External data enables decision makers to learn as much about their competition as they can about their own company. This is an unprecedented opportunity made possible through Outside Insight. Business leaders need a solid benchmarking strategy in order to be successful.
Why benchmarking is key for forward-looking decisions
Benchmarking is the most honest measure of success. It doesn’t matter how well your company is doing in isolation. It is more important to understand how you are doing compared with your competitors.
Brands don’t exist in a vacuum: consumer sentiment about a product, for instance, cannot be established by only looking at your own brand’s data. Opinions about other brands will need to be taken into account in order to make an informed decision, as brand strength is established relatively.
The power of benchmarking lies in its transparency. It has a brutal honesty. It enables you to see your business’s place in the world, the truth, warts and all. There’s nowhere to hide.
Using the right software to enable realistic benchmarking is key. The tool is only successful when data is compiled in a way that is easy to understand so that root causes can be identified and action taken. Modern benchmarking software dashboards enable us to evaluate this information in ways that were previously impossible.
The case for benchmarking: YouTube’s breakout moment
[[excerpt taken from Outside Insight]]
In 2006, a little-known, start‑up in the online video sector with about twenty employees was an early client of Meltwater’s media monitoring service. The name of the company was YouTube. They asked the Meltwater team to measure their share of voice in online media, in real time, in order to benchmark their brand against their competition. In 2006 there were a handful of players in the video sector, and it was anyone’s guess who would come out on top. Initially every player was mentioned about the same number of times – Vimeo, Dailymotion, Stupidvideos, Break, Google Video, MSN – but then it started to change.
During the early summer of 2006 YouTube started to pull away from its competitors. Momentum grew; it generated more media coverage, thereby strengthening the brand, which in turn attracted more consumers. This was an early indicator that YouTube would rise to the top. On 9 October 2006 it was sold to Google for $1.6 billion. Today the online video-sharing company has become the world’s default repository for videos from Keyboard Cat and Dramatic Squirrel to Martin Luther King’s ‘I Have a Dream’ speech. It’s all there.
In this particular industry scale is everything, and the winner takes all. By tracking share of voice, YouTube cleverly benchmarked itself against the competition. It would have been hard for YouTube to access user growth and other traction metrics from its competitors. By looking outside and measuring share of voice of online news, YouTube was able to get a third-party objective measure of how successfully it was competing with its peers.
It’s important to note the difference between benchmarking and competitor research. According to Six Sigma, benchmarking is the most cost-effective way of introducing best practices. It focuses on continuous improvements, while standard competitor research looks only at performance metrics and individual campaigns. Those who incorporate benchmarking into their decision-making processes use it to continually adapt based on customer needs and behaviors for more relevant and forward-looking strategies.