We’ve all heard the scoop on our competition from some other industry source.  Supposedly their campaign is generating millions in sales, has a 3.0+ MER,  40% web conversion, has an average of 5 turns of continuity…AND only a 2% return rate.  You start to beat yourself up over the harsh reality that you are nowhere near any of these numbers, and it can be a bit discouraging.  Well, two months later their show goes off the air and you hear the company has gone belly-up.  What are we missing here?  Well, my initial guess is that the supposed “scoop” was probably a combination of white lie, some exaggeration, and about five different definitions of each metric being referenced. One of the key reasons we have metrics is so that we can compare ourselves to others, however, one of the main reasons we resort to faulty comparison is because we are not comparing apples to apples. The correct comparison of metrics is often called benchmarking.  Our dear friend Wikipedia defines this as:

The process where you compare your process with that of a better process and try to improve the standard of the process you follow to improve quality of the system, product, services etc.

How to benchmark

Okay, so you are interested in benchmarking.   Where do you start?

Before you can compare yourself to others you need to compare to yourself.  It may be intuitively obvious but nonetheless necessary that you know your KPIs (Key Performance Indicators), know how you’re trending, and know what you’re trying to achieve.  If you have not done so yet then define all of the metrics for your business and begin methodically tracking each one.  Learn what affects them, learn how to improve them.

Seek out real data, not hearsay.  I could tell you that my campaign converted at 60%, 47%, or 36% last week.  All numbers could be true but are meaningless unless I tell you exactly how I measure conversion.  My suggestion is that unless you have a reliable means to get real, rich, data you should focus on the simple things that could be useful in your decision making process.  Example: you have a weight loss product and you know your media agency has a similar product and are running a large TV campaign.  If you are able to reliably determine from your agency that their creative runs at 50 CPK (Calls per thousand in media spent) and you test a show that runs at 20 CPK you can save yourself a lot of time by immediately focusing on better creative.  The reason I would choose a metric like CPK is first, that it’s a good indicator of your front end creative success, and secondly, it’s a measure that your media agency should reliably know.

Dig in to the minutiae and test. So, what if you’ve figured out your metric and also figured out you’re lagging behind your competitors.  What can you do about it?  My suggestion is that you dig into every little detail of both your campaign and your competitors.  There is no silver bullet out there but we at KPI believe that systematic diligence and testing will pay off in the long run.  Look at other websites, call other call centers, sign up for other continuity programs.  Be careful not to assume whatever they’re doing is better than what you’re doing, but also be sure to never stop testing.  It’s the only way to improve.

The future of benchmarking

Several weeks ago Google announced something pretty revolutionary: the addition of benchmarking tools to their Google Analytics platform.  Basically what this boils down to is that anybody who chooses to share their data will be able to see how they stack up against other competitors in their industry vertical space.  What makes it so powerful is the fact that it is real data coming from real sites and that it is a common standard (no fudging of the definition of MER is allowed!).  Personally I think this will be the future of benchmarking in the DR space.  We will no longer have to distill the hearsay from truth; instead technology providers will serve as data aggregators.  Companies that so choose will be able to objectively and confidentially know how they stack up against the competition and in the end we’ll all be better because of it.  And isn’t that the point?

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This entry was posted on Tuesday, May 27th, 2008 at 8:41 pm and is filed under DR Marketing, Metrics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.