Benchmarking, benchmarking, benchmarking… it’s a popular subject.
I’ve been publishing CX benchmarks for more than 10 years, so you might be surprised by my point of view on the topic: benchmarking is often overused and misinterpreted. I’m not saying to give up on the entire activity, but people often spend too much time and energy focusing on industry comparisons that aren’t necessarily an accurate reflection of the genuine customer experience.
Let me start by saying that benchmarking is a perfectly good activity. It makes sense to periodically evaluate your performance relative to competitors, especially as an input to your strategy. And it’s also healthy to look at your performance relative to companies from other industries.
While benchmarking provides value, people often let it distract them from more important activities. So here are five recommendations on how to think about benchmarking:
- Focus on improving, not comparing. When it comes to the use of your insights activities, it’s critical that an overwhelming majority of your efforts are aimed at finding opportunities to improve — not scorekeeping. Many executives seem to feel as though a benchmark provides a security blanket of sorts—one that shows their remit within the business is in line (or better than) the competition. Whether it’s from internal metrics or external benchmarks, knowing where you are and where you’ve been is not nearly as valuable as knowing where you should be heading. Companies often use up a lot of their feedback capacity to ask customers (and employees) questions solely for the purpose of fueling a benchmark. My advice: Optimize everything you do on driving improvements, even if it means dropping some benchmarking questions.
- Obsess about customers, not competitors. One of the risks of relying too much on benchmarking is that it can mask your performance when there are shifts in the market, such as new competitive options or evolving customer requirements. You may be doing well against current competitors and with existing customers while the market is slipping away from you. Your critical strategic question should be are we delivering the right experiences to the right customers?, not how are we doing versus our competitors?
- Compare data within studies, not across them. Every industry benchmark is based on a specific methodology, with it’s own target audience, sampling approach, timing, collection mechanism, questions, and calculations. Each of these items has an impact on the results. As I often say, sampling patterns really, really matter. It’s often ineffective to compare results across different studies unless you control for all of those items, which can be very difficult. So don’t spend too much time trying to reconcile an industry benchmark with internal results.
- Set goals around key drivers, not necessarily industry benchmarks. As you think about setting goals for your organization, don’t fall into the trap of relying on benchmarked metrics just because the data exists. You should be setting goals for the items that drive the overall performance of your business, which may or may not look anything like the industry benchmarks. What’s unique about your brand and what creates a loyal customer? We recommend following five steps for creating a CX metrics program, starting with higher-level goals and working your way down to metrics on key drivers.
- Rely on internal insights, not external data. While external benchmarks can provide a high-level snapshot of relative performance, they lack the depth and adaptability to dig into critical company-specific topics such as the needs of target customer segments and your performance during key moments of truth. The additional value of internal insights are also dramatically amplified when you combine experience data (X-data) with operational data (O-data). The ability to dig into key questions and find more meaningful insights makes building internal insights capabilities a much more valuable endeavor than digging into external benchmarks.
The bottom line: Choose actionable insights over competitive comparisons… everyday!