We made our case for benchmarking and covered the different things that your organization can benchmark against in Part 1 of this series. Now, we’ll start looking at what your company should benchmark against.
What to measure? Why understanding the relationships between various performance measures is a primary objective of benchmarking.
Simplistically, understanding the relationships between various performance measures means measuring the right things and making certain that a focus on those things measured does not negatively impact performance against other important metrics.
Regardless of industry or area of focus (the areas we have the greatest experience in include Brand MappingSM and brand performance, customer journey mapping and marketing strategy performance), it’s critical to be clear on what you’re trying to accomplish, and why. You don’t need to (nor should you) measure everything. Just the right things.
To benchmark performance against competitive industry leaders dictates a certain approach. If you wish to benchmark functional performance against non-competitive functional leaders (e.g. mortgage broker experience and satisfaction at a financial services institution vs. meeting planner experience and satisfaction with Ritz-Carlton) it dictates another.
If you are interested in measuring your brand performance (e.g. importance vs. importance on key experience or perceptual attributes) you’ll need to understand which segments to measure against. For instance: is the benchmarked opinion of an entire industry (e.g. 50,000 plus brokers) the measure you should be tracking and improving? Or is it the opinion of the top 20% of the segment that are the most profitable? How do your customers deviate from the industry overall?
If you improve touchpoint performance against key metrics industry-wide (let’s say – just for example – speed to negotiated quote and commitment letter for commercial mortgage brokers), will that make you more profitable? Or, should you focus on improving the experience on the specific touchpoint metrics that matter to the segment that represents your most profitable customers?
In our opinion, benchmarking is relevant only in so far as the metrics you benchmark are linked to key financial, business and customer objectives, and the metrics that define success for your business in these areas.
Although linking various metrics can be difficult to do, it is critically important for several reasons. If the cause-and-effect relationships are identified and understood, then these measures – whether in brand performance or touchpoint performance – begin to provide the ability to serve as predictors of future organizational and financial performance.
Understanding the cause-and-effect relationship is relatively easy. Identifying leading and lagging indicators of optimal performance is typically more difficult, though critical.