Although companies are accustomed to some level of constant change, COVID-19 has impacted the world in ways that no one could have predicted. CMOs are aggressively adopting new processes and incorporating technology solutions to keep up with the rapidly-changing business environment. Marketing teams and marketing service providers are struggling with a lack of data to optimize their spending to revenue, and yet CMOs are under increasing pressure to deliver on revenue expectations.
While 82% of CMOs report that their goals are aligned to revenue targets, marketers are struggling with a lack of insight to continuously optimize their spending and demonstrate a high return on marketing to their investors.
Source: Forrester Research
World-class organizations are relentlessly looking for ways to improve operational efficiency focused on process, performance, productivity, and financials. To understand and improve performance, leaders need a combination of benchmarks, forward-looking key performance indicators (KPIs), defined strategy and mission, operational targets, and initiatives that promote and deliver change.
Benchmarking is a common practice used by companies to analyze their success and gain a better understanding of how they are performing relative to their competition. The idea of benchmarking is based on the premise that KPIs are of little use if you have no way to compare performance results.
The ongoing practice of benchmarking should be integrated into marketing operating procedures since it enables agile decision making and allows marketing to improve speed to market, redeploy funds rapidly, and allocate resources where they matter most.
Understanding the Key Elements of Standardized Benchmarking
CMOs, marketing service providers, procurement, and finance teams use various processes and tools to conduct ongoing competitive analysis, including benchmarking, KPIs, market data analytics, and cloud-based technology solutions.
52% of senior marketing leaders are disappointed in the initial results they receive from analytics investments, despite CMOs prioritizing investments in marketing data and analytics.
Source: Gartner Marketing Data and Analytics Survey 2020
To support today’s complex business operations, companies leverage multiple benchmark formats to measure and track efficiencies and effectiveness. They include performance and practice, plus external and internal elements.
Performance focuses on quantitative data – measures or KPIs – and is usually the first step organizations take to identify performance gaps. Practice involves comparing qualitative information about how an activity is conducted across people, process, and technology. External compares metrics and/or practices of one organization to another or many others. Lastly, Internal compares metrics and/or practices from different units, product lines, programs, departments, geographies within an organization.
Benchmarking, either internal or external, can be applied in various ways, including Process. This creates a better understanding of processes and performance. Strategic compares business strategies to strengthen strategic planning and determine strategic priorities. Performance measures outcomes from revenue growth to customer satisfaction and compares the outcomes internally and/or externally.
Marketing leaders’ top mentions of weaknesses that impact marketing teams’ ability to execute and deliver:
- 33% define marketing strategy and execution not effectively linked,
- 32% state poorly designed or missing business processes (operational, data management, measurement)
Source: Gartner, 2020 Marketing Operations Survey
KPIs are useful decision-making tools because they help reduce the complex nature of organizational performance to a small, manageable number of key indicators. When organizations use KPIs, they are comparing progress to a specific goal. When they use benchmarks, they compare themselves against others. Marketing can use benchmarking to put KPIs into context and establish KPI targets.
In the second part of this series (coming soon) on benchmarking, we’ll describe the four key steps in an effective organizational benchmarking initiative.
Ken McDonald is the founder of SourceSCM Consulting LLC, dedicated to partnering with businesses to drive cost optimization, accelerate organizational transformation, and execute innovative, customer-focused solutions. A trusted sourcing and supply chain expert with 30 years of Fortune 6 leadership experience, Ken focuses on sourcing, negotiations, contracting, supplier relationship management, risk, compliance, supplier diversity, distribution, and logistics operations in highly regulated industries. He began his career in retail and moved from there into lead roles in manufacturing and distribution. Ken volunteers as a sports coach and with various groups benefiting children’s charities, food banks, and struggling families.