A simple benchmark will tell you what you need to know. And you don’t have to be a stats geek to understand it.
Digital data has never been easier to collect. Tools like Google Analytics make it possible for one-man shops to glean enterprise-level information. This is both a blessing and a curse. On the one hand, you can measure just about everything your business does online. On the other, analyzing it all is arduous at best and downright painful at worst. And who has the time to commit to this kind of this endeavor? Not any small business owners we know.
That’s where benchmarking comes in. It’s the quickest way to interpret the data you collect, and the simplest way of gauging success.
The Basics of Benchmarking
Benchmarking digital data is the process of comparing your results against a competitive set and finding out you where you stand in relation to them. For example, your data will tell you that your latest digital promotion yielded a 2% conversion rate. Benchmarking that number will tell you if it’s good or not. If the average observed conversion rate for that type of promotion is 0.8%, then it’s fantastic. If the average is 4.5%, your 2% is leaving a lot to be desired.
Internal vs. External Benchmarking
Step one for any business is to get a grasp on their own numbers. Benchmarking a company’s internal performance metrics over an extended period of time is the first priority when trying to gauge results. How do you know if your marketing efforts are effective without tracking results in comparison to past campaigns?
Step two and arguably more telling, is utilizing external (competitive) benchmarks as a success indicator. An industry average gives you a non-biased and constructive way to evaluate and optimize performance. Though internal benchmarks may demonstrate traction or decline in relation to past performance, full understanding of how your business stacks up against the rest of the industry will provide a much more conclusive and actionable story.
Three Reasons to Start Benchmarking Today:
What does success look like? When you’re committing big money to an initiative, that’s something you should probably know. Without a benchmark, you’re essentially throwing darts with a blindfold on. A real average to compare against removes the blindfold and gives you a target.
Less Naval Gazing
Comparing your recent data against your older data is better than nothing, but remember that you’re not competing against yourself. Competitive benchmarking measures your numbers against the ones that matter – the rest of your industry segment.
Instead of taking stakeholders through piles of numbers, just show them how you measure up against the industry average. Nothing will make them happier than seeing themselves in first place.