Put simply, benchmarking is the process of comparing one’s performance against the standard or “benchmark” of your industry vertical, the performance leaders, and/or yourself. The purpose of benchmarking is to see how you are performing in relation to others. Are you behind, level with, or ahead of your benchmark?
As a society, we benchmark everything. For example, is your baby the proper weight for his age? We compare that with the benchmark, or the typical average among similar babies, along with other factors. The same is true with businesses.
When we use benchmarks, we keep several things in mind.
- What are the goals? Specifically, what are the micro-goals and what is the main goal that your executives are going to care about?
- How are you measuring your goals? What are your Key Performance Indicators (KPI’s)? Do these provide enough information and context for your company to take action? (I found this slide deck helpful in differentiating between a metric and a KPI.)
- Who are you benchmarking against? Who does your company aspire to be? The best in the industry, the best overall, and/or your company’s personal best?
- What do you plan to do with the results? Do you have a project plan to take action? Who are the stakeholders in your company that can use this information?
All of these decisions have to be made by you as a company. One of Avinash’s blogs highlights BP’s presentation in which they measure their customer experience and website performance against some of the best companies. BP does not limit themselves to just their competitors, but compares themselves with companies who they can learn from and be challenged by.
At Bazaarvoice, our Community Managers urge our clients to set out a plan for success, including their business goals and KPIs. When a client is launching, the benchmarks help determine expected performance and initial goals. Once a client has been live, they can check how they are doing and adjust their UGC marketing campaigns and promotions accordingly. Whether it is highlighting their top contributors or sending out a post-purchase email, Bazaarvoice best practices with strategies from Community Managers have been proven to drive UGC volume.
Benchmark data is just another way that we provide value to our clients. For example, if one of our clients is lagging behind in Product Coverage (percent of active products with content) against their industry benchmark, then they may want to dig deeper into the data. One possibility may be that the client has new products that haven’t been reviewed yet, so they will need to consistently run a post-purchase email. Another possibility may be that only certain products are being reviewed, and you might want to target purchases on particular products. Another case may be that some products aren’t even being viewed online.
By viewing the Product Coverage in context with the metric Products Viewed with Reviews, you may see that your product coverage is 35% but your products viewed with reviews is 75%. You can interpret this to mean that although 65% of your products have reviews, only 25% of those products are actually being viewed on your website. Your action item may be to reevaluate your site usability and/or revisit your product catalog. All in all, benchmarks can help pinpoint your strengths and weaknesses, but it is ultimately up to you to take action!