Friday, April 22, 2011
Is your retail business a peak performer?
As retailers, we’re always striving to do better. Whether we’re looking for more sales, higher profits or better customer service. But do we really understand what doing better means? When we’re “judging” our businesses performance, what are we measuring our success against? And when we measure performance, how do we determine what results should be expected?
The answer is Benchmarking. For some of you, this may be a common occurrence, for others, a new concept that can be a game changer for your business. So, let’s spend some time here trying to explain what benchmarking is and how it can help your retail business profit on a regular basis.
For those who are new to benchmarking, let’s start with a definition. Simply put, benchmarking is the practice of being humble enough to admit that someone else is better at something, and wise enough to learn how to match and even surpass them at it. Benchmarking is a systematic and continuous process of searching, learning, adapting and implementing the best practices from within your own organization, or from other organizations, towards attaining superior performance.
Another way to define benchmarking is as a measured “best-in-class” achievement or a recognized as the standard of excellence for a particular process reference point or a standard against which other performance may be measured against.
There are many different ways to focus your benchmarking efforts within a business. Typically retailers will focus their benchmarking efforts on the review of key business drivers including market share and comparative data on sales and operations. Some examples of benchmarking for a retail business may include:
-Annual sales per square foot
-Rate of customer complaint
-Annual sales per square foot
-Employee satisfaction rate
So why should retailers understand and utilize benchmarking? Most importantly, improving overall performance with the most up to date information can help any retailer improve their bottom line. Benchmarking can be used to help your retail business determine what optimum performance benchmarks should be from an objective source. These indicators can help your retail business define success more effectively and help you to determine any potential areas of weakness in your business. Benchmarks can also help you create realistic goals for improving your performance that is realistic and achievable. Some key benefits of benchmarking include:
-Understanding world-class industry performance
-Encouraging and stimulating company innovation
-Improving organizational quality
-Creating company buy-in for change
-Exposing employees to new ideas
-Broadening company learning
-Increasing employee satisfaction
-Raising level of potential performance
-Sharing of best practices
Obviously, there are quite a few areas where benchmarking can be applied to your retail business. Determining which benchmarks to measure should align with your strategic and operational goals for the business and be appropriate for current stage of your business life cycle. Then if you uncover opportunities for improvement, they can have the greatest effect on delivering results that align with your overall business objectives.
While benchmarking is not an easy task to undertake, the results can have profound results on your businesses’ bottom line. Is 2011 the year you look outside of your own company walls and utilizing benchmarking to determine if you are truly achieving the success possible from your business?