Last updated April 26, 2021
Benchmarking has become a popular tool for understanding your company’s place in the housing industry and for good reason. Benchmarking done right is a vital component of business strategy and growth. Learn about the most common benchmarking types and how your company can use them to propel to the top of the leaderboard.
Benchmarking is the process of measuring the performance and quality of your company’s services, products, and processes, then comparing that data to other “best-in-class” organizations within your industry, world-class companies outside of your industry, and internally against historical data. The main goal of benchmarking is to identify gaps in operation and discover opportunities for improvement that can yield significant benefits for operational efficiency and revenue growth.
Types of business benchmarking
There are three main types of benchmarking homebuilding professionals can use to help improve operations.
Competitive benchmarking is about comparing your company’s practices and standards to those of your direct “best-in-class” competitors, as well as other professionals regionally and nationwide that consistently perform above average in all, or some areas of your industry.
Studying high-performers in your industry to replicate, or ideally, exceed the gold standard is imperative to gaining a competitive advantage, improving customer experience, and driving business.
Internal benchmarking is the process of comparing your company’s practices and processes to historical company data. This means looking at each department, branch location, and employee to determine the most efficient and effective ways to operate.
Monitoring internal benchmarks helps strengthen teams, identify which procedures (or processes within them) need improvement or discarding, and determine what success going forward looks like based on previous performance.
Strategic benchmarking is similar to competitive benchmarking, with one main difference: instead of emulating gold standards in your industry, you look to world-class organizations outside of it. Many times, innovative practices come from unexpected places.
For example, in the mid-1980s Motorola benchmarked against FedEx and Dominos to improve their phone delivery process, and Southwest Airlines has even modeled its maintenance, cleaning, and boarding procedures after the efficiency of a NASCAR pit crew.
Top 5 benefits of benchmarking for housing professionals
Here are the top five benefits of benchmarking that help housing professionals improve their business operations and bring in more revenue.
Reduce operational costs
Benchmarking helps your company run more efficiently each year by improving productivity which as a result, helps cut back on operational costs. Through deep analysis of performance compared both internally and externally, your team can identify previously unnoticed areas of the business that waste resources and make changes to streamline them – saving time and money.
Raise customer satisfaction
A large portion of benchmarking is gathering and evaluating customer survey data to assess how well your services and products are performing. By comparing customer satisfaction scores internally, against direct competitors, and across industry standards, you can uncover and address customer pain points and areas your company struggles to meet customer needs. A boost in customer satisfaction generates better ratings and reviews, making it easier to attract new customers and drive sales.
Increase customer loyalty and retention
As customer satisfaction rises due to changes implemented through benchmark analyses, customer loyalty and retention generally rise along with it. Taking it a step further, benchmarking can help your company determine best practices for maintaining and improving retention and loyalty by comparing loyalty programs with competitors and businesses outside of your industry that have consistently high retention rates and large promoter customer numbers.
Create more clear and competitive goals
Among identifying what parts of your business need attention, benchmarking helps determine what specific goals to strive for based on set industry standards. These goals are more competitive targets, which give your business an unclouded trajectory towards the industry’s idea of “success”. Clearly defined goals also mean a more productive, constructive, and coherent organization – all of which contribute to higher customer satisfaction and bottom-line growth.
Improve employee performance
Benchmarking can help improve employee performance in a number of ways. By evaluating which employees perform above others, you can determine how they operate differently and implement their practices throughout the team and even company-wide. Benchmarking also helps uncover and tackle challenges holding employees back from being most productive. Happier employees are more motivated to work hard, which results in a high-functioning business.
How can Avid Ratings help you successfully benchmark your business?
Avid Ratings’ award-winning platform, AvidCX, offers housing professionals extensive benchmarking capabilities, making it easy to confidentially compare your data with thousands of others in the industry. Monitor trends over time, understand how homes, communities, home products and homebuyer services are performing, compare performance throughout your supply chain, and evaluate employee performance. Learn how Avid can help you strategize against your biggest competition here.
Want visuals? Check out the ‘5 Ways Benchmarketing Can Upgrade Business Operations and Increase ROI for Housing Professionals’ infographic here.