To put it simply, when it comes to customer loyalty, you have to be better than the competition.
Overtake the competition
Customers have a choice. They don’t have to buy from you so you must please them in every sense, convincing them that you are much better than the alternatives. Direct competitors aren’t the only benchmark. Increasingly, the boundaries of performance are being widened as consumers compare all the products and services they buy.
If a consumer can get money from a hole in the wall at any time, or if they can be served a meal in a fast-food restaurant in less than three minutes, they may wonder why it takes three days to get a reply to their technical enquiry, for example.
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Southwest Airlines is a good example of how competitor benchmarking can be used to excel on performance. The speed of turnaround of the airline’s planes is critical as they only make money when they are in the air. However, instead of benchmarking against other airlines, they spent time at the Formula One pits to find out exactly how they turned their cars around – fully refueled and fit with four new tyres – in just seven seconds.
A successful competitor benchmarking study needs to decide who to benchmark against. Almost certainly the lineup will include market leaders and major competitors. It may also be relevant to establish which, out of all the suppliers of all products and services, is a role model others should aspire to. In most cases, benchmarking studies are quantitative surveys involving sufficient interviews to reliably compare and contrast the rating scores on a range of different attributes.
What is involved?
In a single country study, competitor benchmarking is easy to incorporate into the survey whereas in a multi-country study it may be necessary to include different local competitors. Usually respondents are asked which companies they know and what experience they have had of them. Normally only those companies with experience are rated.
Competitor benchmarking studies may also involve desk research in which we collect published and freely available data to compare and contrast financial and marketing metrics. In this way we can see the size of different companies’ portfolios of products, their prices, the number of depots they have, their revenue, their assets, and their costs.
Case study: Benchmarking metrics for energy suppliers
Our client, an energy company, needed to understand the views of corporate customers on all energy suppliers.
What we did
Energy buyers are likely to be aware of all the different energy companies and so the benchmarking metrics we focused on were the factors that could influence the choice of supplier. As expected, while price was one of these metrics, our survey showed that other factors played an important role, such as “interest in doing business” and “communications of all kinds”.