Functional benchmarking - it's worth knowing

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There are issues that are actually very simple, although they have a complicated name. This is what functional benchmarking seems to be, which allows you to measure high and evaluate your strategy in relation to the best patterns. First things first. 

What is functional benchmarking?

A benchmark is often talked about in the marketing world, although not everyone knows what exactly this concept means. And you need to understand them to be able to explain what functional benchmarking is. A benchmark is a pattern and a benchmarking it is analyzing the phenomenon in relation to this pattern. The term is used widely, not only in the marketing world.


For example, a game with high hardware requirements can be a benchmark for testing computer power, and the results of one company on the stock exchange - a benchmark for other indices. In business, benchmark allows you to evaluate your products or brand against others, and this is what the concept of functional benchmarking is related to. It was first used in 1976. Examples can be found below.

 Functional benchmarking is a tool that can be used by everyone, and at the same time belongs to the arsenal of the most experienced marketers. On-line business specialists usually like practical solutions that can be applied immediately. This is the case here, and at the same time it is something from the world of creativity and unfettered fantasy. It is about evaluating your services or processes, but not in relation to another company that has similar services, but to a market giant. Even if it operates in a completely different industry! It may seem absurd, but this approach gives interesting conclusions and allows you to break away from the overwhelming industry reality or formal issues.  

The only difficulty here may be to accurately determine who could be such a model. It is often personal sympathies or impressions that decide. Meanwhile, the results of comparing your processes with those who are actually far from ideal, can be deplorable. That is why it is so important to spend enough time identifying truly valuable patterns. This is the most complicated step and may consist of many steps. This could be the identification of available research, resources, business activities, materials or legislation that could affect the credibility of benchmarking. Research proves that if the right company is chosen, then the evaluation of actions in relation to it can be practically always accurate (and at the same time often inexpensive and simple). 

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Purposes of functional benchmarking

Probably everyone who starts a company, even subconsciously dreams that his company will be the best in at least some respects.

This is precisely the goal of functional benchmarking - following the example of leaders. In this way, it is possible to evaluate not only the functioning of the enterprise as such, but also individual areas such as:


All of this can be assessed to some extent as an ambitious but unrealistic inspiration. In the era of globalization, however, functional benchmarking more and more often becomes an obligation, not an option! After all, the competition of a local company are to some extent the largest players, because employees and customers are mobile and have more choice than ever before. Considering what bonuses Google offers to Google employees or how it shapes Tesco's pricing policy can actually ensure competitiveness in a world where the largest corporations are increasingly present in local markets and compete there. In addition, the giants probably developed a strategy with a lot of time and resources. It has also been tested on a large network employing many people. The possibility of relying on such a ready pattern is an invaluable help in business. 

Functional benchmarking - examples of application in marketing

It is easiest to describe functional benchmarking on specific examples. They will show that even the smallest individual can use this tool.


Let us take a small company that is making its debut in the field of luxury goods - such as candles or shoes. Knowing the profit margin of the most luxurious high-fashion brand can be interesting information for interesting comparisons. On the one hand - one company employs a few, and the other employs several hundred people. So they are divided by a lot. However, with certain points of contact, one of the factors can be treated as a functional benchmark for your business, counting that a company with a global reach has a very well-thought-out strategy in this regard.

Examples of similar use of such phenomena can be multiplied: HR policy, location, price, quality, marketing strategy ... It is best when the selection of the benchmark will be really well thought out, taking into account various variables. Sometimes, however, a small company treats data about a company from a different industry out of context as a functional benchmark, because it was just ... it was the only one it managed to find. This is not an ideal situation, but sometimes even such comparisons allow drawing interesting conclusions and are better than acting completely in the dark.

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