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June 22, 2006
Benchmarking for Brand, Marketing and Customer Relationships, Part 2: What to Measure?
Understanding the relationships between various performance measures is a primary objective of benchmarking. Essentially, this means measuring the right things and making certain that a focus on those things measured does not negatively impact performance against other important metrics.
To benchmark performance against competitive industry leaders dictates a certain approach. If you wish to benchmark functional performance against non-competitive functional leaders (e.g. mortgage broker experience and satisfaction at a financial services institution vs. meeting planner experience and satisfaction with Ritz-Carlton) it dictates another.
If you are interested in measuring your performance (e.g. importance vs. importance on key experience or perceptual attributes) you’ll need to understand which segments to measure against. For instance: is the benchmarked opinion of an entire industry (e.g. 50,000 plus brokers) the measure you should be tracking and improving? Or is it the opinion of the top 20% of the segment that are the most profitable? How do your customers deviate from the industry overall?
If you improve performance against key metrics industry-wide (let’s say – just for example – speed to negotiated quote and commitment letter for commercial mortgage brokers), will that make you more profitable? Or, should you focus on improving the experience on the metrics that matter to the segment that represents your most profitable customers?
In our opinion, benchmarking is relevant only in so far as the metrics you benchmark are linked to key financial, business and customer objectives, and the metrics that define success in these areas.
Although linking various metrics can be difficult to do, it is critically important for several reasons. If the cause-and-effect relationships are identified and understood, then these measures begin to provide the ability to serve as predictors of future organizational and financial performance.
Understanding the cause-and-effect relationship is relatively easy. Identifying leading and lagging indicators is typically more difficult, though critical.
By regularly monitoring the leading and lagging relationships among various metrics, you gain the ability to identify problems well in advance of their affecting overall financial performance. At the same time, the ability to understand these relationships can have a direct effect on the ability to predict financial performance.
Posted by MCorp. at 22.06.2006 06:22 | Permalink
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