As marketing leaders, we’re always looking for a way to make a serious impact. An impact on our customers and, ultimately, on our business. The pressures of succeeding in the organization as a marketing leader have also mounted. We’re often fighting an uphill battle when it comes to proving our worth as a marketing organization.
But marketing doesn’t have to be like this.
With all of the tools and data available to us, it’s time for marketers to make a change. To leave behind our old way of doing things — of looking at and reporting on the same metrics over and over again — and start showing our organizations that we should be considered one of the most strategic assets in the business.
How can we do this? Marketers need to shift from focusing only on the channel-specific, operational KPIs we’ve come to know and plaster on every board report and instead emphasize strategic KPIs that actually impact our business. As the leaders in omnichannel marketing, we know how to unite channel strategy with data-driven insights to unlock a more strategic organization. In this article, we’ll discuss what benchmarketing means, how businesses can use it to their advantage, and the different tools that can help us make it a reality.
Benchmarketing defined
We’ve all heard of benchmarking. It’s an important part of any marketing strategy. Understanding how your business compares to others in your industry can help you not only gauge how your business is doing, but also understand areas of improvement for your own strategy. Benchmarketing, however, is a process that elevates your benchmarks to actionable insights.
The concept of benchmarketing
Benchmarketing is a process where companies compare their performance against best practices in their industry to identify areas of improvement, enabling them to understand their position in the market, identify gaps in products/services, and establish goals to improve competitive advantage.
Understanding how benchmarketing works
Benchmarketing combines benchmarking with marketing, utilizing comparative data to shape and optimize a marketing strategy. This method involves analyzing benchmarks to inform and refine strategic marketing decisions, ensuring a business adopts the most effective practices for success.
Why is benchmarketing so important?
Most benchmark reports we come across offer us benchmarks on email (open rates, click-through rates, sends) or social media (number of followers, likes, retweets). But what do these metrics actually tell us about how we’re performing as a business and how our business compares to others? They don’t.
They benchmark reports give us a surface-level indication of how your channels are working. While these operational, channel-specific reports are important for seeing how customers are engaging with you, they don’t show how marketing is performing for your business as a whole.
Enhancing business performance and productivity
This is where strategic KPIs come into play. These metrics can actually give you an indication of how your marketing work can make an impact on your business.
For marketers, this is often an incredibly hard (if not impossible) task to do. Most marketers feel like they have trouble connecting their day-to-day work to business results. And unfortunately, the C-suite often notices the lack of connection marketing has to the bottom line. But by focusing on strategy KPIs that actually align to business goals, you can use benchmark data to influence your marketing strategy and plan out the best strategies for your business.
Understanding market trends and competition
Market trends and competitive analysis have a huge impact on your business, but they aren’t often reflected in your typical benchmarks. For example, if you were running campaigns during the pandemic, you probably saw huge unattributable drops in sales, drop offs in page visits, or a higher proportion of abandoned carts. Without the context of the world around you, you might think your copy needs to change – or maybe a plugin broke. We all know that wasn’t the case.
The same can be said for competitive activities. If a major competitor releases a massive product update that your range doesn’t currently cover, you would want to act quickly to get things in gear. But if you only looked at your benchmarks, you’d be none the wiser about market trends. By integrating market context and analytics into your benchmarks and evaluations, you can always have the actionable insights you need to make the right decisions about your campaigns.
Benchmarketing in business: How to do it
So now that you understand what kinds of KPIs can actually connect marketing results to business, let’s look at how you might do this in your own business.
1. Identify your area of focus
Identify the strategic KPIs you plan to measure based on strategic business goals. Depending on your industry and your team’s remit, you may be tasked with influencing revenue growth, customer pipeline, lead generation and conversion, or even the entire sales process. Choose a set of KPIs that map to the key business goal you’re trying to achieve.
Example: An e-commerce brand’s north-star metric is revenue growth, and based on their performance, they decide to focus on growing their customer base by increasing first-time to repeat buyers.
2. Benchmark your performance
To be able to track improvements, you need to know where your starting point is. In addition to comparing against your historical performance, industry benchmarks are a great way to see how your marketing stacks up, and provide the bones for your strategy. Depending on your area of focus, industry reports like Customer Loyalty Indexes and advertising performance reviews can give you a good sense of how your industry and the market at large are performing.
Example: Our e-commerce brand analyzes their repeat purchase rate, and sets this as their performance benchmark to track performance against.
3. Build your strategy
Once you’ve identified a strategy you want to either focus on or improve, now is the time to begin thinking about your tactics. These are the specific actions you’ll take to set your strategy in motion and start pushing your benchmarks to have a demonstrable impact on your business.
Example: The e-commerce brand decides on replenishment campaigns as their core tactic. replenishment messages are a great way to remind a customer that it’s time to grab their next product so they don’t run out. You can use purchasing data from your existing repeat buyers to understand how often customers purchase this product and create a replenishment timeline that can trigger once a customer has reached the point of needing to repurchase.
4. Track your performance
Be sure to leverage tools like Google Analytics or customer engagement platforms to track your progress against your benchmarks and KPIs. Look for tools that can integrate with your current tech stack so they remain functional as you scale your campaigns.
5. Measure and iterate
Develop a feedback loop with your benchmarks so you can always stay ahead of the numbers. You don’t want to get into the habit of chasing the dragon — where you see a number go one way, take an action, and wait for it to turn. Establish a consistent schedule of reviews so you’re evaluating things on a time horizon that makes sense for what you’re tracking.
Examples of benchmarketing
We’ve talked a lot about benchmarketing in the abstract sense. Let’s bring it down to brass tacks.
1. Revenue growth
When it comes to revenue growth, marketers have several strategies that can help impact this incredibly important business goal.
Increasing conversion rates
When thinking about strategies that can impact revenue growth, Increase conversion rate is one of the best strategies. By focusing on converting the contacts that are already interacting with your brand, you can increase purchases and, in turn, increase revenue.
Growing Customer Lifetime Value
Another strategy many e-commerce businesses focus on is Customer Lifetime Value (CLTV) increase. By focusing on the entire lifecycle of the customer (not just converting them to their first purchase), marketers can make each customer a more valuable asset to their business. When you grow your CLTV, you’re not only growing purchase rate and frequency, but also growing revenue.
Driving purchase frequency
Another method for turning up revenue growth is to focus on purchase frequency. Much like the above strategies, this strategy allows marketers to make each customer more valuable by converting them to purchase more often. If you’re not focused on increasing the frequency that your customers are buying, you’re not effectively impacting revenue growth.
2. Customer growth
Moving on to customer growth, marketers should have a huge focus on this metric. After all, as marketers our goal is to attract customers and delight them to the point of purchase.
The problem many marketers have is that after we get them to convert, we tend to mishandle the relationship. We’re so focused on customer acquisition that we forget how important customer retention is. But customer retention should be a main focus to continue growing your business. So, let’s dig into the strategies that other successful e-commerce businesses are using to drive customer growth.
Increase lead to first-time buyer conversion
In order to focus on retention, you need to have a pool of existing customers. One way to grow your customer base is to increase lead to first-time buyer conversion. By focusing on this strategy, marketers are able to build their pool of customers and begin to set the groundwork for growing a loyal customer base.
Increase first-time buyers to repeat buyers
Acquisition is only one part of customer growth. Customer retention is a bigger, oftentimes more important, piece of the puzzle because it’s a lot cheaper to retain your customers than to attract new ones. Companies that focus on increasing their repeat buyers are making a bigger impact on the overall success of their company. By mining and turning your existing customers into repeat purchasers, you’re creating a loyal community that can help your business grow.
Retain active customers
Again, customer retention is a major focal point for e-commerce businesses. Successful marketing teams know that the key to keeping up in the fiercely competitive e-commerce space is to keep customers happy, engaged, and purchasing. That means that marketers need to understand the buying cycle of each of their customers and work to prevent active customers from falling off.
Just by identifying these strategies as important metrics to benchmark, you’re giving your marketing organization an edge on many businesses in the e-commerce space. As mentioned before, most marketers are looking at operational and channel-specific KPIs to gauge their success in the space. But the reality is, those metrics only give us one piece of the pie. Marketers need to understand how they compare to others more strategically if they want to make a true impact on their business.
Using Google Analytics for benchmarketing
Now that we’ve outlined what benchmarketing means and how you can use it in your business, let’s look at one key tool that can help you execute this methodology.
If you’re not already using Google Analytics in your business, it’s time to start. This tool is great for helping you build a picture of the customers and contacts you have engaging with you on a regular basis. It can even help you identify your competitors in the space — a crucial part of benchmarketing. Before you can begin comparing your business to others, you need to understand who your competitors are and if you’re competing for the same customers. This is just the tip of what GA can do, but it’s an important part of getting started with successful benchmarketing.
Aligning benchmarketing with business goals
As marketers, we understand how important it is to gauge our success against competitors and the market at-large. But too often, we get stuck looking at the same benchmark reports, from the same companies that focus too heavily on channel-specific metrics that don’t tell us much about our business. So what if our competitor has a higher open rate on emails than we do? They may have a higher open rate, but that doesn’t mean that their customers are purchasing more than ours or that their emails are helping impact the bottom line.
In today’s marketing landscape, marketers must shift our attention from traditional benchmarking reports to next-generation benchmarketing. By making this shift, we’re helping our departments by definitively connecting our traditional marketing work to the strategies and high-level objectives that matter most in a business.
