Published January 31st, 2009 by
'Is Fear of Benchmarking Costing You Money?' by Debra Ellis
Debra Ellis’ latest article is titled “Is Fear of Benchmarking Costing You Money?” [Article]
Debra Ellis’ latest article:
Is Fear of Benchmarking Costing You Money?
Do you wish you could sell more while mailing less? Or, improve service while reducing costs? Or, reduce risk when making decisions? Benchmarking will help you do all that and more. So why are you not benchmarking today? It’s simple. Implementing a benchmarking program is overwhelming.
Why Bother?
It starts with volumes of data, tons of theories, and the nagging thought that you need expert intervention. Next comes hours of filtering through the statistics before “why bother?” aborts the program. In a few months or years, someone will ask, “do you have a benchmarking program?’ and you will respond with “we tried it, but it didn’t work.”
Do You Know Which Customers are Rising Stars and Which Ones Are Trying to Rest in Peace?
Let’s start with the “why bother?” question. Would you bother with a program that helped profile customers so you could mail more effectively? There are six types of customers: Newbies, Rising Stars, Platinum, Falling Stars, Bargain Hunters, and Rest in Peace. Each type responds differently and mailing by profile increases response. Wouldn’t it be nice if there were magic rules that universally identify a customer’s profile? Like, customers who haven’t ordered in 12 months are Falling Stars. Or, customers who ordered within the last 30 days are Platinum. But what if that order, the one placed yesterday was that customer’s last? Wouldn’t it be nice to know before you mailed them six more catalogs?
There are basic rules that apply universally, but to maximize your return, you need to know the rules that apply to your specific customers. How does a customer move from Newbie to Platinum? If you knew, then you could start the conversion process with the first order. How many Newbies go directly to Rest in Peace? Would a shift in marketing and service change their pattern? Without measuring and monitoring buying patterns, you’ll never know.
My Marketing Program is Great! Why Would I Benchmark?
But, what if maximizing marketing is your specialty? Don’t worry; benchmarking can help your operations, too. Would you bother with a program that measures your service levels and improves customer satisfaction? We all know that satisfaction is important, but quantifying it seems impossible. Not only is it possible, unlike activities that require a stunt double, you can try this at home! In fact, it is better if you do. You can skip the consultant (GASP! Did I just say that?), the high end software, and the statistician. You are the one that lives with the results and you should understand every aspect of your business. The beauty of benchmarking is hidden treasures that appear in odd places. Outsiders may not recognize the significance, but you will.
When you have results, you may decide to hire a call center, outsource your fulfillment, or bring it all in-house. You will be able to make these decisions because you will know the costs associated with these services and their effect on customer loyalty. If you decide to outsource, you will also be able to monitor performance and insure quality service.
Nothing to Fear…
Now, why are you not benchmarking? In Franklin D. Roosevelt’s inaugural address he said “…let me assert my firm belief that the only thing we have to fear is fear itself – nameless, unreasoning, unjustified terror which paralyzes needed efforts…” Don’t let the fear of benchmarking paralyze the process.
But my customers expect fast, free, and friendly!
It often seems that customers want everything fast, free, and friendly when you review their complaints. The reality is that most customers are trained to expect poor service, so a good shopping experience is a welcome surprise. Of course, expectations are different for different companies so you have to find your customers’ specific needs. Before you develop your next survey or organize a focus group, try benchmarking. It is economical, effective, and universal. It crosses channels, departments, and divisions improving marketing and operations.
The greatest benefit of benchmarking is that it quantifies areas often considered intangible. Many companies treat customer service from the call center to fulfillment as a cost of doing business. They miss opportunities to build relationships and improve marketing by reducing service. Change requests are met with “Show me the ROI” responses. Benchmarking can deliver the return on investment (ROI) information while improving marketing and operations.
Take the WEC Benchmarking Challenge
If you are still skeptical of how benchmarking can deliver, take the WEC Benchmarking challenge. There are two parts to it, increasing sales, and reducing costs. It doesn’t require sophisticated technology, additional investments, or a long term project. It does carry a warning: Once you have tried benchmarking, it can be addictive for companies wanting to growth and profitability.
Part One: Increasing Sales
Choose 2,000 – 4,000 of your best customers and separate them with an A-B split. Flag the A customers in your order management system as “Platinum”. Set it up so every contact point identifies these customers as the best. CSR’s should see their status whenever they access the customer’s account. Packing lists should also identify them. Tell everyone in the organization that you are focusing on improving relations with your best customers. Make sure your team knows how to identify the platinum customers in your system. Remind them about your focus every week and ask for feedback. Continue marketing as usual. Monitor sales for the two segments weekly over a twelve week period. You will find that A customers have a greater value than the B ones. Now you have information to quantify service enhancements.
Part Two: Reducing Costs
Choose an area where workload is nearing or exceeding capacity. For this example, we will use the call center. Have a meeting with the agents and explain that you are working on a plan to improve their work environment. Ask them to document their challenges and any suggestions for improvement. Tell them that you will be monitoring everyone’s work load and posting the results. Continue monitoring for a twelve week period. Each week choose a simple improvement suggestion and implement it. You will find that productivity and morale increase, reducing the need for additional personnel.
Once you get started and see the benefits, benchmarking will become your best growth and profitability strategy.
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Debra Ellis is a writer, speaker, consultant and the founder of Wilson & Ellis Consulting. She has extensive experience as a multichannel company consultant and executive. She uses her experience and expertise to teach executives how to integrate departments, motivate employees, maximize return on investment, and successfully grow their business. She recently completed an e-book entitled “The New Rules of Multichannel Marketing”.
Wilson & Ellis Consulting (www.wilsonellisconsulting.com) is a multichannel management consultancy specializing in transforming information into growth and profitability. In addition to strategic planning and consulting services, they offer hands on workshops and informational guides.
*This news post was submitted by Debra Ellis.