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Benchmarking Explanation Notes

The document discusses benchmarking, which is the process of measuring a company's performance against industry leaders to identify opportunities for improvement. It can help companies increase efficiency and profitability by studying superior performers and implementing changes. The document provides details on different types of benchmarks, how to establish benchmarks, and how benchmarking can be applied to marketing activities.

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Sharon Peter
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Download as DOCX, PDF, TXT or read online on Scribd
47 views

Benchmarking Explanation Notes

The document discusses benchmarking, which is the process of measuring a company's performance against industry leaders to identify opportunities for improvement. It can help companies increase efficiency and profitability by studying superior performers and implementing changes. The document provides details on different types of benchmarks, how to establish benchmarks, and how benchmarking can be applied to marketing activities.

Uploaded by

Sharon Peter
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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What is Benchmarking?

 Process of measuring the performance of a company’s products, services,


or processes against those of another business considered to be the best in
the industry/best in class.
 To identify internal opportunities for improvement by studying companies
with superior performance, breaking down what makes such superior
performance possible, and then comparing those processes to how your
business operates, you can implement changes that will yield significant
improvements.
 That might mean tweaking a product’s features to more closely match a
competitor’s offering, or changing the scope of services you offer, or
installing a new customer relationship management (CRM) system to
enable more personalized communications with customers.
 There are two basic kinds of improvement opportunities: continuous and
dramatic. Continuous improvement is incremental, involving only small
adjustments to reap sizeable advances. Dramatic improvement can only
come about through reengineering the whole internal work process.

Key Benefits
In addition to helping companies become more efficient and profitable,
benchmarking has other benefits, too, such as:
 Improving employee understanding of cost structures and internal
processes
 Encouraging team-building and cooperation in the interests of becoming
more competitive
 Enhancing familiarity with key performance metrics and opportunities for
improvement company-wide
 In essence, benchmarking helps employees understand how one small
piece of a company’s processes or products can be the key to major
success, just as one employee’s contributions can lead to a big win.

How to Benchmark in Marketing


Benchmarks let you evaluate your marketing performance.
Applying benchmarks to your marketing initiatives lets you determine the
effectiveness of your efforts compared to the best practices in your industry.
When you determine which companies are achieving better results, you can study
their approaches and improve your own marketing performance. By establishing
benchmarks -- or measurable standards -- that serve as a valid basis for the
comparison of your marketing activities with those of your competitors, you can
save money by eliminating waste and gain more benefits from your marketing.

Financial
You can get financial data about marketing costs, sales revenue and profitability
from the annual reports of large companies in your industry. This information lets
you compare variables such as cost per sale, marketing expenditure as a
percentage of revenue and return on investment for your marketing budget. You
can identify the best performers and establish corresponding benchmarks, which
become the targets for your own operations. Once you have established the
financial benchmarks, you can use other performance benchmarks to evaluate
how to meet your financial targets.

Promotion
Effective promotion of your products is a key function of marketing and vital to
marketing success. You can check how much money companies are spending on
promotion in their annual reports and study what they are doing in the market to
determine what promotional activities they are carrying out. Relating their
spending and activity to their sales volume lets you establish benchmarks, such as
promotional cost per item sold and sales per ad. These benchmarks let you
compare the performance of your own promotional activities to the performance
of market leaders and study what they are doing to improve the results from your
own promotion.

Sales
Benchmarks derived from sales performance indicate how effectively your
marketing is driving sales. Typical variables are sales volume and market share.
You can get some of the sales data from annual reports, but for statistics such as
market share, you either have to perform your own market surveys to find out
what consumers are buying or purchase surveys from industry associations or
market specialists. Relating your various marketing activities to sales statistics lets
you derive benchmarks such as percent market share per salesperson, market
share due to direct marketing and percent of online marketing that is generating
online sales.
Customers
When your marketing produces satisfied customers, your business prospers.
Benchmarking based on customer surveys establishes what your customers like
about your company and what they prefer in your competitors. Your benchmarks
evaluate marketing performance based on indicators such as customer retention,
repeat business, number of customer complaints and general customer
satisfaction. Setting your benchmarks at the highest survey levels achieved by a
company that was part of your survey lets you continuously measure your
performance against those competitors whose marketing is the most effective in
achieving high customer satisfaction.

How to benchmark marketing?


Benchmarking is a method of objectively evaluating your company’s digital
marketing activities. You need to carry out an assessment of your existing digital
marketing activities, tracking how often they are carried out, how much they are
engaged with and what effect they have. Once you have a snapshot of the quality
of your digital marketing today, the next step is to use this information as a
reference to help you keep on improving.

Let’s explore some of the best methods of gathering the objective data that can
give you a snapshot of your digital marketing efforts. Below are seven steps to
take that will ensure you can effectively benchmark marketing activities at your
organisation.

1. Narrow down the digital marketing activities you want to focus on


There are countless variables that you could use when you benchmark marketing
– from email open rates, to the length of time customers spend reading your
blogs, to how many times your latest whitepaper has been downloaded.

So, how do you decide what you’re going to benchmark? We recommend


choosing between one and three marketing activities you carry out – be that your
blog, social media, emails, website analytics or anything else.

Deciding which activity to focus on ultimately depends on your wider marketing


goals. Do you want to increase the number of visitors to your website? Or the
amount of engagement your tweets receive?
2. Choose the right metrics
There are thousands of potential data points you could choose when measuring
your digital marketing. Don’t be tempted to go overboard! Your benchmarking
needs to be detailed, yet also provide you with enough clarity and simplicity to
support action. We’d recommend choosing between three and five metrics to
monitor. Examples would include:

How often do you tweet/blog/send emails?


How many people react/read/open your content?
What do people do once they see your content?
Where do readers come from?
How long do people interact with your digital marketing content?
How often do people click on your call to action (CTA)?
3. Do your initial benchmarking against these metrics
Once you have the focus for your analysis, plus a selection of metrics you want to
measure, now’s the time to use powerful tools to carry out your digital
benchmarking.

You also need to choose a reasonable time period in which you are going to
review your digital marketing. Most companies carry out their analysis based on
the three previous months.
You might begin your analysis by simply tallying up numbers – of blogs, of tweets,
of emails sent, etc. But, for more detail, the following four tools give you a lot of
powerful extra detail for digital benchmarking.
Google Analytics – Analyse visitor traffic and paint a picture of your audience.
Discover the routes they take and devices they use to reach your site, and track
what they do while on there. Reporting features display this in a clear and
actionable manner.

MailChimp – MailChimp lets you build your email campaigns with ease and
monitor their effectiveness. Features such as A/B testing and campaign reporting
help you get an understanding of what’s drawing your audience in, and what’s
getting ignored.

Twitter Analytics – Twitter Analytics help you understand how the content you
share on Twitter is being received. Month-by-month statistics on the ‘success’ of
your tweets and audience insights give you better knowledge of your audience
and how best to attract their attention. Read our exclusive free eBook about the
three tools that can boost your Twitter presence here.

Partner Benchmarking Tool – Our very own free benchmarking tool scores your
current marketing efforts based on your blog, website and social presence. The
Partner Benchmarking Tool helps you better understand your areas of strength
and weakness, and how you can improve. Try it out for free to get an
independent and objective overview of your digital benchmark.

4. Carry out competitor analysis too


Of course, you can’t use Google Analytics on your competitor’s website (although
the Partner Benchmarking Tool does let you test any website you like).
Nonetheless, you should carry out a basic analysis of your competitors’ digital
marketing in the areas you focus on. Compare how often they blog, tweet or
otherwise promote themselves during the same time period.

5. Create a report that summarises your marketing benchmarking


Once you have completed your first round of analysis, you are now able to take
stock of where you are objectively. Create a report that gives an honest view of
where you are today and include comparable data from your competitors.

6. Create a digital marketing strategy to improve your metrics


Now you have your digital benchmark, the next natural step is to create a strategy
which will help you improve on those metrics. Now’s the time to aim high:

Double click-through-rate from your emails


Treble inbound web traffic
Increase leads from your blog by 50%
At Fifty Five and Five, we know how important creating a B2B marketing strategy
is. Learn how we work with clients on campaign strategy here.

7. Review then repeat


A one-off benchmark is pretty pointless. To get real value from digital
benchmarking, you need to carry out regular analysis to get a feel for how you are
improving and to get a taste of the impact your strategy is having. If you use our
Partner Benchmarking Tool for digital benchmarking, you can track and record all
your analyses over time.

Don’t wait to get started


When you benchmark marketing activities, you get a transparent and objective
way of tracking the effects and impacts of your work. This should help you
develop your marketing strategy and generate more leads. And remember: once
you have an idea of where you are, it’s a lot easier to plan where you’re going.

Most of the companies maintain some sort of quality in their working


environment. And these natures of work can be compared with the rest of the
companies involved in the same field of work. To specify that comparison, these
companies use some sort of benchmarking process.

The benchmarking process helps to increase the competitive nature in different


companies working in the same field of business.

Benchmarking also provides a sense of awareness regarding the maintenance of


quality in their field of work.

Benchmarking Process Advantages Disadvantages


What is Benchmarking:
Benchmarking is a process where different companies compare their nature of
work with other companies in the same field of business and they set a certain
type of standard of work.
It is a matter of work from different companies which creates some standard for
the work they deliver. And this standard of their work is considered and called as
benchmarking.
This benchmarking allows different companies to compare their workability with
other companies.

Importance of Benchmarking:
Benchmarking is a widely used global management process, which is very helpful
for organization development and success. But still, most of the industries do not
use the benchmarking process as an efficient tool to boost their performance and
productivity.

Here we have designed 24 benchmarking tactics that can help companies develop
and build winning techniques and plans.

Strategy
Structure
Leadership
Cost
Investment
Business economics
Staffing
Skills
Talent
Services
Activities
Impact analysis
Technology
Innovation
Future trends
Quality
Cycle time yields
Productivity
Best practice insights
Process intelligence
Analogs
Launch
Planning
Life cycle insights

Examples of Benchmarking:
As per the definition, benchmarking is a process of comparing your performance
with your competitors in the market. This competitive analysis helps you improve
your strategies for growth and development.
The outcomes of the benchmarking process can be used in promotion and sales.
Some of the best examples of benchmarking are

Technology
Financial
Marketing
Products
Markets
Operations
Productivity
Processes
Governments
Services
Strategy
Cities
Retail

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