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Marketing Research & Metrics

Benchmarking Indicators

5 min read Translated from the Arabic original

Preamble

Today’s article is about benchmarking indicators and their uses in the marketing-research industry. To begin, I’d like to clarify that the term Benchmarks has different connotations across industries. In marketing research, this term means using benchmarking indicators for a strategic objective related to improving organizational performance by comparing against competitors’ performance in a particular industry. If you work in any of the following fields — marketing, marketing research, quality control, corporate performance management, strategy and consulting — you’ll benefit from reading this article.

These indicators are abundant in developed countries because of transparency. This may relate to the existence of government bodies or professional unions overseeing the performance of certain industries and imposing performance-measurement procedures on them to create a healthy competitive environment among them.

Examples of Benchmarking Indicators (Not Exhaustive)

  • Customer satisfaction levels: Many entities measure their customer satisfaction at varying cadences, and the results are published in media outlets or periodic reports from the same entity, or through reports of government bodies or unions holding the supervisory and regulatory role over these entities.
  • Customer loyalty levels: Specifically the Net Promoter Score, which I discussed in a previous article. Its results are published through the same channels mentioned above. See also NPS, CSAT, CES.
  • Employment-related indicators: A company needs indicators on employee-satisfaction levels to compare its employee satisfaction with other entities — to see whether it’s a market leader in pleasing its employees, or far from being one of the best companies in this area. Another example may relate to comparing salary scales to reduce attrition.
  • Marketing indicators: Such as the marketing channels preferred by consumers, particular consumption habits, technology-use behaviors, and so on.

Best practices can be classified as a means of comparison aimed at improving organizational performance — meaning identifying the best practices in a particular field then trying to emulate them to reach the same results.

But the important question every marketing researcher should know the answer to — whether they work at agencies or on the client side — is: when can these indicators be used?

The Answer

Using these indicators is very sensitive and may be misleading in many cases, for the following considerations:

First: Comparing against regional or global indicators is unfair because of cultural differences between peoples. The impressions these peoples have of ideal or satisfactory service differ greatly from country to country. What you, as an Arab reader, might see as ideal service, a British customer might consider below the acceptable level. Expectation levels vary widely from country to country. On top of that, some peoples are known for their over-positive or over-negative ratings. Our Arab peoples are known for their emotion — even if the customer is at peak displeasure, if they realize when filing their complaint that the employee may be harmed, you’ll find them backing down and withdrawing the complaint. This is why the comparison is unfair.

Second: The research methodology used to derive these indicators. Under this same heading falls the agency executing the research and its qualification to execute this type of research, the target sample size, the data-collection method (face-to-face, phone, electronic channels, etc.), whether the proprietary statistical models of certain research agencies were used, and — most importantly — the research instruments used. The questionnaire, the order of questions, and its length have a huge effect on changing the results. Many studies on research itself have proven that using different methodologies — even on the same sample — will lead to different results. So what about applying those different methodologies on different samples? I’ll leave the imagining to you. Question order also greatly affects results.

Even emulating and copying best practices has not borne fruit in many cases, for reasons related to differing societal cultures. The best example of that is the attempt to emulate the Japanese management experience in some Arab companies, which failed dismally.

So When Can These Indicators Be Used?

When the research is conducted with the same methodology, in the same country, using the same research instruments — and preferably executed by the same party — then the comparison is fair. This is done through what some bodies call syndicated research, which ensures interviewing all the main competitors’ customers in a particular industry. After conducting the study, the executing agency sells the results in whole or in part to those wishing to buy them.

There are also entities that conduct the measurement in a standardized scientific way, sometimes specializing in particular types of studies — such as Hays Group specialized in employee-satisfaction studies, the American Customer Satisfaction Index, and the British one. These entities have unified methods they apply to all their clients in the same way. So when one of these entities’ clients compares their results with the results of other clients who also conducted their study with these entities, the comparison becomes fair.

What If Neither of the Above Options Is Available?

Then I recommend you compare yourself with yourself. Start by conducting studies periodically for a stretch of time, then use this historical data to achieve the main objective of comparison — namely, improving organizational performance by setting specific benchmark goals to reach and achieve within a given timeframe.

In Closing

I ask every reader to critique any paragraph they don’t agree with. Through dialogue ideas mature, and to God belongs the right path.

See also: NPS, CSAT, CES, Voice of Customer (VoC), CX ROI Model.

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