benchmarking is a better way to understand just exactly how your business performs in comparison to other competitors in your industry. Ultimately, it helps you to establish your successes and drawbacks in your current market position. As a result, you can better justify your trade marketing budget and improve your return on investment (ROI).

Read on to find out what exactly external benchmarking is, the difference between external and internal benchmarking, and the steps involved in the process…

Specifically, external or competitive benchmarking is a way of measuring performance against a standard (or benchmark) of other businesses within the same industry. For example, you might compare your processes or products against a competitor, which will help you to determine any areas in which your company could improve – such as operationally or staffing – as well as helping you to gain insights into the best practices.

Put simply, it’s a way of stepping back from your company to assess how well it is performing from an outside perspective. As a result, you can get a more accurate, objective perception.

External benchmarking has been helping businesses (especially those taking part in trade shows) to reassess their company goals and drive better performance for decades. It can offer many benefits, such as the following:

As previously mentioned, external benchmarking helps you to identify gaps in your company’s performance when compared to competitors in your market. Essentially, you’re able to see where your business falls short and where your competitors are succeeding.

As a result, you can establish what steps you need to take to improve your performance. For example, if a business wants to improve its performance at a trade show, it might need to utilise better or more in-booth activities or portray an engaging booth layout. For more information on how to stand out at a trade show, check out our ultimate exhibition guide.

Another reason why external benchmarking is important for your business is because it can help your business stand out in your industry or market – no matter how crowded or competitive it is. This is because benchmarking data provides an objective analysis of your business compared to similar companies and monitors market trends to understand how your company is performing within them.

Consequently, you’re able to better understand how your business can compete based on the data presented to you. Moreover, you can identify emerging trends and opportunities to help you stay ahead of the curve.

External benchmarking can also help improve the efficiency of your everyday business operations. Using this process, they can establish the pitfalls of their processes compared to other companies and determine how these companies are boosting their efficiency.

Subsequently, you can emulate what these businesses are doing and streamline the processes within your own organisation.

Internal and external benchmarking are incredibly similar but have one main difference regarding the assessment they use. Whilst external benchmarking focuses on comparisons with external businesses in your industry that are similar to yours (in terms of their products and services), internal benchmarking looks at comparisons between processes and operations within the company.

For example, if your business has multiple chains that visit trade shows across the company, with some chains performing better at these trade shows than others, internal benchmarking would enable you to assess these performances and compare them to each other. This way, you can know what’s working and what isn’t. Meanwhile, external benchmarking would focus on your competitors’ performance at these trade shows and compare it to your own business. For example, you could compare visitor analysis.

Both benchmarking and key point indicators (KPIs) are used to measure the performance of a business or an individual within the company. However, there is a difference when using them both.

For example, external benchmarking marks objectives and goals against your competitors. Meanwhile, key point indicators are internal metrics that provide an understanding of how well your company or staff within it are achieving specific goals. It’s best to think of benchmarking as a comparison, whereas KPIs help to monitor progress.

Now that we’ve established how external benchmarking differs from other methods of establishing business goals and improvements, let’s take a look at how the process works as a whole:

The first step in the external benchmarking process is to define what needs to be benchmarked and identify the best practices amongst your competitors.

For example, when it comes to performance at trade shows, you might want to assess the amount of footfall your business is getting to its booth in comparison to competitors. Then, you can look at what these booths look like and how your competitors are engaging their audience.

To measure metrics such as footfall, dwell time, engagement, and even conversion ratio in your own company when at trade shows, you might need to use certain trade show technology. This is something we provide at Exposure Analytics via our Apex Sensor and Apex Sensors.

Ultimately, it has helped our clients to monitor the entry and exit points at their booths so they can understand what level of footfall they are achieving. Moreover, our competitor benchmarking data allows you to gain unmatched insights into how you measure against industry standards.

Now that you’ve established your performance, you can compare it against the best industry practices. For example, you can understand your position within your specific industry. If it shows you’re a top performer, great news: there’s nothing in your strategy you need to adjust.

But, if you’ve found that there are failings in your strategy and you can update it, determine how best you can update your processes to be in line with your competitors. Sometimes, your competitors might have an advantage if they have more resources, but most of the time, you can update your strategy to be in line with your market rivals.

After reading the above, you’re probably an expert in everything related to external benchmarking. But you also might be wondering what other types of benchmarking there are.

Take a look below, where we’ll discuss the other types you can encounter in further detail:

Similar to external benchmarking, strategic benchmarking works by comparing an organisation’s processes with market leaders or high-performing companies to determine how they can make improvements in the long term. It concentrates on high-level business approaches and processes that can improve the overall performance of a business and help it stand out from the competition.

Performance benchmarking refers to the comparison of a business’s KPIs (e.g., efficiency and productivity) against rivals and other competitors. Like external benchmarking, it helps to identify gaps and set achievable objectives that will help a company improve and succeed. It uses data-driven insights to help understand how a current strategy needs improving and refining.

Functional benchmarking is more specific in its approach, as it compares specific business functions. For example, it might assess the marketing or HR side of a company or even its supply chain. This is then compared with organisations that succeed in those areas so they can adopt better practices and processes.

International benchmarking looks at comparing other organisations’ strategies, processes, and performance metrics with international market leaders. This way, a business can better understand how these companies perform so well and how they can improve competitiveness. As these companies are already well established, businesses just starting can get a better understanding of how these industry leaders succeed and excel past their company goals.

Marking your accomplishments is one thing, but identifying exactly where your business could improve is an entirely different kettle of fish. Make it easier for yourself with help from Exposure Analytics.

If you’re interested in seeing how you compare against competitors in your sector, contact Exposure Analytics today at 0203 982 0997 to organise a free demo. A member of our expert team will listen to your needs and showcase how our competitive benchmarking software can help you achieve your business goals and stand out in your market.