How can benchmarking reveal competitive threats to your revenue streams?

1 Market share erosion

One of the most obvious signs of competitive threats to your revenue streams is the loss of market share to your rivals. Benchmarking can help you track your market share over time and across different segments, regions, and channels. You can also compare your market share to your competitors and industry averages, and see how they are changing. This can help you identify where you are losing ground, why, and how much. For example, you may find that your market share is declining in a certain segment because your competitors are offering lower prices, better quality, or more innovation. To counter this threat, you may need to adjust your pricing strategy, improve your product or service, or invest in research and development.

2 Customer churn

Another indicator of competitive threats to your revenue streams is the rate at which you are losing customers to your competitors. Customer churn is the percentage of customers who stop doing business with you over a given period. Benchmarking can help you measure your customer churn rate and compare it to your competitors and industry benchmarks. You can also analyze the reasons why customers are leaving, such as dissatisfaction, switching costs, or alternatives. This can help you identify the gaps in your customer retention strategy, and how to address them. For example, you may find that your customer churn rate is high because your customer service is poor, your loyalty program is ineffective, or your competitors are offering better value propositions. To reduce this threat, you may need to enhance your customer service, reward your loyal customers, or communicate your unique selling proposition more effectively.

3 Revenue growth stagnation

A third sign of competitive threats to your revenue streams is the lack of revenue growth or decline over time. Revenue growth is the percentage increase or decrease in your revenue over a given period. Benchmarking can help you monitor your revenue growth rate and compare it to your competitors and industry trends. You can also break down your revenue growth by different sources, such as products, services, customers, or markets. This can help you identify where you are missing opportunities, facing challenges, or losing momentum. For example, you may find that your revenue growth rate is low or negative because your products or services are becoming obsolete, your customers are shifting their preferences, or your markets are becoming saturated. To overcome this threat, you may need to innovate your products or services, diversify your customer base, or enter new markets.

4 Profit margin compression

A fourth indicator of competitive threats to your revenue streams is the decrease in your profit margin over time. Profit margin is the percentage of revenue that you keep as profit after deducting all expenses. Benchmarking can help you measure your profit margin and compare it to your competitors and industry standards. You can also analyze the factors that affect your profit margin, such as costs, prices, or volumes. This can help you identify where you are losing profitability, how, and by how much. For example, you may find that your profit margin is shrinking because your costs are rising, your prices are falling, or your volumes are dropping. To reverse this threat, you may need to reduce your costs, increase your prices, or boost your volumes.