How to Source Data for Benchmarking? Once you know what to benchmark the next step is actually to start the benchmarking process...
Promoting Benchmarking Results and Using KPIs
When associations realize why do organisations benchmark it becomes easier for them to promote it. However, when we talk about promoting benchmarks, it does not always mean supporting the idea of running benchmarking campaigns. If businesses in your industry are already familiar with the benefits of benchmarking, you won’t have to sell them the idea. Though you will need to sell them the effectiveness of your benchmarking results and how members benefit from it.
Results matter to businesses of all sizes and types. So, promoting a benchmark would mean that you promote the results. After your association runs successful benchmarks reports and analysis needs to be shared with all members. However, what also needs to be shared is the effectiveness of the benchmarks. Case studies, press releases, and trend reports can all help to solidify the idea that your benchmarks are highly effective.
Show How the Data Was Used
If your benchmarking surveys are effective, some member businesses would have benefitted from it. Though the benefits wouldn’t be immediately apparent. That said when you promote results it can be from previous years’ benchmarks. Write up the case study with hard data showing how benchmarking results led to business ‘A,’ ‘B’ and ‘C’ positively turning around their business. When you do this, it automatically prepares members and even those who didn’t participate in the previous benchmarking to take interest this time.
Make sure that your members are happy enough to promote the association and its benchmarking efforts. Happy members will have on problem talking about how satisfied they are with the association’s efforts when it comes to improving their business amongst other things. That means as you continue to benchmark and publish case studies it works to encourage more companies to join the association which leads to better benchmarking.
Note: Benchmarking promotion does not have to cost money. The team in charge of collecting data and running the benchmarks can just as easily draft case studies and conduct interviews.
Publish an Annual Magazine
Publishing an annual magazine may not be directly associated with how to benchmark or run benchmarking studies, but it ties into it. Associations publish a magazine in some form or the other. Some have online versions of it called ezines. However, most member business rarely take notice of the magazine, with maybe a few outside of the association having access to it. That means a huge means of communication and promotion isn’t fully utilized.
One of the ways to make sure that the magazine’s distribution grows is to ensure that everyone can read it. Should be available as a free download from the association’s website. Secondly, it should be where case studies, interviews, and benchmarking studies are published. Schedule for upcoming benchmarks should also be published there. All of which encourages circulation of the magazine which in turn promotes the data and stats which are being shared by the association.
Tie KPIs into the Results
KPIs or Key Performance Indicators are often used by businesses to measure their overall success. It is often seen as a way to measure individual success within the confines of the company itself. For instance, if a company was able to increase sales by 25% in the past year that will be reflected in the KPI positively. However, it does not take into account how much the industry has grown as a whole and if that success was even significant in the grand scheme of the industry’s progress.
KPIs differ from one industry to the next; they also vary based on the process. So, a grocery store will use a totally different set of KPIs as compared to a Karate centre, or a consulting firm. Even though all organisations will use the same KPIs within an industry, they may differ in measuring performance.
Note: Associations may want to take a look at each member’s KPIs to get an idea of their data points. It can prove to be an excellent way for associations that are just starting to use benchmarking.
KPIs can be divided into those indicators that are leading and those that are lagging. Leading indicators can lead a process, as well as influence it while those that lag are just a results, an outcome. For instance, if a leading indicator for Apple is sales of iPhones, it’s lagging indicator can be overall result. A leading indicator could be composed of other leading indicators. Number of stores on A-locations could be a leading indicator for sales.
When you combine all leading and lagging indicators, they form what is called a KPI tree. Lagging indicators are usually associated with output or outcome. Output is easier to measure yet can prove to be challenging to improve or even influence. Input or activity oriented KPIs in most cases are leading indicators which are sometimes difficult to measure but can be easily influenced. Plus, lagging indicators are indicators of past performance while leading are of future performance stats.
Lagging indicators differ slightly from one organisation to the next. Though leading indicators tend to be dependent on the business’s strategy, the nature of the business, management choices and processes.
Benchmarks need to have a set of both lagging and leading indicators. The problem with leading indicators from a management standpoint is that each organisation is managing it differently. So, the lower a KPI is on the three, the more difficult it can be for association members to provide data about it.
What Does All This Mean?
Well, it means many things but most of all it means that the lower a KPI is on the tree, the more difficult it can be to benchmark it accurately. Take customer satisfaction for instance which is comparatively easier to benchmark than the percentage of orders processed and delivered in 2 hours. That’s because customer satisfaction is higher up on the tree and used by much more companies.
When it comes to benchmarking associations can only provide accurate benchmarks for lagging industry indicators like revenue, costs, and profits. The indicators are the results of the company’s actions and so easier to measure. Also, not easy to influence.
Revenue, on the other hand, can be more challenging to benchmark since it depends on:
- Products sold
Much of the abovementioned factors are harder to control for a business. Take competition, for instance, if a new shop opens up offering the same service at a lower price, there is little the company can do about it. If the older business decides to drop prices, it will affect its revenue.
The Data Gathering Questionnaire Should Take Indicators into Account
When gathering data for benchmarking, associations need to make sure that the questionnaire takes both lagging and leading indicators into account. Think about how each data point is going to be used and how they will be measured. Maybe ask members which indicators matter the most to them. Try to get data points which they tend to favour or use. That’s the only way that benchmarks can be meaningful and accurate for the most part.
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