What You Don’t Know About Fitting In
How Competitive Benchmarking Can Lead Businesses to Happier Customers and Better Products
With very few businesses claiming sole rights to a product category or service, businesses who understand the role of competition and weaponize the insights that it brings are poised to stay ahead. In this post, we’ll walk through best practices to quantify customer experience across a competitive landscape through a methodology called competitive benchmarking. In this post we will:
Define the framework for benchmarking
Establish the value it can bring
The How: Getting the Research Off the Ground
Walking through an example
Benchmarking Basics - Our Framework
What it is and what it’s not
What it is: Competitive benchmarking embarks on the process of understanding how a business compares to competitors in the same space. Zooming out to see the entirety of the relevant market enables a better understanding of consumers and products, which should inform decision making within your company. At its core, competitive benchmarking is quantitative market research. Quantitative, because we need hundreds (if not thousands) of consumers to share their experiences, and market research, because approaching this problem tactically means we can understand what makes up customer experience in a more organized way. Benchmarking can also be applied at whatever level of focus you need:
An entire industry or market
A specific customer journey
Specific customer types
What it is not: Competitive benchmarking should fit within a larger strategy to improve customer experience. As such, it is important to clarify what it is not:
First Principles: Benchmarking is not a replacement for working from first principles of consumer decision making. Pairing first principles with what is observed in the real world is a step towards consumer-focused product development.
Exclusive competitor research: Benchmarking is not as simple as looking at the competitive landscape to poach techniques and winning ideas from other companies. At best this creates a reactive strategy that can lead to idea generation. At worst this leads to a calcified, unoriginal way of doing business that can lead to stifled innovation.
A “They’ll Get Used to It” Mentality: Very few (successful) companies operate by ramming their product vision down consumers’ throats - meaning that most businesses benefit from hearing their customers’ feedback. For instance, after showing the first iPhone prototype to a VC, who asked if consumers could get used to typing on a screen with no physical keyboard, Steve Jobs responded 'They'll get used to it.’” There are very few Steve Jobs - for the rest of us, customer feedback is valuable.
Ostrich Syndrome: Benchmarking rejects any attempt at sticking your head in the ground and trudging on despite evidence. Symptoms of this syndrome include focusing on illusory correlations, internal platitudes that soothe concerns but do not address customer issues, arrogance of the “too big to fail” variety, the Dunning-Kruger effect that says we’re too smart to be wrong. If there are insights about our products, whether good or bad, it is better to be aware of it.
The Value of Benchmarking
How it becomes actionable
Knowing what competitive benchmarking is and is not and understanding what it enables, helps to nail down the definition. With a focus on actionability, the key insights provided by benchmarking are:
Measuring and aggregating key information and metrics across a market
Contextualization of what the broader market is offering consumers
Identifying customer expectations and reality along with the relationship between customers and businesses
An investigation of differentiation in an established market
Each of these areas are key to what makes up strategic decision making for a business.
The How: Getting the Research Off the Ground
Benchmarking: Project A to Z
If benchmarking is primarily an exercise in quantitative market research, here’s the overall flow:
Discovery: Start the process by having your stakeholders articulate exactly what they want to get out of this research and what your business objectives are. You need to be able to say what success and failure look like. Do they want to identify opportunities to improve existing customers’ experience? Do they want to know how to go after competitors’ customers? Do you want to have a metric to tie bonuses/compensation to? All of the above? Now is the time to ensure that you’re charting a clear vision for the research, setting expectations and enabling success through the coming stages.
Questionnaire Writing: Put pen to paper and write out your full survey. Write a screener to make sure you have the right consumers taking your survey. Include questions to gauge competitor engagement (e.g., Which services have you used? Which retail stores have you ordered from?). Include behavioral, attitudinal, demographic and any other questions that you’ll want to slice & dice the data to better understand consumers.
Programming: get your questionnaire into an interactive format to collect data. Tools like Qualtrics, Decipher and SurveyMonkey allow for branching logic to show the right questions to the right people.
Collecting Responses: Circulate your survey using marketing emails and dedicated sample providers who can connect you with consumers who have opted in to sharing their opinions and experiences.
Analyze: With your full data set, start addressing those business objectives your stakeholders articulated in the discovery period. You’ve already defined what success should look like - now pick apart the data to find those insights to drive decision making!
Circulate / Present: Once you have your insights which tie back to what you established in the discovery phase, package the results in a way that brings out a story. Whether you go the more traditional route of a PowerPoint deck or more innovative Tableau dashboards or infographics, make sure you’re benchmarking results can inform decision making.
A Benchmarking Example
Principles in action
The head of marketing at your company has asked your team to identify areas of improvement and prioritize 3 key issues to address related to consumer experience and brand perception of your company. You decide to use competitive benchmarking as your tool of choice. You embark on the following journey:
Defining your metrics: Finding a way to metricize customer experience, you select the appropriate product based on your company. Popular options include NPS (based on “likelihood to recommend” your product or brand), overall satisfaction, and churn (likelihood to stop using your product/service), though many other options exist.
Identifying your competitors: Though each industry and product category is different, most studies focus on 4-8 direct competitors. If you’re a mobile provider, your competitors are Verizon, AT&T, T-Mobile and other smaller providers like US Cellular and Xfinity Mobile. If you’re a language learning app, your competitors are Duolingo, Rosetta Stone, Babbel, Busuu and others. Aim for 4-8 direct competitors and, remember, you can always create a bucket of “Smaller Competitors.”
Selecting your area of focus: Wanting to be tactical in the way you approach your task, you apply constraints to your research. Do you want to look at customer experience...
By channel (online, in app, in-store, over the phone)?
By product (pants, shirts, outerwear, swimsuits etc.)?
By journey (buying a new phone, cancelling service, fixing billing issues etc.)?
By customer type (Millennials vs. Gen Z, Households with children vs. consumers who live alone etc.)?
After making these decisions, running the research and getting the final data set, you may come across insights such as: our website experience lags the industry, we’re undeserving millennials, our onboarding experience is great but continued care needs work. How you report these results will differ based on your organizational norms (PowerPoint deck vs. Infographic vs. Tableau dashboard) but proper focus will lead to concrete next steps to inform strategic decisions.
Benchmarking gives you tools to situate your company among your competitors, whether to highlight where you lead or underperform. It can affirm decisions emanating from CX leadership and identify blindspots in your current strategy. It’s specific, metric focused and can help deliver actionable next steps to help you meet your customer’s needs. And when your company commissions the work, it’s customized to meet your needs exactly. Why wait for the next Gallup, Forrester and Garmin report on how your industry stacks up?
Joshua Leviton, Market Research Manager