“Benchmarking competitors will ensure this effort will fail.”
Not the most welcome (or expected) statement you can make to client leadership. Especially when you’ve been hired to do just that. But that doesn’t make the statement any less true.
Competitive benchmarking is roundly accepted as a key foundational element to any digital strategy. It’s often the first step companies take in gathering insights…and too often the only one, which is the problem.
Let’s be clear…competitive benchmarking doesn’t inherently create risk…but the narrow approach many companies take does.
There’s questionable incremental value in conducting yet another extensive, formalized competitive benchmarking effort. This is especially true given the healthy, ongoing obsession most organizations have about their competitors. It’s the rare company that can’t already recite every digital initiative in their industry. And between existing research, trade publications, industry experts, blogs and strategic hiring there are usually few stones left unturned.
- The competitor may be years ahead from a technical/organizational maturity POV, so Company A risks overspending for overly robust systems that increase development and onboarding costs while often decreasing adoption and productivity due to complexity.
- Just because a competitor has a technology doesn’t mean it works. One leading CPG was the envy of the industry, winning countless digital awards. What wasn’t as widely known was that their systems were being held together with twine and tape, costing the organization millions.
The last point is often most critical to creating an effective digital strategy. Even if your strategy is to defend share, competitive benchmarking alone will not provide the needed insights to prepare for future competitive threats.
Competitive benchmarking is best leveraged as part of a greater whole that provides a balanced vision of the marketplace and your customers.
- Start with your customers. This can’t be restated enough. Put aside the Web analytics and focus on the basics of who your customers are, their needs and how you do (or can) help them. Knowing what your customers are doing is important…knowing why they do it creates advantage.
- Look outside your industry. Customer behaviors are rarely specific to a vertical. People apply existing experiences and behaviors to new situations. Banking and insurance shopping/buying patterns are very similar to each other. People will look for a new vacation home in much the same way they found their last car…or TV. Identifying parallel industries creates broader insights and provides needed perspective to evaluate competitors.
- Look upstream. By definition there are very few companies leading digital innovation. And many of those are start-ups…not industry-leading businesses (i.e., your competitors). Following on the previous two points, looking upstream to digital innovators expands your digital horizon and helps your company better anticipate future opportunities and threats. So what if Moms aren’t socializing about your cereal. What’s important is that they are socializing more and more, which means it’s your next important opportunity or threat…no matter what your competitors are doing now.
So, a more accurate opening statement probably would have been “Only benchmarking competitors (with the implied ‘as you are now doing’) will ensure this effort will fail.”
More accurate…but less startling…and what’s the fun in that. Try it for yourself and let me know how it goes.