Wonders of Bench Markinng in Sales Management

Even when you can widen the quality gap between you and your competitors to such an extent that people can easily notice the difference, there remains the strategic question, “Are people willing to pay for such quality?” After all, the Law of Diminishing Returns states that the closer to 1 00 per cent that you get, the harder and more expensive it is to make any incremental gains. So, given the generally high quality in most products today, trying to make a quantum leap in quality is bound to be extremely expensive and that cost will have to be passed on to the customers. Are they willing to pay a lot more for extreme levels of quality? Not necessarily.

That’s why companies practise benchmarking They find out how their products fare against the competition, whether in real or perceived terms, and act accordingly It’s not just the underdogs for whom this is a necessary evil. General Electric’s former CEO, Jack Welch — a man well known for his astuteness — encouraged his people to benchmark as he openly reveals in his book, Winning

Through benchmarking, companies set themselves targets to beat (or match). And for good reason. Customers do so too, relentlessly comparing quaity, price, performance and whatever else they think is important in order to make a purchase decision. It has become a way of life. Inevitably, the overall standard is raised, and the divide between the best and the worst narrows to the point where quality is no longer a differentiator

However, benchmarking cannot take all the credit for the surge in quality. In the past, companies could benchmark themselves against the best in their business but not be able to close the gap in quality. These days, with the proliferation of advanced and accessible technology, a breakthrough product could be introduced, only to be stripped apart, analysed, reverse-engineered and made better by competitors. Within months, a cheaper, yet higher- quality product could be out on the market. That is how scary the competitive landscape has become.

That was how the Japanese consumer electronics companies and car manufacturers made their mark in the early years, They benchmarked against established American and European brands, and they gradually closed the quality gap until they were able to surpass many American and European brands in quality. But the Americans and Europeans are now benchmarking against the Japanese (and against each other) to close the quality gap. What the Japanese did to the Americans and Europeans, the Koreans are now doing to them.

The rise of Samsung Electronics and Hyundai Motor follows this established pattern. And who is to say the up-and-coming stars from China and India will not do the same to the Korean companies?

Right now, Chinese cars, consumer electronics and home appliances still fall short of their Japanese and Korean rivals in terms of quality (or perceived quality), Thanks to benchmarking and the relentless march of technology — which will make it easier, faster and cheaper to produce high-quality products of any type — the situation will not remain that way for long.

Share This Post

Post Comment