What is benchmarking in marketing

1. Career development
2. How To Benchmark Your Marketing in 7 Steps

By Indeed Editorial Team

Updated February 16, 2022 | Published September 29, 2021

Updated February 16, 2022

Published September 29, 2021

Marketers use many tools to assess their standing in the marketplace. Using a benchmark allows you to compare your performance to that of your competitors. When you understand how your competitors connect with customers, you can better assess your own position within the market. In this article, we discuss how to benchmark your marketing, the different strategies you can use and some tips for implementation.

What is a benchmark in marketing?

A benchmark in marketing is a tool you can use to measure the progress of your advertising campaigns. Through a benchmarking strategy, you compare your company's performance to other businesses. It involves analyzing the effectiveness of your campaigns and determining how to optimize them. The goal is to outperform competitors and gain more customers.

Why is benchmarking in marketing important?

Here are some reasons why you may want to use benchmarking in your marketing strategies:

Create attainable goals

Benchmarking helps you identify industry averages, which can make it easier for you to create detailed goals based on data. By establishing benchmarks, you can analyze your competitors' achievements and aim for similar results. Your analysis can also help you determine which strategies can help you get these results. For instance, if a competitor successfully gets new customers through social media, you may decide to be more active on your company's accounts.

Optimize your budget

Marketers often find that when they improve their processes or business model through benchmarks, they spend less on advertising. This means that everything from your pay-per-click campaigns to your costs per lead can become more affordable. Your optimized budget can help you connect with more potential customers, including those who consider your competitors.

Related: Best Ways To Manage a Marketing Budget (With Template and Example)

Gain a competitive advantage

Analyzing other companies' processes and business models allows you to learn from leading performers in your industry. Additionally, you can capitalize on their weak points by providing products or services that customers are missing. For instance, if a competitor lacks a chatbot on their website, you can add one to your website to meet the demand.

Build an effective, unique strategy

Analyzing competitors through benchmarking can make you aware of the industry's latest trends, allowing you to use strategies that have proven results. While you can use these proven strategies in your campaign, you can adjust them to suit your brand's distinctive values. The result is usually an effective, unique approach that attracts more customers.

What are the different types of benchmark marketing?

The four main types of benchmark marketing are as follows:

Process benchmark marketing

Process bench marketing aims to improve your business' operations. Marketers look at how competitors complete tasks and seek to replicate their success. For example, your company might want to increase engagement on its social media accounts. To get more users to interact with your posts, you analyze a competitor that has a strong social media presence. Incorporating their engagement tactics into your strategy can increase your online presence and brand awareness.

Strategic benchmark marketing

Strategic benchmarking is a broader concept that focuses on optimizing your business model. When you examine how other companies operate as a whole, you can improve your business' approach.

For example, a marketer wants to increase sales by appealing to their target audience's beliefs. They're unsure of what these beliefs are, so they analyze how competitors reach similar target audiences. They discover that the target audience is passionate about protecting the environment, so the marketer creates an eco-friendly business model. The marketer incorporate "green" tactics into everything from website copy to social media posts.

Performance benchmark marketing

Performance benchmark marketing relies on key performance indicators (KPIs) to compare your analytics to those of your competitors. If a competitor has better KPIs, your goal is to surpass them. For example, a company wants to lower its customer acquisition cost. It calculates its current cost and compares it to how much it costs for its competitors to get a new customer. If the competitor has a lower customer acquisition cost, the company can use this value as its new goal.

Related: 20 Marketing Metrics and KPIs

Industry benchmark marketing

Industry benchmark marketing is when you rely on industry standards to improve your advertising efforts. Instead of focusing on certain competitors, you compare your company's performance to the industry as a whole. For instance, a marketer for a record label might run an email campaign. They can use an email marketing service to see what the average click-through rate is for other record labels and work toward this goal.

How to benchmark marketing initiatives

Follow these steps for how to benchmark in marketing:

1. Analyze the right competitors

Whether you use process, strategic or performance benchmarking, try to analyze the right competitors, including those who market to a similar audience and have a similar company size. By using their metrics as benchmarks, you can create realistic goals while striving for growth. If you decide to use industry benchmarking, create your goals by analyzing industry standards from research firms instead of metrics from specific companies.

2. Determine where you want to improve

The next step is to specify what areas of your company you want to improve. Some marketers might focus on their social media campaigns, while others want to optimize their pay-per-click campaigns. Try to define clear goals, such as improving engagement by 13% or increasing leads from 30 to 60 per month.

3. Pick the right metrics

Once you know what your goals are, you can identify the appropriate metrics to analyze. For instance, if you want to improve engagement on a social media platform, you might compare your impressions to those of your competitors. Marketers who want to increase leads would find it more valuable to look at click-through rates, as clicks usually translate to actions like phone calls.

4. Calculate your current metrics

Before you make adjustments to your campaigns, calculate your current metrics. Analytic tools can show how your website or social media accounts are performing. If you discover that one metric is lower than you want, you can focus on improving it through your benchmark strategy. Additionally, you might notice that a metric is performing better than you thought it was, allowing you to focus on others.

Related: How To Measure the Success of a Marketing Campaign With Metrics

5. Create a benchmark marketing strategy

Once you know how you compare to your competitors, you can create a benchmark marketing strategy. Establish a timeline that can help you manage your expectations. For instance, you might want to increase your leads by 25% in one year. You can then separate the goal further to carefully monitor your progress and make adjustments as needed.

6. Implement your new strategy

Follow the plan you created using techniques that other businesses have used to find success. As you implement these new ideas, remember to prioritize your brand's value. Promoting a defined brand can help customers remember you, which can help maintain your growth.

Related: What Makes a Good Marketer? Qualities and Tips

7. Continue to make adjustments

Consider your plan as a set of loose principles that guides you toward your goal. It's normal for a certain strategy to take longer to produce the results you expected. Try to be willing to make further adjustments, as good marketers are flexible when working toward their benchmarks.