One of the most important questions you need to ask yourself is which type of benchmarking structure will work best for your business...
Which Members to Benchmark
Which Members to Benchmark? Once an association has established how important benchmarking is to all member businesses, the next logical step is to identify qualified members. The general assumption amongst most people who write about benchmarking is that an association will represent a specific type of industry or even a subtype where all businesses are virtually the same. The problem with this assumption is that many times associations will represent an array of companies all of which can be categorized in the same industry.
Take the gaming industry for instance. An association that represents game developers will include those that develop an array of titles from horror, to sports and shooters. Each type of game developer is, in fact, developing a game, but they are faced by a separate set of challenges. Also, the market for a horror title will be different from a shooter or even a sports title. The sales, marketing, and acceptance will vary. Also, in the same industry and member of the same industry association, you will see suppliers and clients, each with different processes and products, needs, pains and gains. So, benchmarking will need to be set up accordingly. A benchmark for horror titles can’t use data from a company or a group of companies developing sports titles. It will cause various issues.
Identifying and Categorizing Members
It is essential to start with identifying and then categorizing members. If your association does not already do that then now is a good time to start. Having each member in a separate category makes it easier to identify which group is the best subject for a particular type of benchmarking. Also, which segment will the benchmarks you want to run serve the best, then get into contact with them.
Smaller associations may not have a very diverse number of member segments. We know of many that only have a single type of member from the industry. So, these associations can skip the segmenting and categorizing process.
Tip: If your association only allows certain types of businesses in as members, then you will not have such a large pool of diverse companies to deal with. That alone makes finding the right benchmarking model and collecting the required data for the benchmark easier.
Find Out More About Each Member Group
What does your association know about each member? What do you know about each group? What do they each have in common? Which groups have you individually asked for information? Which groups have asked you to run benchmarks? Also, which groups do you think will benefit most from benchmarking? All of these are very important questions that associations should ask when finding the right group of members for benchmarking. Answering these questions will also help to identify why this is the right group and how they will benefit from the results.
Knowing about the challenges, needs, pains and gains faced by each group of businesses allows associations to market the benchmarks accordingly. Some groups may not have asked for information despite the challenges they face, but that does not mean they can’t use the information.
Generally, associations will want to create a more homogeneous member group, which can then be compared across multiple factors during a benchmark. However, if you don’t categorize and identify groups, then the data is a lot more generalized, and that leads to highly speculative results. Usually, the benchmarks will be limited to financial stats across the industry.
Targeting a single group has the advantage of being able to focus on various operational metrics and leading indicators. So, members gain a much better insight into their own performance weighed in and compared to others. Which in other words means that the results are a lot more actionable.
Note: Finding out about member groups do not have to be intrusive. Much of the polls and surveys can ask for approximate figures and not exact numbers. Keep in mind that many businesses may shy away from sharing specifics about things like margins, sales, salaries, etc.
Comparing Members with Benchmarks
When an association is considering offering benchmarking services to members the first step should be to know if the members can, in fact, be benchmarked. Most businesses in most industries can be benchmarked but in some, they can’t. At times they may not even be relevant.
When an association has both professional and organisational members then benchmarking them across the board isn’t viable. For instance, if an association’s members consist of supply chain business which ranges from raw material suppliers to end product consumers, to retailers and wholesalers then benchmarking isn’t going to yield any actional results. If anything, the results will be muddied by the fact that there is so much diversity.
The focus should be on specific groups of members which will ensure that only data specific to that group is used. Larger associations should conduct many different benchmarks for each group of members. After all the more members that benefit from the results, the better it is for the industry as a whole.
Even Members Within the Same Group are Diverse
That’s right! Even members who are part of the same group could make comparisons difficult. Like for instance the products they each sold was different. So, finding common ground amongst the group will require a better understanding of what each one has in common.
It is possible to find similarities when you focus on a specific aspect of a business-like IT, finance, sales, marketing. Each organisation will have most of these departments and even smaller segments. That said as an association it is critical to know if benchmarking these functions are of any value to the members. That is where running polls and surveys come in.
Tip: The goal of benchmarking is to solve a particular type of problem. That problem can be issues with the supply chain, sales, or pricing. However, associations need to recognize the fact that even members within what they have categorized as the same group are going to be different. The only way to overcome that for benchmarking is to focus on their similarities. Then benchmark what is similar but make sure that the outcome of all that hard work will be useful.
Defining Value for Members
Once you have identified the targeted group of members for the benchmarks and have identified their needs, pains and gains it is now time to explain how benchmarking will solve their problems. The benefits they can expect and the value they will get from the results. Obviously, these points are easier said than explained.
One way to explain this for an association is to understand what services and products are created for each member of every segment? How much do these products or service relieve the pains of each member? And to what extent? It is imperative to discuss with your team all the various benefits of the benchmark for members and all the issues it will help to solve. It is also essential to make sure that the benchmarks aren’t seen as a sort of silver bullet, i.e. they aren’t going to solve every business problem under the sun. The expectations that members have about the outcome should be realistic, to say the least.
It is between the issues that members face, and the gain you are offering is where the value proposition lies for the most part. Though that value proposition is perhaps only for that particular member group, it can’t be sold to other groups because those groups have their own sets of issues.
Using the value proposition, it is very easy to define which services the association is going to provide. The services will include reporting and data collection. It can also include training and analysis of the results. All of which will help businesses overcome some aspect of their challenges.
Picking out the right members for benchmarking is a complex process. Above is an overview of how it is done but as an association, you may face numerous challenges. Every association is different. Also, each association has to deal with the fact that members come and go which changes the way they should run benchmarks. That said once member groups are identified it helps to make the process easier.
Associations that take the time out to learn about member businesses are best suited to run benchmarks in the shortest time. So, it stands to reason that polls and surveys should be a significant part of an association’s job, as it helps to learn what is going on in the industry. Plus all that data can then be used to run benchmarks for specific groups of business. The results will be of excellent quality and value. At the end of the day, all of this translates into a win-win situation for both companies and the association.
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