Product benchmarking is a structured comparison of a product or software against competing or reference offerings, using criteria defined in advance: features, usability, performance, price and support. In a digital project, it helps you choose the right solution, then check that it actually fits the way employees work and drives adoption.
Key takeaways
- Product benchmarking compares a product or software with reference offerings on criteria defined in advance.
- APQC distinguishes four types of benchmarking: performance, practice, internal and external.
- The method has three steps: select the products to compare, define and weight the criteria, then collect and analyze the data.
- For business software, the benchmark must cover user experience and ease of adoption, not just a list of features.
What is product benchmarking?
Definition of product benchmarking
Product benchmarking — a form of competitive benchmarking — is defined as a methodical process of comparing a product or service with its main competitors in a given market.
To carry out this benchmarking exercise, every characteristic of the product under scrutiny is studied in depth, whether it be the features offered, ergonomics, technical performance or value for money.
The aim? To pinpoint the competitive gaps that need to be closed in order to match or even exceed market standards.
The main objectives
Assessing a product's overall performance
First and foremost, product benchmarking makes it possible to accurately assess an offering's performance across all its key characteristics, through direct comparison with competing benchmarks on the market.
This comparative analysis provides a revealing snapshot of the relative strengths and weaknesses of the solution under review. The end result is an objective overview against industry standards, giving a meaningful picture of the product's competitiveness.
Identifying priority areas for improvement
But the main value of product benchmarking lies in precisely identifying the levers to pull in order to enhance the appeal of the offering under review.
By highlighting gaps compared with market best practice, this diagnosis makes it possible to target the workstreams to prioritize in order to close shortcomings and match the competition.
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Common methodology
Step 1: Selecting the products to compare
The first step is to build a relevant panel of competing products to compare, representative of the leading solutions in the target market.
Selection is generally based on criteria such as market share, positioning (entry-level, mid-range, premium) or even the target user group.
The challenge is to choose offerings that are sufficiently comparable to obtain meaningful results.
Step 2: Defining the evaluation criteria
Once the panel has been finalized, the next step is to define the criteria on which the products will be scored (features, usability, integration, security, support, total cost) and to weight them according to your priorities.
Step 3: Collecting and analyzing data
The third step is to collect tangible data on each of the selected products, for all the criteria chosen.
This collection draws on a range of methods: product testing, customer surveys, analysis of specifications, market research, vendors' public data, and so on.
This raw data is then analyzed to produce numerical scores for each criterion.
What are the 4 types of benchmarking?
The American Productivity & Quality Center (APQC) distinguishes four types of benchmarking, which you can combine:
- Performance benchmarking: comparing quantitative data such as metrics or key performance indicators.
- Practice benchmarking: comparing qualitative information on how an activity is carried out.
- Internal benchmarking: comparing metrics or practices across units of the same organization, for example how two subsidiaries use the same software.
- External benchmarking: comparing your metrics or practices with those of one or several other organizations, including competitors.
Product benchmarking is usually external: you compare your offering, or the software you plan to buy, with the market. In a digital transformation project, internal benchmarking is just as useful: comparing adoption of the same tool across departments shows which practices to spread and which teams need support first. Whatever the type, finish with an action plan: every gap you identify should lead to a decision, an owner and a deadline.
Why use competitive benchmarking for digital adoption?
Making informed decisions
By revealing customer expectations in detail and the gaps to close compared with market leaders, this competitive diagnostic tool helps rationalize strategic choices:
- Understanding the real criteria for users' adoption of a solution.
- Identifying the features to develop as a priority to make the offering more attractive.
- Determining the technological and UX levers that create value for the customer.
- Allocating resources to the most promising areas from a business perspective.
Continuous product improvement
Furthermore, by providing an objective barometer over time through regular waves of comparative analysis, product benchmarking ensures continuous monitoring of solutions' competitiveness. It thus becomes a powerful catalyst for incremental innovation, making it possible to:
- Monitor best practice in your sector on an ongoing basis
- Integrate the latest cutting-edge advances and features quickly
- Test promising new technologies
- Keep pace with the state of the art in a constantly evolving market
Process optimization
In addition, the lessons learned from benchmarking can trigger an overhaul of internal product development processes, typically leading to:
- Rationalizing design methods by drawing on best practice
- Accelerating innovation cycles by adopting agile principles
- Streamlining collaboration between sales, marketing and technical teams
In this way, digital transformation is fueled by the value delivered to the end customer.
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Strategic alignment
Finally, product benchmarking provides an objective framework for challenging the strategic vision behind digital products and how well they fit the company's business imperatives in its market.
It fosters team alignment by grounding discussions in factual data and a shared diagnosis of the offerings' strengths and weaknesses relative to the competition.
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Product benchmarking example: a scorecard for business software
To compare several candidate applications, a weighted scorecard keeps you from judging on the feature list alone. Here is a template to adapt:
| Criterion | Questions to ask | How to assess it |
|---|---|---|
| Functional coverage | Does the software cover priority processes without custom development? | Demo on your own business scenarios |
| Usability | Can a user complete a routine task without help? | Timed user tests on a few key tasks |
| Integration | Are there APIs and connectors to your existing tools? | Architecture review with IT |
| Security and compliance | Where is data hosted? Which certifications? | Security questionnaire, GDPR review |
| Training and support | What materials, in-app help and post-go-live support are provided? | Customer references, trial of the materials |
| Usage analytics | Can you track real adoption by feature and user group? | Demo of usage dashboards |
| Total cost | Licenses, integration, training, maintenance and upgrades over several years | Cost comparison over the same period |
Weight each criterion before scoring the solutions, so you do not favor your preferred tool after the fact. Once the software is live, repeat the exercise on actual usage with software adoption KPIs: that is when the benchmark becomes a tool for steering digital adoption.
Conclusion
By objectively dissecting how your offerings are positioned against the competition, product benchmarking equips you with valuable insights to set a course for value-driven innovation and operational excellence. Admittedly, this comparative analysis requires a sound methodology and a rigorous, objective approach. But the competitive dividends it generates make it well worth the effort. As markets keep changing, measuring yourself against the best in your category is more essential than ever.
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Frequently asked questions
What is the difference between product benchmarking and competitive benchmarking?
Competitive benchmarking compares a company with its competitors across its whole strategy: offering, pricing, marketing, distribution and online presence. Product benchmarking focuses on the offering itself: features, usability, performance, quality and price. It is often one part of competitive benchmarking, but it can also compare non-competing products, such as several candidate software tools before a purchase.
What tools can you use for product benchmarking?
Product benchmarking starts with a scorecard, often kept in a spreadsheet, with weighted criteria and scores. It is fed by product tests, user tests, customer surveys, vendor documentation and public data. For software already in production, usage analytics tools let you compare real behavior instead of opinions, for example task completion or feature adoption by team.
Can you give an example of competitive benchmarking?
A typical example of competitive benchmarking is a company comparing its customer onboarding with that of three competitors: time to first value, number of steps, help available and price. For internal software, a product benchmarking example is scoring three HRIS candidates on the same tasks performed by real users, then comparing usability, integration, support and total cost.
How do you present product benchmarking results?
Present product benchmarking results with a short summary of the main findings, a comparison table by criterion and prioritized recommendations. Restate the method (products selected, criteria, weights, sources) so the results can be discussed on facts. Each recommendation should lead to a concrete action with an owner and a deadline, plus the date of the next benchmark.
How often should you repeat a product benchmark?
There is no universal rule: how often you repeat a product benchmark depends on how fast the market moves. For SaaS software that ships new features several times a year, regular updates, for example at each major roadmap milestone, are useful. A one-off benchmark is also justified before a contract renewal, a tool replacement or a new rollout.
