What is Product Benchmarking?
Product benchmarking compares a company’s products or services to competitors to identify strengths and weaknesses. This analysis can help companies increase their market share and improve their offerings. This can be done in various ways, including comparing product features, pricing, customer service, and marketing strategies. By analyzing these factors, companies can identify areas where they excel and where they need to improve.
Product benchmarking can also involve analyzing industry trends and best practices to stay up-to-date and innovative. Keeping up with changing market trends is an excellent way for companies to remain competitive.
Benefits
Several benefits of benchmarking can help businesses improve their products and stay competitive in the market. These include:
- Helps businesses identify areas for improvement – By comparing their product with their competitors, companies can identify the gaps in their products and work towards improving them.
- Understands the market trends and customer preferences – Companies can identify customer preferences and the features they must prioritize by carefully analyzing the competitors’ products.
- Establishes realistic goals and targets for businesses – Businesses can use competitor analysis to establish benchmarks for their product, leading to enhanced quality, increased customer satisfaction, and greater market share.
- Save businesses time and money – By studying their competition’s products, businesses can avoid repeating their mistakes and spend resources on areas that matter most.
Which Benchmarking Metrics Matter?
Various metrics can measure performance benchmarks, but four of the most common are:
Stickiness
A measure of user engagement that measures how often users return to a product. The more “sticky” a product or service is, the more likely customers will continue using it and recommending it to others.
To measure stickiness, companies can use metrics such as customer retention rate, frequency of use, and referrals. Over time, tracking these metrics can help companies identify improvement areas to increase stickiness.
Feature Adoption
This metric assesses the usage of specific features within a product or service by tracking the number of customers utilizing them. Through monitoring the adoption of features, businesses can determine the popularity of certain features and identify areas for improvement or additional promotion.
User Retention
User retention refers to the number of users who continue to use a product over time. Using this metric can help you measure the success of your marketing and customer service efforts. Companies can use tools such as cohort analysis to track user retention over time.
Account Level NPS
This metric measures the loyalty of your customers and their likelihood to recommend your business to others.
To calculate the Net Promoter Score (NPS) account level, ask your customers, “From 0-10, what is your likelihood of recommending this product to a friend or colleague?” Based on their response, customers are classified as promoters (9-10), passive (7-8), or detractors (0-6). Calculate account-level NPS by subtracting detractors from promoters at the account level.
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Here are the steps to follow when conducting product benchmarking:
Step 1: Identify Your Competitors
Start by identifying the main competitors in your market. You can do this by researching industry reports online and asking your customers which brands they consider alternatives to your product.
Step 2: Choose the Criteria for Comparison
Once you have identified your competitors, you need to choose the criteria for comparison. It can include product features, pricing, quality, customer service, and other essential factors for your target audience.
Step 3: Evaluate the Competition
Once you have identified the criteria, evaluate your competitors’ products based on each. You can do this by purchasing their products, reading online reviews, and analyzing their marketing materials.
Step 4: Compare Your Product
After evaluating your competitors, it’s time to compare your product to theirs. Determine how it stacks up against theirs regarding the criteria you identified.
Step 5: Identify Opportunities for Improvement
Find areas for improvement in your product based on the information you gathered. You can modify your product features, pricing, marketing, and customer service.
Step 6: Implement Changes
Once you have identified areas for improvement, it’s time to implement changes to your product. It can involve redesigning your product, improving your marketing strategy, or changing your pricing strategy.
