Friday, January 8, 2016

To Mark the Spot with Benchmarking or Not?

Image courtesy of Woods | Damien
I originally wrote today's post for Intradiem. It appeared on their blog on July 16, 2015.

Are you focusing on a benchmark that may not or may no longer be a valid mark to strive for?

I recently came across the following Chinese parable, and as I often do, wondered how this story might apply to customer experience measurement and management initiatives.

The parable, titled "Mark the Boat for a Dropped Sword" goes like this:
There was a man crossing a river on a boat. When the boat reached the middle of the river, he accidentally dropped his sword into the water. He scrambled to grab it, but it was too late: the sword had already sunk to the bottom of the river. He immediately pulled out a small dagger and proceeded to carve a small mark into the side of the boat. He then said aloud, “This is where my sword dropped in the water.” When the boat reached the bank on the other side of the river, the man jumped into the water to look for his sword in the place where he had marked the boat. 

Of course, the boat had since moved, but the sword itself had not. Isn’t this a foolish way to look for his sword?
First, let me just say that I hope we're all smarter than that! But let's go with the moral of the story and work from there: everything in the world constantly changes. 

So how do we tie this story to customer experience? I make the connection vis-à-vis benchmarking your voice of the customer metrics, e.g., NPS, customer effort score, satisfaction, and loyalty. Benchmarking means that you're making comparisons to competitors or to some standard or average in order to help you understand the relative perception of your business in the minds of your customers.

When you benchmark, you've put a stake in the ground (or a mark on the boat) and have decided that that's where you want to be as an organization. The problem is, just like the boat, the benchmark moves while the sword (your company) remains exactly where it is relative to the benchmark. Why? For a variety of reasons, not the least of which is a misplaced focus on the numbers rather than on the customer experience.

Tom Peters takes an interesting stance on benchmarking - and addresses that movement - in a talk he gave back in 2007:
I hate benchmarking. Benchmarking is stupid. Why is it stupid? Because we pick the current industry leader, and then we launch a five-year program, the goal of which is to be as good as whoever was best five years ago five years from now. Which to me is not exactly an Olympian aspiration.
Benchmarking is fine to do in order to get that relative perspective - and that's all it is; you really need to take that information for what it is and figure out what makes your company unique. How can you be different?  How can your company become the one that inspires others? What about your business approach excites customers to consider your products and services first?

Typically when companies are focused on benchmarks, they don't have a real strategy in place; they've got an executive looking at their NPS, for example, and wondering where they stand; it's probably a metric that executives are being bonused on. But they have no real strategy in place to fix the experience behind that number. It's all about the number.

Meanwhile, the industry leader is on the move (like the boat), keeping up with changing customer needs, emerging trends, new tools and approaches, and more. How's a benchmarker supposed to keep up?!

There are a few things you need to keep in mind:
  • It's fine to benchmark, but you have to view it for what it is and not make it your end game to be like the competition or to beat the competitor's score.
  • The end game should be to do what's right for your customers, to deliver an experience that meets your customers' needs.
  • Customer experience is a journey; it is a moving target because customer needs and expectations evolve and change, you develop new products and services, the world is changing, etc.
  • The things that work today may not work tomorrow; the experience you deliver today may not meet customer needs tomorrow.
  • When you focus on the benchmark, you're likely misplacing the focus on metrics rather than focusing on the experience.
  • Benchmark for inspiration, not for imitation.
  • Don't focus on the number or the score.
  • Listen to and understand your customers and their experience - without that understanding, the business will always struggle.
W. Chan Kim, co-author of Blue Ocean Strategy, said: To grow, companies need to break out of the vicious cycle of competitive benchmarking and imitation.

6 comments:

  1. Hi Annette,
    Using benchmarks can be a useful gauge of how companies are getting on with their improvement efforts. However, doesn't relying on them imply that the company is following and not leading?

    But, maybe that's your point?

    Adrian

    ReplyDelete
  2. You make some good points here, Annette.

    I came across a study a number of years ago that confirmed something I'd long suspected about benchmarks: executives use them due to fear.

    They're worried that the decision they're making isn't good, but there's a safety in knowing that others are doing roughly the same thing or performing roughly the same way.

    ReplyDelete
    Replies
    1. Jeff, that's an interesting way to look at benchmarks. Hadn't thought of that. And yet, to James' point below, that's exactly what leads to mediocrity, sameness (good or bad), etc., isn't it?!

      Delete
  3. One of my favourite quotes comes from a man called John Seddon

    "Benchmarking is the fastest way to mediocrity"

    I suppose that is precisely your point.

    ReplyDelete