How do you compare with the competition - Benchmarks

Benchmarks - their types and use

Benchmarks are a key part of market research, especially for customer satisfaction or brand experience studies. Benchmarks provide context, through them we can answer questions such as: is an NPS of +27 a satisfactory value or not? Or is customer satisfaction at 64% a high score? Or is it low after all?

About this and many other questions below. However, let's start with the basics.

How is benchmarking different from benchmarks?

There is a distinction between benchmarking as a process and specific benchmarks. Many people think of benchmarks as benchmarking, while it is only a small part of the process. Benchmarking is the practice of identifying the best processes, strategies and techniques for achieving business goals. It starts with identifying an area for improvement and ends with improving the quality of products and services. Benchmarks, on the other hand, are comparisons of data, such as performance/quality of service or customer satisfaction scores or individual indicators. They can provide an indication of what needs to be improved, in what area and from whom to learn.

The most common distinction is between 4 types of benchmarking:

1. Internal benchmarking

The most easily achievable benchmark is your organization. You compare the performance of your sub-categories to the larger department, or you compare the evaluation of a test product (under development) to existing products with known performance/market value.

What questions does such an analysis answer?

• Are you better or worse than other parts of your organization (departments, categories, regions) or product/service versions?
• What are the strengths and weaknesses of your product/service?
• Where are you underperforming and where are you performing more positively relative to the overall level?

When is it used?

Typically used in:

• U&A (habits and attitudes) research: to compare niche categories to a larger category or department; to compare different categories in a department;
• Shopper surveys: to compare one's own performance in different categories with that of a department or entire store;
• Employee satisfaction surveys: to compare the performance of different departments;
• Product testing: to compare an existing version of a product/service with an improved or cheaper version of the same product/service;
• Concept testing: to test different product or communication concepts;
• A/B testing of ads, products or concept testing: comparing the results of the ad/product/concept under test to the average results of previous ads/products/concepts (tested with the same methodology).

2. Historical benchmarking (trending)

Various types of surveys help identify individual data that will become the key metrics against which future findings can be compared. The organization is able to benchmark itself by answering questions such as: where have we improved? Where have our services deteriorated? Each new wave of data is a new yardstick. If you measure yourself against historical results, you focus on improving and moving forward, rather than settling for a score 20% higher than the industry standard.

You compare your performance either continuously at regular intervals, or before and after a specific event or activity (e.g., during a marketing campaign or in the current situation: before and after Covid-19). You usually combine historical benchmarking with competitive benchmarking (more on that below), i.e. you track not only your own performance, but also that of your competitors.

What questions does such an analysis answer?

• How do your performance KPIs (or other metrics) change over time? What is the trend?
• How do the results change before and after an action you took (e.g., a marketing activity)?

When is it used? Usually in:

• General brand research: to track brand image - usually on a continuous basis
• Satisfaction research: to track consumer or store customer satisfaction on various KPIs
• Advertising research: to compare brand image and brand value before and after a specific event, such as a communications campaign.

3. External or competitive benchmarking

This is the most common type. You compare your own performance to one or more competitors or to a combined aggregate "industry benchmark."

What questions does such an analysis answer?

• In what areas are you better or worse than your competitors?
• What is particularly good/bad about your service/product?
• What are your strengths and weaknesses compared to other brands or categories (that may be meeting similar consumer needs)?

It can be used in most types of research. Typically used in:

• U&A (habits and attitudes), satisfaction or brand research: to compare brands or categories in terms of consumer funnels, consumer profiles, brand images;
• Shopper research: to compare brands, categories or retailers in terms of their shopper profiles, to understand the category's role in the store, shopping funnel, shopping habits, POS effectiveness, etc.; and
• Product tests: to compare a product with competitors' products, to support product development;
• Ad tests: to compare the copy of your ads with competitors in a diagnostic way or on some simple awareness measures;
• Mystery Shopping: to compare customer satisfaction with competitors;
• Post-purchase surveys: to compare post-purchase customer service.

4. Continuous benchmarking

It involves comparing the company's performance with a predefined fixed number: the target.

What questions does such an analysis answer?

• Are you achieving your goal?
• Are you better or worse than the fixed benchmark?
• Is the product/concept being tested "to be introduced" or definitely not?

Typically used in:

• Product testing (e.g., websites): if the company has a target set on a KPI above which the product/service is marketed
• Mystery Shopping or satisfaction surveys: to evaluate employee performance, as a basis for their bonuses

How can YourCX support your company in the benchmarking process?

Benchmarks are useful in giving context to data, thereby reducing uncertainty in interpreting results. At YourCX we believe in the power of benchmarking, we not only identify a potential area for improvement, but also analytically calculate its real impact on the organization. When preparing analyses for our Partners, we use a combination of the above types of benchmarking, depending on the type of business question posed. At YourCX, we offer unique benchmarks that you won't find anywhere else. With them you will learn how quality indicators are changing in the market. By comparing yourself, you will verify whether the observed changes are due only to your actions or perhaps to the behavior of your competitors.

If you have any questions or ideas for using benchmarking in your organization - get back to us 🙂