Why benchmark? And what should you benchmark against?
We were asked an interesting question during a new business pitch the other day. In the middle of our discussion of the “Touchpoint Performance Dashboard” and our ability to help clients both understand key touchpoint metrics and develop benchmarks for ongoing touchpoint performance measurement, a senior marketing exec piped in: “What is benchmarking?”
After a (very brief) pause to see if they were serious, I quickly dove in. But the question was illuminating. How many marketing consultants – in this age of management focus on ROI and brand performance measurement – wonder what to track to prove how well they’re doing?
Our definition of benchmarking is the act of comparing a specific measurement (or set of measurements) to a benchmark. External benchmarking compares internal measurements to measurements from external sources (prospects, competitors, non-competitive functional leaders). Internal benchmarking compares internal measurements (typically by division, process, unit, customer or segment) against other internal measures.
A recent engagement on the process of identifying, codifying and transferring internal best practices fell into the internal benchmarking category. The question we answered was, “How can we (organizationally) find out what we (individually or at the business unit level) already know?”
Once they got it, this client was really interested in external benchmarking, followed by a dialogue around what they’re trying to accomplish: Would you like to benchmark yourselves against best practices in your industry? Or would you like to benchmark yourselves against perceptions of the ideal? Or do you want to benchmark performance against the ideal as perceived by the most profitable, loyal customers you have, and others like them?
The answers, unsurprisingly, were yes, yes, yes and yes.
But we’ve been able to narrow this down somewhat to those metrics that really matter, with the objectives of helping our clients adopt best practices and increasing touchpoints and brand performance. But benchmarking should be treated as a continuous process in which organizations continually seek to challenge their practices and improve upon them. While many organizations benchmark on weekly or monthly performance data, we’ve found that quarterly measures are most manageable, while still occurring often enough to incent positive change.
The approach you’ll take is driven by exactly what you’re trying to accomplish – whether it be touchpoint performance measurement, improving upon your marketing strategy, or brand performance measurement, and what you plan to with the data once it’s been gathered and analyzed.
There are many things that you could choose to benchmark against. But do you need to benchmark against all of them? Probably not. Read Part 2 of this series, for our perspective on what you should measure (vs. what you can), and why understanding the relationships between various performance measures is a primary objective of benchmarking.