What Does Benchmarketing Mean?
As marketing leaders, we’re always looking for a way to make a serious impact. An impact on our customers and, ultimately, on our business. The pressures of succeeding in the organization as a marketing leader have also mounted. We’re often fighting an uphill battle when it comes to proving our worth as a marketing organization.
But marketing doesn’t have to be like this.
With all of the tools and data available to us, it’s time for marketers to make a change. To leave behind our old way of doing things — of looking at and reporting on the same metrics over and over again — and start showing our organizations that we should be considered one of the most strategic assets in the business.
How can we do this? Marketers need to shift from focusing only on the channel-specific, operational KPIs we’ve come to know and plaster on every board report and instead emphasize strategic KPIs that actually impact our business.
We can do this by taking a traditional part of marketing one step further. Let’s go from benchmarking to benchmarketing. In this article, we’ll discuss what benchmarketing means, how businesses can use it to their advantage, and different tools that can help us execute against this methodology.
What Is Benchmarketing?
We’ve all heard of benchmarking. It’s an important part of any marketing strategy. Understanding how your business compares to others in your industry can help you not only gauge how your business is doing, but also understand areas of improvement for your own strategy.
But what about Benchmarketing? This is a term you may have heard thrown around in the marketing space. Basically it means benchmark marketing. But the idea behind benchmarketing is to take the benchmark reports we all know and love one step further: We should be using strategic KPIs that go beyond operational and channel-specific metrics and give us a better understanding of how marketing is actually impacting a business.
Why Is Benchmarketing So Important?
Most benchmark reports we come across offer us benchmarks on email (open rates, click-through rates, sends) or social media (number of followers, likes, retweets). But what do these metrics actually tell us about how we’re performing as a business and how our business compares to others? They don’t. They give us a surface-level indication of how our channels are working.
Don’t get me wrong, I’m not saying that operational and channel-specific KPIs aren’t important. They are. As I mentioned, they give us a view of how our customers are interacting with our channels. But when it comes to showing the value of our work and understanding how marketing is performing for a business as a whole, they don’t provide enough information.
This is where strategic KPIs come in to play. These metrics can actually give us an indication of how our marketing work can make an impact on our business. For marketers, this is often an incredibly hard (if not impossible) task to do. Most marketers feel like they have trouble connecting their day-to-day work to business results. And unfortunately, the C-suite often notices the lack of connection marketing has to the bottom line.
But by focusing on strategy KPIs that actually align to business goals, you can use benchmark data to influence your marketing strategy and plan out the best strategies for your business.
Examples of Benchmarketing
So I’ve mentioned benchmarketing with strategic KPIs, but what do those KPIs look like? As a business, your company probably has high-level objectives that you’re obligated to meet. For e-commerce businesses, that usually consists of goals like revenue and customer growth.
As a marketer, revenue and customer growth may seem out of reach. But at the end of the day, why are you sending emails, creating website pop-ups, and creating Instagram ads? You’re doing this to generate purchases from your customers, and purchases can grow your customer base and eventually turn into revenue growth. So as a marketer, you’re closer to touching these metrics than you think.
The problem here is that too many marketers look to the channel-specific benchmarks to compare how they are doing to other businesses like them. Instead of focusing on those metrics, compare how your business is doing compared to others with strategic KPIs. This gives you the opportunity to identify what strategies other businesses are using to impact their business goals.
Do you see a strategy that you’re not focused on? Or find that your marketing strategy is too tactic-focused? Use benchmarketing as inspiration to plan out and execute a new and better marketing strategy.
This will also help marketers stop focusing on tactics (like Abandoned cart emails) first. By focusing on strictly tactics, we’re missing the opportunity to connect our work to a greater strategy that can actually impact the high-level objectives we’ve identified above. Instead, marketers should look at strategy KPIs first and then plan out the tactics that best fit into and compliment those strategies.
Let’s look at some of the strategic KPIs that other e-commerce businesses are using to tie their marketing back to revenue and customer growth.
When it comes to revenue growth, marketers have several strategies that can help impact this incredibly important business goal.
Increase Conversion Rate
When thinking about strategies that can impact revenue growth, Increase conversion rate is one of the best strategies. By focusing in on converting the contacts that are already interacting with your brand, you can increase purchases and, in turn, increase revenue.
Customer Lifetime Value Increase
Another strategy many e-commerce businesses focus on is Customer Lifetime Value (CLTV) increase. By focusing on the entire lifecycle of the customer (not just converting them to their first purchase), marketers can make each customer a more valuable asset to their business. When you grow your CLTV, you’re not only growing purchase rate and frequency, but also growing revenue.
Increase Purchase Frequency
Another method for turning up revenue growth is to focus in on purchase frequency. Much like the above strategies, this strategy allows marketers to make each customer more valuable by converting them to purchase more often. If you’re not focused on increasing the frequency that your customers are buying, you’re not effectively impacting revenue growth.
Moving on to customer growth, marketers should have a huge focus on this metric. After all, as marketers our goal is to attract customers and delight them to the point of purchase. The problem many marketers have is that after we get them to convert, we tend to mishandle the relationship. We’re so focused on customer acquisition that we forget how important customer retention is. But customer retention should be a main focus to continue growing your business.
Let’s dig in to the strategies that other successful e-commerce businesses are using to drive customer growth.
Increase Lead to First-Time Buyer Conversion
In order to focus on retention, you need to have a pool of existing customers. One way to grow your customer base is to increase lead to first-time buyer conversion. By focusing on this strategy, marketers are able to build their pool of customers and begin to set the groundwork for growing a loyal customer base.
Increase First-Time Buyers to Repeat Buyers
As mentioned above, acquisition is only one part of customer growth. Customer retention is a bigger, often times more important, piece of the puzzle because it’s a lot cheaper to retain your customers than to attract new ones. Companies that focus on increasing their repeat buyers are making a bigger impact on the overall success of their company. By mining and turning your existing customers into repeat purchasers, you’re creating a loyal community that can help your business grow.
Retain Active Customers
Again, customer retention is a major focal point for e-commerce businesses. Successful marketing teams know that the key to keeping up in the fiercely competitive e-commerce space is to keep customers happy, engaged, and purchasing. That means that marketers need to understand the buying cycle of each of their customers and work to prevent active customers from falling off.
Just by identifying these strategies as important metrics to benchmark, you’re giving your marketing organization an edge on many businesses in the e-commerce space. As mentioned before, most marketers are looking at operational and channel-specific KPIs to gauge their success in the space. But the reality is, those metrics only give us one piece of the pie. Marketers need to understand how they compare to others more strategically if they want to make a true impact on their business.
Benchmarketing in Business: How to Do It
So now that you understand what kinds of KPIs can actually connect marketing results to business, let’s look at how you might do this in your own business.
If your CEO identified customer growth as a main target for your business, as the leader in marketing, you need to identify different strategies that can best impact that objective.
From the section above, you’ve already identified that top e-commerce businesses in your space are focused on growing their customer base by Increasing first-time buyers to repeat buyers. If this isn’t something you’re focused on, or if it’s something you’re underperforming in compared to your competitors, then it’s worth digging deeper into this strategy.
Once you’ve identified a strategy you want to either focus on or improve, now is the time to begin thinking about what the best tactics are to help execute this strategy and make a true impact on your business.
Let’s focus in on Replenishment for this example. This tactic is a great way to convert customers repeatedly on an item that is only good for so long. Whether you sell running shoes or makeup, Replenishment is a great way to keep customers engaged with your brand by offering them the opportunity to repurchase their favorite item right when they’ll be needing another.
If you’re a beauty brand and a customer purchases a certain type of mascara, replenishment messages are a great way to remind a customer that it’s time to grab their next product so they don’t run out. You can use purchasing data from your existing repeat buyers to understand how often customers purchase this product and create a replenishment timeline that can trigger once a customer has reached the point of needing to repurchase.
To simplify, this is what your campaign would break down to look like:
- Objective: Customer growth
- Strategy: Increase first-time buyers to repeat buyers
- Tactic: Replenishment
This is just one example of how you can use benchmarketing in your business to identify and execute against strategic KPIs that will actually impact the high-level objectives of your business.
Essential Benchmarketing Tools
Now that we’ve outlined what benchmarketing means and how you can use it in your business, let’s look at a few tools that can help you execute this methodology.
If you’re not already using Google Analytics in your business, it’s time to start. This tool is great for helping you build a picture of the customers and contacts you have engaging with you on a regular basis. It can even help you identify your competitors in the space — a crucial part of benchmarketing. Before you can begin comparing your business to others, you need to understand who your competitors are and if you’re competing for the same customers. This is just the tip of what GA can do, but it’s an important part of getting started with successful benchmarketing.
Bencharketing.io is an awesome tool for identifying both channel-specific and strategic KPIs. This tool is unique in that it allows marketers to identify different strategies and KPIs and then uncover the tactics that best impact these strategies. This allows marketers to actually connect their day-to-day work with the high-level objectives of the business, finally giving them the ability to showcase their impact on the business. This tool is completely free, only requiring an email address for signup.
As marketers, we understand how important it is to gauge our success against those around us. But too often, we get stuck looking at the same benchmark reports, from the same companies that focus too heavily on channel-specific metrics that don’t tell us much about our business. So what if our competitor has a higher open rate on emails than we do? They may have a higher open rate, but that doesn’t mean that their customers are purchasing more than ours or that their emails are helping impact the bottom line.
In today’s marketing landscape, marketers must shift our attention from traditional benchmarking reports to next-generation benchmarketing. By making this shift, we’re helping our departments by definitively connecting our traditional marketing work to the strategies and high-level objectives that matter most in a business.
Are you ready to try benchmarketing on for size in your business?