One Important Thing Missing From Most KPI Dashboards

One thing I see lacking on most dashboards and key performance indicator (KPI) measurement systems companies produce to track their own performance is an external perspective. Companies become so immersed in their own numbers, their own trends, their own data, that they forget to look at the external factors, including the market at large, and their competitors specifically.

It is important to include data on the competition and external threats, to benchmark your own business performance against the competition. Instead of simply measuring your own customer satisfaction it is important to also track the competitor — which is now a lot easier than ever before through social media channels, aggregator websites (e.g. data from Trip Advisor that allows hotels to compare their performance with those of their competitors) and more.

If companies only track their own performance, they can be blinded to what is actually happening. Even if their performance is improving, the competitor might be improving at a faster rate.

Competitor analytics is important for marketing and strategic planning. It allows you to understand your competitors in more than just a cursory ad hoc way. Not everyone in your market is your competitor; some may sell similar products but to different audience and some may simply be too small to be your competitors. You need to know who your real competitors are, and how they are positioned in the market and in relation to your business.

By understanding their strengths and weaknesses, you can identify opportunities to exploit and threats to navigate or mitigate through strategic planning. Plus, competitor analytics pulls all the relevant information on all your competitors together so that you can see the whole picture, not just snapshots when you focus on one main competitor. 

Why does an external view matter?

Your business does not exist in a vacuum. It’s part of a dynamic industry where many businesses are all seeking the same dollars from the same consumer. If you are to prosper in that dynamic market, you need to know what’s happening around you and how you and your competitors are perceived by the market. 

Competitor analytics help you to understand your competitive advantages and disadvantages relative to your completion. It also helps you to predict what they will do in the future and therefore how you can stay ahead.  Plus, if you know how they have behaved in the past, you can better predict how they will behave in the future and how they may respond to a new product or pricing strategy.

Where to find competitor data and how to use it

Competitor analytics will help you answer some important business questions including:

• Who are our key competitors and why?
• What are the objectives of our key competitors and how does that differ from our objective?
• What are their strengths and weaknesses?
• What threats do they pose?
• What opportunities do they present?
• What strategies are they pursuing and how would they affect us?
• Based on their past action how are they likely to respond to changes in our business?

As always, strong and useful analytics relies on strong and useful information. You can source competitor data from recorded data that is easily available such as annual reports, product brochures and marketing activity. If possible (i.e you don’t sell jet engines or luxury yachts) have an employee, friend or family member buy a product or service from your key competitors and assess their experience. This will also get that person on the other company’s mailing list so you can see all their communication and marketing efforts.  

Pay attention to business journals and newspapers for any mention of your competitors. You can use media monitor services to find these or simple create a Google Alert which will alert you of any online mention of your competitor.

There is also observable data which is collected from various sources such as competitor pricing data, advertising campaigns etc. And finally opportunistic data such as trade shows, supplier meetings, sales force meetings. Your sales team will often meet would-be clients who are already doing business with your competitors — they could be a rich source of information.

This type of analytics used to be quite laborious but so much data already exists online. You can, for example, read competitor product reviews in places like their Facebook page and see what their customers are saying about them. 

Most businesses don’t conduct any kind of external analysis. They think they have analysed their competitors because they may share snippets of gossip from a conference or a newspaper article in a strategic meeting. 

But real analysis looks at hard data and key market indicators and benchmarks. Once you have defined these kinds of key performance indicators for your entire market niche, you can compare your own performance — and that of your closest competitors — to overall market trends.

Don’t fall into the trap of thinking that informal impressions, intuition and conjecture is a) all you need and b) competitor analytics. The process is much more systematic and thorough than that and if you invest the time it will yield rewards and inform your decision making.

As always, I would love to hear your thoughts on this topic. 

Thank you for reading my post. Here at LinkedIn and at Forbes I regularly write about management, technology and Big Data. If you would like to read my future posts then please click 'Follow' and feel free to also connect via Twitter, Facebook, Slideshare, and The Advanced Performance Institute.

You might also be interested in my new book on Key Performance Indicators For Dummies which outlines in very practical terms how you find the right KPIs for your business.