The Importance of Benchmarking

No matter your business stage or industry, the course of your ecommerce business will always be profoundly impacted by three simple questions:

1) Where am I?

2) Where do I want to be?

3) How do I get there?

Sometimes, neither the questions nor the answers to these questions feel easy. But your ability to navigate them is well within reach with a process management technique called benchmarking. In this post, we’ll cover the “what,” "why," and “how” behind benchmarking so you can turn even the toughest questions into actionable strategies and meaningful results.

What Is Benchmarking?

Benchmarking is the process of looking at your own performance relative to your competition and determining where you want to be. Under the umbrella of that benchmark, you’ll set your goals and design a series of small, measurable steps to help you reach them.

The more logistical side of benchmarking involves analyzing specific KPIs and tracking metrics related to your long- and short-term goals. This allows you to gauge the progress of your business and make strategic changes as needed.

Why Is Benchmarking Important?

Since benchmarking is a flexible process, it can be applied to almost any part of your business, from the state of your business at the broadest level to individual channel goals. Here are a few additional ways benchmarking can prove beneficial to your business:

  • It helps you understand how your business stacks up. By comparing your business to your competition, you can gain clear insights into your strengths and weaknesses in comparison to theirs.
  • It helps you set clear goals for your business. For example, if the abandoned cart rate for your industry is 38% and yours is 46%, you know how far behind you are—and how much work it will take to get on track.
  • It allows you to prioritize areas that need improvement. Areas in which you fall significantly behind your industry or competition will need more urgent attention, whereas areas in which you align more closely can be deprioritized.
  • It helps you track the progress of your goals. Once you have set goals, continuous benchmarking allows you to see how closely you are adhering to them and, if you’re falling short, determine what needs to change.

How Do I Benchmark?

Like the benchmarks themselves, the way in which you benchmark can also be completely tailored to your business; as long as you have an informed long-term goal and use specific, appropriate indicators to track your progress, there’s plenty of room for flexibility. If you’re looking for a standard process, though, try this one:

Step 1: Pick what you’re going to explore in the general sense and take stock of where you are compared to the competition. For example, let’s say you want to track your organic performance. Use a paid SEO tool to take an in-depth look at your own performance relative to competing websites, or simply start Googling your business’s high-priority keywords to see who comes up—and how often.

Step 2: Based on your initial deep dive, establish your long-term goal(s). For our SEO example, let’s say you want to increase total organic traffic by 25% by September.

Step 3: Identify the KPIs you’ll use to measure your results and gauge performance. For SEO, you might look at organic traffic, organic revenue, traffic to specific pages, specific keyword performance, or overall brand visibility.

Step 4: Decide which actions will impact your KPIs the most, and create specific goals connected to the actions themselves: optimize X pages, produce Y content, secure Z high-quality backlinks, etc.

Step 5: Set your benchmarking schedule. If you plan to have your goal achieved by September, check in on your progress once a month to make sure you’re still on track.

Step 6: Work, measure, adjust, and repeat. While SEO takes time, if you’re making no progress toward your goal by the end of three months, it’s time to adjust your strategy. However, if you’re soaring ahead of your goal, keep the momentum going.

How Often Should I Benchmark?

Think of it as a road trip. When you’re on a long drive, you’ll need to stop occasionally to check the map, fuel up, and regroup. Stopping too often won’t be a productive way to reach your destination, but not stopping often could wreak havoc on your trip if you end up driving far off-course before you notice that something is amiss.

Finding the right balance between “too much” and “not enough” will look a little different for every business, and it can also vary by channel; setting a monthly benchmark for SEO, for example, wouldn’t give you enough time to truly assess your organic standing. That said, checking in on a benchmark’s progress on a monthly basis is perfectly reasonable for SEO. Use what works for you—but generally speaking, err on the side of more frequent benchmarking, not less.

Conclusion: Benchmarking is an Ongoing Process

When your business is performing well, it can become easy to put business-critical tasks like benchmarking on the back burner. But if you only visit or revisit benchmarks when something is noticeably off-track, you might be arriving too late. Keeping your benchmarks and long-term goals at the forefront of your strategy, on the other hand, will give you ongoing confirmation that you’re on the best possible path—or help you adjust as quickly as possible if you’re not.