Every organization uses some form of measurements to decide if they are successful or not. One aspect of this is key performance indicators or KPIs. KPIs help your Middle Market track growth and profit. You may also track capital, customer happiness and quality control with KPIs. While the data you collect is certainly helpful, it might not be giving you all of the information you need to make key decisions or be more responsive. Why? KPIs are just your data, measuring your company against itself. Helpful, certainly, but it doesn’t help you understand what’s happening in your industry or the world at large.
Introducing Benchmarking
Benchmarking is useful to help you determine where your Middle Market organization is performing in comparison to your competitors in any number of key areas. Everything you track or measure internally could be evaluated as a benchmark as well. So, instead of just evaluating your capital from one time-period to another, you can see where your liquidity puts your organization against an individual, the market or generally against all competitors of your size, etc.
Why Benchmarking Is Important
Certainly, any data you can put together about the health and performance of your company is helpful. You can use benchmarking data to improve your financial health, gain market share, tighten up production or any other number of initiatives for improvement. It gives you a much clearer picture of where you land in comparison to your competition.
You may choose to use this information solely for internal improvement, which would definitely be beneficial in some capacity. If you wanted to sell your organization, you could also track indicators that help you know how desirable you would be to potential buyers. Your Middle Market organization could also use specific benchmarking indicators to make systemic improvements or changes for improvement.
Deciding What’s Important To Look At
If you are new to benchmarking, you may want to just start looking at the same points you track for KPIs. The information will likely bring your KPIs into greater focus or give better meaning to the data you track and review. Where you go next with benchmarking likely depends on what your organization is hoping to achieve or your future plans.
If you want to be for sale for instance, you will likely delve deeper into benchmark information that helps you improve your chances of attracting a great buyer. If you need to improve customer satisfaction, your benchmarking tracking and goals will be much different. So, look at what short, middle and long-term goals your Middle Market firm has and use benchmarking to help investigate and meet those goals.
KPIs are good sets of information to track, but they don’t give you the full picture. Benchmarking may be the next step your company needs to reach your goals and desired levels of successes.
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