Benchmarking is long time custom of comparing your own KPIs with best-in-class, whether you’re in search of quantitative answers (“How does my traffic compare to industry trends?”) or if you’re on a more qualitative journey (“How are the ‘best of’ approaching social engagement these days?”). These kinds of comparisons help guide our understanding of best practices, contextualize our performance within the bigger commercial universe, and identify our biggest opportunities to accelerate performance. However, taken too far out of context, they can also become a distraction, or worse, a reason for complacency and potential stagnation (“My conversion rates are GREAT! Why change anything now?”)
For the best brands, the question is usually less about “Should I use benchmarks?” and more “How should I use them?” Consider the following when incorporating rules of thumb into your business:
Measuring relative performance
By measuring performance against industry standards and/or peer data if available, you can develop a clearer understanding of the overall size and trajectory of the market, key competitors, and their current position on relative dimensions. These types of comparisons can help shed light on both strengths and opportunities, helping you prioritize actions to take to optimize marketing performance, close capability gaps, or lean harder into growth.
Goal setting for the near- and long-term
Benchmarks play an essential role in setting realistic, data-driven goals. For example, you may look to conversion and traffic quality benchmarks to understand the root cause of poor on-site conversion. If you find your traffic quality is well under benchmark, you can start to unpack whether you need to improve anything platform-side (like audience targeting or creative messaging), site-side (UX), or with the product itself. From here, you can build out a prioritized plan to improve your overall upper funnel ROI.
Uncovering optimization opportunities
Done correctly, benchmarking can help foster a culture of continuous improvement. Looking at your performance over time or against the broader universe will almost always uncover places to optimize. If your website conversion is lagging your competitors, you can experiment with ad campaigns or customer journey on-site to bridge the gap. This iterative approach helps the best brands remain adaptive and respond to evolving market conditions.
Taking a one-size-fits-all approach
Optimizing to benchmarks for the sake of hitting benchmarks never leads to good results. Lots of factors – including size or age of business, strategic goals, budgets, and capability – must be considered when setting goals. Sometimes “tracking toward” a certain status is enough. Other times, you may have a good reason to take an entirely different path. And in others yet, hitting the benchmark alone doesn’t tell the whole story. Be careful in where and how you compare yourself; consider it all in context and choose the path that best fits your goals.
Focusing on the wrong data (or too much of it)
Just because you can get all the data, doesn’t mean you should. Said differently, you don’t need to be worried about how you’re doing against every single benchmark, especially the ones that aren’t relevant to your business. A CPG brand who largely sells offline will have a different view of the value of site traffic than a D2C brand. Similarly, brands selling high consideration, low purchase frequency products (think mattresses, cars, high-end appliances) may be less concerned with LTV and more focused on referral or loyalty-type metrics. Prioritize the metrics that help move the needle in your favor.
Becoming complacent with results
It’s tempting to sit back once you’ve done the work of hitting your benchmark goals. Strong results are surely something to be proud of, but they’re only part of the story. It’s important to keep striving for better and to look for opportunities to maintain your progress through innovation and optimization. If you’ve largely been tracking against internal goals, don’t forget to pull up and look at the full landscape from time to time (see Helpful Uses #1) – there’s almost always a chance to improve or re-engage somewhere in your mix.
Used properly, benchmarks can illuminate improvement points, inspire performance improvement, and unlock innovation within the business. Accept points as helpful guidance, not the final say. The best results come when we look at benchmarks through the context of our own unique needs and expectations as a business.
