There are two clear camps when it comes to external benchmarking: the fervent disciples and the dismissive naysayers. The proponents of the practice like Warren Buffett and Mark Cuban argue that it’s crucial to know your competition in order to better know yourself and your industry. A handful of others out there will argue that benchmarking is flawed and can’t possibly provide useful data in complex industries. So which side of the fence are you on?

Some of you might be passively reserved about using external benchmarks, and it’s not uncommon. A lot of questions swirl around whether or not it’s worth the effort. Most of the holdups cited by businesses tend to be misconceptions, and they shouldn’t keep you from the wonderful world of benchmarking. The bulk of them go something like this:

“My business is unique. I don’t need to copy others.”

An inward-looking mindset seems to be the most popular and unfortunate reason for backing out of benchmarks. We all have a tendency to think we’re special and different, but in reality, we all have similar goals and experience similar problems. It’s not about copying, it’s about comparing.

A benchmark isn’t the equivalent of peeking at someone’s answer on a test and writing down whatever you see. It’s more like seeing the grade reports afterward as well as how each student prepared for the test. If one student keeps getting an A+ and is doing something you’ve never thought to try, wouldn’t you want to know about it? It certainly wouldn’t hurt.
Let’s stick with the school analogy. If you’re not looking at others’ grades, you might think you’re doing the best you can, and the class (your industry) is just a really difficult one. If you carry on doing your own thing and accepting your grade without looking at the class average, you’ll never know the potential to do better.

I’d venture a guess that the class average isn’t good enough for you anyway. If you want to be at the top, you need to know what you’re up against. Nobody is competing in an industry of one, so if you’re satisfied with just looking inward, you might want to reconsider.

Our Customer Loyalty Benchmark

If you haven’t heard yet, listen up! We at Listen360 published an exciting benchmark report that includes industry-standard Net Promoter Scores and best practices. You’re going to want to get your hands on this one. Come learn with us and read our 2019 Customer Loyalty Benchmark.

Game theory is a fascinating corner of mathematics that is used for everything from predicting social behavior to geopolitics and to, of course, business. It deals with the strategies and outcomes of individuals when faced with certain scenarios or dilemmas. As predicting outcomes and weighing risks are integral to economics, it’s no surprise that game theory plays a role in business and helps in decision making. We recently saw an example of how these mathematical scenarios affect people’s decisions while working on a survey for a benchmark report. Let’s dig into the findings and what they could mean for your business.

The Dilemma

While researching for our benchmark report, we contacted and surveyed hundreds of businesses across a wide variety of industries. The biggest speed bump with surveys, of course, is getting people to actually respond.

The questionnaires are naturally anonymous,  but we encountered some hesitation when it came to the idea of sharing best practices to be published. Why should you put your tricks of the trade out there for your competitors to see? There’s a good reason why you should, and it brings us to our theoretical game: the stag hunt.

The Game

The game starts with a simple choice for the two players: will you hunt for stag or hare? The two hunters have to work together to get a stag, but one hunter alone can get a hare. Neither hunter knows which the other will choose, so there is a risk of getting nothing if a player chooses stag and the other chooses hare. It seems obvious to protect your own interests and choose hare, but a small hare will yield much less meat than a stag. So which should you pick?

The stag in our situation is a comprehensive benchmark report with valuable data. If you’re familiar with the power of benchmarking, you know that loads of businesses use them to improve their practices and jumpstart innovation. The only way we can get a complete report here, though, is if the players cooperate. The act of choosing the stag is like agreeing to respond to a survey about best practices. The hare, for us, is not participating in benchmarking and going it alone to figure out the best way to do things. While it seems less risky, not participating decreases the potential reward for everyone.

The Outcome

As an exercise, this game is played with both hunters oblivious to the choice of the other. While an excellent demonstration, it doesn’t necessarily reflect how things work in the business world. We don’t operate in a closed system, and by forming relationships and acquiring knowledge, we literally change the game.

You may remember the film A Beautiful Mind in which Russell Crowe portrays brilliant mathematician John Forbes Nash Jr. In the Oscar-winning biopic, a young Nash finds himself in a juvenile barroom dilemma with his classmates: who gets to go for the prettiest girl? In a moment of dramatized inspiration, Nash realizes that by competing for just one girl the friends will block each other and scare off the rest of the girls.

It dawns on him that the best outcome will happen when each individual does what’s best for himself and the group. Not just himself. You may want to refresh yourself on the iconic scene for the full effect, but it lends itself to our benchmark situation. When we all consider the strategies of our opponents, collaborate, and act accordingly in an open system, we are much more likely to get the proverbial stag. Closed-mindedness and failure to consider others’ strategies will get only a hare or two if anything at all. It’s up to you to change the game.

The Benchmark

As I mentioned above, we are working on a comprehensive benchmark about best practices in customer experience to be released this summer! It covers tons of industries and includes info from hundreds of businesses. Follow our blog and stay tuned to see how you can get your hands on the report. Reach out to us if you’d like to know more about best practices and strategizing for your customer experience.

Nobody operates a business in a vacuum. It’s pretty obvious you should at least be keeping an eye on your competitors. Benchmarking is a great way to evaluate your own practices by comparing them to industry standards and the best practices of your competition. Think of it as a mile marker in a race. If you don’t know where you are on the course, how can you adjust your pace? Here are 3 ways in which benchmarking can help you hit that stride in your customer experience efforts.

1.Know Your Strengths… and Weaknesses

Success, like pretty much everything else, is relative. You set goals within your own organization, and you should be setting them within your industry, too. It is sometimes hard to be objective when we judge ourselves, but data doesn’t lie or pull any punches. When you compare yourself to others in your industry you might be surprised at how your practices actually stack up. Like the old saying goes: you don’t know what you don’t know.

Taking a look at your peers will reveal the ways in which you’re excelling and can provide insight on how to stay ahead. It will also show you where you’re coming up short of the average. Defining both of these areas through an objective lens will make it easier to establish a new direction and let go of any practices that may have been detrimental.

2. Learn from the Best to Be the Best

If Tiger Woods offered you some pointers on your short game, you’d probably take them. Right? Emulating the best in the biz certainly wouldn’t hurt. Taking a look at what industry leaders are doing might help clear up some roadblocks you’re hitting when it comes to innovation. Finding new and creative ways to solve problems is a collaborative process, so looking for pieces of the puzzle wherever possible will help that big picture come together. A benchmark is an excellent place to start.

Seeing the trends in best practices from those at the forefront of your industry can also act as a compass when you’re strategizing or kicking off a new program. It’s very important to formulate standardized processes to stay on course. You can use a benchmark as a template for helpful metrics to keep you moving forward.

3. Winning New Business

Better practices translate to a better bottom line. I think we can all agree on that. But knowing where you stand in your industry goes so much further. Your managers and team members will be better educated in the competition and have a better direction for business development and customer experience. This also instills a company-wide dedication to improvement and excellence. Think of it as a sort of scoreboard that motivates your team and unites them in achieving a common, tangible goal.

If you’re a franchisor or multi-location business, being able to articulate how you stack up in your sector, where you’re aiming, and how you’re going to get there is crucial to growth. The same is true for customers in many industries. If you can show prospects how your brand measures up and that you’re diligently monitoring and improving your practices, that will go a long way towards winning referrals and inspiring loyalty.

Learn More

At Listen360, we absolutely love benchmarks and the deep-diving data that helps us all be better at what we do. We’ve published a very exciting benchmark report using data from thousands of businesses and millions of customers to shed some light on customer experience best practices. It will provide some great insights, and we want you to have it! Check out the 2019 Customer Loyalty Benchmark here.