How to Benchmark Against Competitors Effectively

Early in my career, I learned that assumptions can be dangerous. You might believe your product is the best in the market, but without a structured way to compare it against competitors, you’re flying blind. This is where benchmarking comes in—a critical tool for product managers looking to make informed decisions, refine strategies, and maintain a competitive edge.

Benchmarking isn’t just about tracking who has the most features or the lowest price. It’s about understanding the full competitive landscape—pricing, customer experience, marketing tactics, and even operational efficiency. The real power of benchmarking comes from translating insights into action. Here’s how you should approach it.

Choosing the Right Competitors for Benchmarking

One of the first steps in effective benchmarking is identifying which competitors to compare against.

A common mistake is selecting the wrong competitors to compare against. Not every company in your space is a relevant benchmark, and not every competing product provides useful insights.

Too often, companies focus only on direct competitors while ignoring emerging players or indirect competition. Expanding your scope ensures you’re not just keeping up with the competition but anticipating industry shifts. So, consider a broader perspective:

• Market Leaders – Companies setting industry standards, even if their product is more advanced or priced differently. Learning from the best can help shape long-term strategic decisions.
• Emerging Players – Startups or disruptive competitors that might not yet dominate the market but introduce innovative features or business models.
• Adjacent Markets – Sometimes, the best ideas come from outside your immediate competitors. Look at companies targeting similar customers with different but related solutions.
• Legacy Brands – Businesses that have been around for years can offer insights into what works and what no longer resonates with customers.

By diversifying your competitive set, you avoid getting stuck in a narrow industry mindset and open yourself up to unexpected insights.

Defining Your Benchmarking Criteria

Once the right competitors are selected, the next step is to establish a structured framework by defining the key performance indicators (KPIs) that matter most. A clear set of objectives ensures that the analysis leads to actionable insights rather than just data collection.

But what should actually be compared? Many product managers make the mistake of focusing solely on feature lists, overlooking other critical factors. While features are important, effective benchmarking should also evaluate:

• User Experience (UX) – How intuitive and seamless is the customer journey? Are competitors offering a smoother experience?
• Marketing and Positioning – How do competitors frame their value proposition? What messaging resonates with customers?
• Pricing and Business Model – How does your pricing strategy compare? Are there innovative monetization methods you should consider?
• Customer Satisfaction – What do customer reviews, ratings, and feedback reveal about competitor products?
• Performance Metrics – Speed, reliability, and security are often overlooked but can make or break a product.

By analyzing these areas, you create a more holistic understanding of where your product stands and where it needs improvement.

Collecting Competitive Data the Right Way

A big challenge in benchmarking is collecting the right data without crossing ethical or legal boundaries. As we’ve discussed in previous posts, competitive intelligence is about gathering publicly available information—not engaging in deceptive tactics.

Here are reliable sources for gathering benchmarking data:

• Product Reviews and Ratings – Customer feedback on platforms like G2, Trustpilot, and the App Store can reveal competitor strengths and weaknesses.
• Company Websites and Sales Materials – How do they position their product? What benefits do they emphasize?
• Social Media and Community Discussions – What are customers saying about competitors on LinkedIn, Twitter, or Reddit?
• Publicly Available Financial Reports – For publicly traded companies, investor reports can give insights into strategy and performance.
• Direct User Testing – Signing up for a competitor’s product can provide firsthand experience of their UX, onboarding, and features.

Turning Insights into Action

Benchmarking is not just about gathering data without a clear plan for applying it. Competitive intelligence and benchmarking should feed directly into your product roadmap. For instance, if your analysis shows that competitors are outperforming you in user engagement, don’t just acknowledge it—dig deeper. What features are driving that engagement? Is it ease of use, better onboarding, or strong customer support? Once you identify the root cause, prioritize enhancements in your own product accordingly.

Here’s how to make benchmarking work for you:

1. Prioritize Areas of Impact – Identify which gaps in your product are most urgent to address. Not all competitor advantages require immediate response.
2. Develop a Differentiation Strategy – Rather than copying features, focus on what makes your product unique and amplify those strengths.
3. Run Small Experiments – Before making major changes, test adjustments on a smaller scale to see how customers respond.
4. Align Your Roadmap – Integrate benchmarking insights into your product roadmap so improvements are structured and intentional.
5. Repeat Regularly – Benchmarking is not a one-time exercise. Set a schedule (quarterly or semi-annually) to update your competitive insights.

The Real Value of Benchmarking

Benchmarking is not about imitation; it’s about gaining clarity on your market position and making strategic improvements. Done correctly, it helps you understand what customers truly value, avoid costly missteps, and continuously refine your product for long-term success.

By systematically comparing your product with competitors, you stay ahead of market shifts and make informed decisions that keep your business competitive. Competitive intelligence isn’t just about gathering information—it’s about using it to build a better product.

Equally important is the need for ongoing benchmarking. Markets evolve rapidly, and a single competitive analysis is not enough. Establish a regular cadence—whether quarterly or semi-annually—to reassess your position. This ensures that you’re not reacting to competition but staying ahead of it.

Another critical aspect of benchmarking is customer perception. You might think your product is superior based on internal metrics, but what do users say? Customer feedback tools, surveys, and sentiment analysis can provide valuable insights into how your product stacks up in the real world. It’s often this qualitative data that highlights gaps competitors are filling better than you are.

Lastly, don’t just benchmark against competitors—benchmark against yourself. Track your progress over time to see if strategic initiatives are moving the needle. Are your efforts resulting in increased market share, better retention, or stronger user engagement? By continuously evaluating both external competition and internal growth, you create a well-rounded approach to competitive strategy.

In the end, benchmarking is not just about comparison—it’s about learning and adapting. The best product managers don’t just react to competition; they leverage insights to drive innovation, refine their strategy, and stay ahead of the market. Now, take the next step: identify your key competitors, gather meaningful insights, and start making smarter product decisions today.