Many businesses already know how to do benchmarking, but sometimes lack the required data to run accurate benchmarks...
How to Structure the Perfect Benchmark
One of the most important questions you need to ask yourself is which type of benchmarking structure will work best for your business to get the perfect benchmark? One of the keys to knowing how to use benchmarking for performance improvement is understanding structuring it. Structuring a benchmarking project will require factoring in all the variables and structuring them in advance.
The COMPARE model is one that’s usually used by businesses and happens to be quite successful. However, you shouldn’t limit yourself to that particular model. In this article, I will run you through a model I’ve created which can be used to structure the benchmark, but it does not cover the benchmarking process. The method I’ve used and one you can use too is to convert the business model into a benchmark model which makes structuring the benchmarking a lot easier.
To ensure that benchmarking is carried out as required a number of factors need to be in place. We take a look at the most fundamental variables that should be a part of any association’s benchmarking efforts. Also, what makes them so critical to accurate benchmarking results.
P.S: Make sure to read our bonus tip at the very end of the article!
Segmenting Member Groups
Segmentation is a big part of ensuring solid benchmarking figures for each segment of the business. Each segment has a set of common behaviors, characteristics, and demands. So, associations need to categorize each member based on their request for marketing information and find commonalities amongst those requests which can be benchmarked. One way to do is this is to ask why they have asked for certain market information or a particular set of benchmarks or what they hope to achieve from it. If anything it will help to reveal what their real goals are with these figures. Which helps to create more accurate profiles.
Profile each segment once each one is identified. The profile should include that particular group’s goals especially those that are common amongst them. It should also include a sense of fear, risks or obstacles. Apparently, the goal for each member is to eliminate hurdles in favor of making things easier. So, it goes without saying that the more significant a barrier is, the more businesses want to avoid it. Also, outline what members are trying to get and see if its possible to benchmark those particular concerns.
The Value Proposition Promise
We define this as the association’s promise to members that the benchmarks will deliver. The value proposition should be able to deliver on instances of issues, jobs, and potential growth for members. However, attempting to structure a benchmark that focuses on all the problems and goals of members is futile. What you do need to focus on is what matters, and that means what will make a real difference.
For instance, instead of the benchmarks trying to address all issues associated with exporting school bags to South America, i.e. pricing, shipping hurdles, distribution, etc. The benchmark should focus on export as a whole. What that does is it encompasses all the goals as well as the issues. So, members can identify whether or not it is worth considering South America as a potential market for their school bags. If it isn’t, they can save hundreds of dollars and not do business there but instead find another more lucrative market.
Associations should also explain how their benchmarking products can help businesses achieve their goals. The benchmarks are a combo of benchmark study and an accompanying service which helps to improve member performance.
Tip: The value proposition should slide easily between what your members need and what is offered by your association. When the proposition fits correctly, it gets members excited to participate and eager to see the results.
Make a list of all the benchmark products as well as the services you are offering. Explain what each benchmark provides and how it helps members. Also, what additional services are you offering around the benchmarks like business advice, performance training, and strategic advice, etc.
One of the reasons to benchmark for businesses is to improve and measure their performance. However, a colossal mistake that associations make is not correctly counting and then factoring in benchmarking variables. It goes without saying that improper variable counting can lead to numerous issues with the results, which will affect the value proposition.
How are the benchmarks delivered?
How do you deliver on the promises made to members and how it is to communicated to them? How are benchmarks sold and what steps are taken to deliver? Also, what type of support you provide. If anything these are just some of the most critical questions associations need to be asking themselves.
One of the reasons to benchmark is progress. All businesses want to progress and grow so the delivery of the benchmarks matter as it has to be in line with the value proposition. Associations need to create awareness amongst unaware members about the benefits of benchmarking and educate them about how it solves problems.
Benchmark delivery can be done both offline and online. However, the most critical role for an association is that of support extended to members which help them make sense of the results. It goes without saying that knowing how to benchmark and what it is all about happens to be one part of the puzzle. The other significant chunk is what to do with it and how it can be used to improve businesses.
Associations can always bring experts onboard either on a contractual or fulltime basis. The experts can then help provide individual, customized analysis of the benchmarks to businesses that request it. It helps to add value while ensuring that businesses, as well as the industry, grow as a whole.
Keeping in Touch with Members
The other major part of benchmarking is keeping in touch with members or customers. Associations can use email and an online forum. However, personal contact can also be an option, but it will be expensive since it takes more time. So, associations depending on how they are structured can offer personal contact for an additional fee or to higher tier members.
The important part is to keep members involved in the process. When they are engaged, it translates to better benchmarking. However, it is essential to give them multiple platforms via which to participate.
Associations need to find ways to make money and, in some cases, even be profitable. Benchmarking can serve as a great source of income and especially the types that come with a proper analysis like the one; we described earlier. However, members with only pay for benchmarks that add value, i.e. help them overcome or provide pain relief and create opportunities. That’s why structuring benchmarks are so important.
Another source of revenue can be sponsorship or advertising. However, the only way to know for sure is to ask members. Run a poll to find out if members would prefer that their benchmarks be sponsored, advertised or would they instead pay for it. Obviously, sponsorship has a price, and that price needs to be clear and make sense to everyone.
Resources Shouldn’t be Overlooked
Now the critical thing to keep in mind about resources is that you can’t run accurate benchmarks without them. The resources for running benchmarking can be financial, physical, intellectual, etc. Generally, they are associated with costs.
The key resources for most benchmarking projects will be consultants and staff. These might also include tools needed to collect and compile data. Also, depending on your industry drafting a laser-focused questionnaire may require an expert and that costs money too. Plus, if you’re running high-quality benchmarks but with no revenue stream associated with it, things can become expensive. So, funding becomes a crucial, valuable resource. It is even a resource if the association does not necessarily make a profit.
What to do After Identifying Key Resources?
You will want to make a list of all the critical resources. Define what each resource does and what it is capable of doing when it comes to improving the benchmarks. All of which directly connects with the benchmark’s value proposition or the revenue stream.
Apart from the typical resources we’ve discussed above, there are also non-typical resources like:
- External data sources
- Printing resources if the reports are sent via snail mail
- Formulating questionnaires, reports and benchmarking guidelines
Connecting with Key Activities
Benchmarking correctly requires creating an accurate model. The model should reflect the industry and the goal of the benchmark. So, developing a viable and usable model is a crucial activity. So, what are your association’s key activities in any benchmarking project? Well apart from a couple of differences your list will look a lot like the one below:
- Communicating with members to derive data and address needs
- Connecting with members to receive data and perhaps even help
- Setting up questionnaires
- Analyzing reports
Identifying Key Partners for Benchmarking Projects
Once you know what to benchmark, the next step is to identify key partners. Now partners are possibly other businesses and individuals who are a part of the benchmarking project. They would undertake aspects of it that the association or the company itself can’t handle. For instance, printing services, paper suppliers and research information providers, etc.
At times a key partner can be a competing association that agrees to a mutual transfer of information for the betterment of the industry’s benchmarking results. That said it isn’t unheard of for benchmarks to be conducted without key partners. However, doing so isn’t advisable because unless it is a tiny industry, the results will leave a lot to be desired. Many times, businesses that are part of the association may lose confidence in the benchmarking results.
Make sure to identify and list the role of your key partners such as:
- Do your key partners help to extend the capacity of the benchmarking process?
- Do the key partners bring valuable industry data to the table which is otherwise not readily available?
- What other value do the key partners add which make the partnership viable?
Tip: While it is possible to run benchmarks with an office suite and a few questionnaires it isn’t going to be advantageous. The quality of your benchmarks relies a great deal on the data that’s used. So, if anything make sure to form partnerships with competing and even complementing associations.
Costs Associated with Benchmarking
Finally, it is essential to consider the costs associated with any benchmarking project. Sure! Quality matters but if the project is too expensive, there is a good chance of it being abandoned midway. Abandoning a benchmarking project does not leave a good impression on member businesses.
The best way to do costing is to break the benchmarking project up into blocks. Then determine the cost associated with each block. Also, consider how the reports will be delivered as there are costs associated with that too. Below are all the costs associated with a typical benchmarking project:
- Providing customized revenue models to members
- Proving printed reports to members
- Compiling data gathered from members
- What benchmarking models are used?
- Staff costs usually billed by every hour they spend on the benchmarking project
- The cost associated with outsourcing and automating specific processes
- Costs of advice
- Meeting Costs
- Webinars cost money too
- Many other factors which will be industry dependent
Once you have a clear picture of all the costs associated with benchmarking the make sure that the funds are available. You should also have around 30% in reserve for unexpected costs. It goes without saying that running benchmarks can differ each year and for each industry. So, having some money in the kitty for those unforeseen expenses will help things sail through smoothly.
Bonus Tip: How to Create a Workable Benchmark Model for Your Industry?
When it comes to drafting a benchmark model, there are many routes you can take. So, once you know what to benchmark, the next step is to know how to benchmark it accurately. After all the results matter to your members which is why it needs to be done right.
You’ll only get the best results if the most comprehensive and thorough benchmark model is used. The best way to do this is to start by identifying all the sub-areas of a particular aspect that you’re benchmarking. For instance, if you’re benchmarking industry earning per business, you’ll need to factor in things like salaries, up sales, online sales, rent costs, etc. Each aspect can be highlight using a colored stickie. Use the same color stickie for each corresponding channel, segment and value proposition.
Use words and images to form a model that everyone can understand. While we’ve mentioned stickies since they are help visualize the structure of the model, there is such a thing as using too many of them which complicate matters. Minor details can be added later to the final benchmark colorNormalprint.
Every stickie should be easy to understand and represent an aspect or element of the benchmark. Like salary, rent, membership costs, cost of acquisition, etc. Think of it as telling a story by means of stickies.
Once there is a clear idea of how the model works, a final colorNormalprint can be drawn from it. The minor details can be added, and the benchmarking model is ready!
Structuring a benchmark as we’ve examined above takes more than just knowing what data points to run and compare. It also includes communicating with members and adding value. The more value that’s added to a well-structured benchmark the more effective it becomes. Informational benchmarks which help businesses grow should be the goal for every association.
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