Our dogs are always from rescues so you don’t know what happened to them before you got them – for the most part. When the doctor took x-rays of one of our dogs, Chip (who has since died of cancer), we all saw something that wasn’t supposed to be on the x-ray but that told us a lot about what had been going on in Chip’s life before he came to us. It turns out that someone had use used him for target practice with a pellet gun. Metal pellets appear as perfectly circular spots of bright white color on x-rays but, if you didn’t know what a normal x-ray looked, you might have assumed that the bright white spots were just especially dense patches of bone.
[Side note – Rest assured, Chip’s life was fabulous after we got him, even according to his vet, who said he wanted to come back in his next life as one of our dogs. This is why we only choose rescues as pets, to make sure they no longer have to deal with that sort of thing. He was a wonderful companion to us for many years, as are so many rescues, so please consider not buying your next pet.]
In the same way, measurements are not really useful unless you have something to compare to. In our case, we both had seen x-rays before so we knew the white spots were not normal, even before the doctor brought it up. However, in the case of marketing metrics, many people don’t have enough familiarity with measuring all the tactic types to determine if their data is “good” or “bad.”
Assuming you’ve required marketers tag tactics and assets for measurement and determined which key performance indicators (KPIs) you want your organization to track, you need to find out the relative value of how well you marketing – and your marketing transformation – is performing. Relative value means understanding the implications of your results data. Let’s say you show a 6% in one KPI. Is a 6% rate above average – or below –compared to others in your industry? Is 6% enough to reach your revenue goals? What you need are benchmarks of what is typical.
Beyond any natural desire to be the best, there are tons of studies that show organizations who are above benchmarks in customer satisfaction, return on assets, profitability, and marketing effectiveness, significantly outperform those who are below benchmarks. The trouble is, as always, that there are no hard and fast rules about what is a good benchmark and what is not. It’s about who/what you think are your peers – or who you would like to be considered as your peers.
All the small companies (i.e, less than 300 employees) I’ve worked in, felt more comfortable looking for benchmarks of similar sized organizations, in the same niche market, who were in the same stage of the business cycle (e.g., pre-initial public stock offer or pre-acquisition, depending on the board’s long term plan), since the expectations were always lower for that type of organization. However, the several industry leaders (or “800-pound gorilla” as one reporter insisted on describing my employer) I’ve worked in wanted to be seen by investors and customers as being on par with organizations beyond their own relatively small, industry-specific pond, where they were undoubtedly the biggest fish.
Similarly, if you’re primarily focused on using email as a marketing tactic, for example, you need to make sure your marketers are putting all their effort behind that channel and set aggressive benchmarks to help achieve the results that will impact the business. Comparing yourself to “all” organizations rather than ones that primarily use email is like saying that you are an Olympic runner who only runs the 400-meter sprint but you just want to be compared to decathletes – who have to sprint while also competing in nine other events and can’t physically afford to go all out in any one of them, lest they run out of energy for the rest of the events. Not really a good benchmark if you want to improve your results.
There is lots of data online about benchmarks by type of organization, by tactic type, by geography or other criteria. Make an effort to find benchmarks relevant to your team’s goals (whether related to business stage or key channel) and set those as the standard for the entire organization as part of your marketing transformation. This helps you ensure alignment and prevents “fudging the numbers,” as we discussed in the blog post about KPIs.
Keep in mind that you should have benchmarks for both regular metrics as well as KPIs, if you really want to focus on improvement. So, it’s certainly possible – even desirable –for some campaigns or teams to set even more aggressive benchmarks so they are that much more effective. Nothing happens in a vacuum, though, so keep tabs on impacts to other channels or processes.
On the flip side, if there is nothing truly terrible occurring as a result of their optimization, promote the heck out of it when a team or campaign reaches or exceeds their benchmark goals. They rest of what they do may not be perfect but, if you just focus on that one great area, it provides both an excellent educational example of success for others as well as a potential morale booster showing that “yes, indeed, this crazy marketing transformation can be done!”
Comments welcome, especially those related to how your organization set up and uses benchmarks.