In the competitive world of professional services, it's easy to get caught up in the rankings game. Whether it's Chambers or Legal 500, Accountancy Age, or simply comparing yourself to the competition, the obsession with benchmarking can sometimes overshadow the true purpose of competitor analysis. In this article, we will explore how to shift perspective from worrying about rankings to embracing opportunities for insights and improvement.
What is benchmarking?
Benchmarking is measurement tool that enables you to gauge how your services stack up against the competition. It offers a dual perspective: externally, it captures the opinions of customers and key stakeholders, revealing how your offerings are perceived in the market. Internally, it can measure your processes and culture, uncovering employee sentiments and providing invaluable insights to boost team performance.
Isn't it just competitor analysis?
When we think about external benchmarking, we might think that what we are talking about is competitor analysis. It is true that benchmarking can form a part of a competitor analysis, however, if that is all you do, it can prevent deeper strategic thinking around what it is that is missing in the market and where you have a competitive advantage that can be exploited.
Let’s take the Directories as an example. Chambers and Legal 500 have similar business models. They rank law firms based on a process of submissions (which firms have to write themselves) and feedback (based on referees that firms put forward themselves). There is a game to be played in terms of both submissions and referees. Years supporting firms with submissions has demonstrated to the author that a well-written submission can make all the difference when it comes to where a firm – or individual – places in the rankings.
Are they helpful? Perhaps, in certain cases (see our article on whether is it time to ditch the directories altogether). However, a disproportionate focus is unhealthy. We are not the first to suggest that these rankings play into individual egos and personality types, rather than providing insights that can lead to real change.
The really interesting piece? When we speak to clients they rarely mention rankings as a deciding factor in who to use, indeed, when asked directly, they say that personal recommendations and Google are more helpful!
Is benchmarking becoming an unhealthy obsession?
Competitor analysis is all about understanding your competitive advantage. It requires insights that external rankings just don’t provide. Benchmarking is easy – someone else does it – but it isn’t personal to any one firm and it may or may not measure what you need it to.
We are often asked what we provide by way of benchmarking. Our starting point is always what do you want to be measured against and why? Let’s take a look at innovation by way of example. We can tell firms whether or not they are seen as more or less innovative than other firms we work with in the eyes of their clients. However, how useful is this?
What this observation doesn’t do is:
Take into account whether or not firms are trying to be innovative. Some might, others might have a focus on being a trusted partner, or being the go-to in a particular practice area.
Who has been put forward for interview. Some firms might have put forward business as usual clients, others the clients with whom they do their most innovative work.
Clients vary in terms of how innovative they are; what is innovative for Apple is unlikely to be the same as for a Charity or a Local Authority. This begs the question, what does innovation mean for you? It is likely to vary firm-by-firm, as well as client-by-client.
This one example hopefully starts to demonstrate the danger of relying too heavily on rankings.
Moving to internal benchmarking
External benchmarks are here to stay, but they shouldn't be your only source of insights. Yes, it is nice to see where we are ahead, but from a strategic perspective, have you considered the power of internal benchmarking? By internal benchmarking, we aren't referring to employee data (although that could be something you want to understand). What we are really talking about is how you measure what you need inside your own business. These benchmarks aren't to publish and make money out of - they are for your firm to dig deeper and understand who they can grow.
To gather insights for internal benchmarking, firms need to be brave. They need to encourage professionals to invite all sorts of clients to share their thoughts. This isn't like the Directories, it won't be published and here your most difficult client can be your best teacher.
Continuing with innovation as an example. If you are a firm focused on being seen as innovative, there are things that you can measure from the insights gathered from your key audiences. How did your clients perceive your level of innovation last year? Have you seen year-on-year improvement in this area, especially if it's a focus for your firm?
By shifting your attention to internal benchmarks, you can start asking crucial strategic questions: What do we want to be known for? Who else excels in this area? What unique strengths do we have that set us apart? How can we stand out in a crowded market? Embracing internal benchmarking can lead to deeper insights and drive meaningful growth.
By embracing internal benchmarking, you can unlock a wealth of strategic insights that drive real competitive advantage. Our "Gather - Reflect - Act" framework is designed to help you navigate this process effectively. To find out more about it, get in touch.
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