How do you rate against the competition and best in class? Today we share with you 8 tips on best practices in benchmarking in business-to-business markets:
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Track the trends: Of course the score from customers indicating their satisfaction with you really matters. However what matters even more is whether this score is going up or down. Make sure you track the trends.
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Benchmark against best-in-class: You may think that you are doing really well because you are doing better than the competition. Nowadays people judge you across a much broader range of companies. If they can get money out of a hole in the wall at any time of night or day and if they can get a meal delivered by McDonald’s in less than 3 minutes, they may question why it takes you 3 days to reply to an email.
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Compare apples to apples: There are all types of benchmarks. You will come across Customer Satisfaction Scores, Customer Effort Scores, the Net Promoter Score (NPS) and the like. Some of the ratings will use a scale of 0 to 10, others will use 1 to 5. Some use 1 to 7. Make sure that you compare the same types of score using the same scales.
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Outperform the norm: We all know the joke about the two men walking through the jungle who see a tiger running towards them. They start running away. When one of them stops and starts putting on his running shoes his friend says. “What are you doing? Do you think you will run faster than the tiger with those?” “I don’t have to run faster than the tiger,” he says. “I just have to run faster than you.” In other words: Make sure you outperform the competition.
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Anchor with the industry average: Know your norms – for example the average Net Promoter Score for a business-to-business supplier is 24. Keep that in mind when you are judging your own performance. Also, know the norm within your area of operation – it could be higher or lower than that figure of 24 we have just mentioned.
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Avoid country comparisons: Don’t compare your customer satisfaction scores in Mexico with those in Holland. Your Dutch customers might be happier than your Mexican customers but you wouldn’t know it from their scores. Compare your scores in one country with other suppliers’ scores in the same country and be cautious about making intercountry comparisons.
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Accept that metrics reflect different – and sometimes unrelated – performance: Choose the scores that really matter to you. If you think that your customers and potential customers are driven to choose suppliers by “ease of doing business”, measure your performance using the Customer Effort Score. If you think they are looking for “value”, use the Net Value Score. If it is “loyalty” that matters use the Net Promoter Score.
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Raise the bar: It is relatively easy to achieve a Customer Satisfaction Score of 7 out of 10. In fact, if your average score is lower than 7 out of 10 we would be surprised you are still in business. When rating a supplier using a scale from 1 to 10 most people give an answer between 7 and 10. This means that the scale is much narrower than it appears. It becomes exponentially difficult to raise your Customer Satisfaction Score once you reach the dizzy heights of 8.5 out of 10. A 0.2 difference increase (e.g. 8.0 to 8.2) on your customer satisfaction score really matters. Raise the bar but make sure you don’t set it too high.
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