Benchmarking: Setting the Standard

Yes We Can!” was the catch phrase for U.S. President Barack Obama. It became a chant, empowering his teams, his voters, his following. Those three words became an affirmation to his people, giving them the confidence to know that they could make a change happen.

Let’s take a little time to work on benchmarking. FocalPoint Business Coaching offers a benchmarking service and so, if you are a Brian Tracy Trained Certified Business Coach you have the tools and the know how to provide the service. Great. So let’s consider why you would use benchmarking for you client and how you might introduce it as part of a coaching consultation.

Benchmarking is setting standards. By setting the standard for a product, a service, a system or an event, there is a final goal established. That final goal is the standard.

So, for example, your client, Dave, manufactures rubber chickens Portland, Oregon, and he has asked you to help speed up production. You see, Dave has learned that he is losing sales to the rubber chicken guy at Cross the Road, who manufactures rubber chickens at a rate of 90 per day, compared to his paltry 74 faux poultry per day productivity. Dave figures Cross the Road’s probably beating him in sales by 16 birds a day.

So Dave is telling you that his benchmark for daily rubber chicken runs is 90, but you need to ask Dave why he figures productivity numbers are so important.

Before you do that, you run across the road and grab a few chickens from the competition. Sure enough, seven out of ten chickens are missing a body part. They are utility rubber chickens.

Now you can work with Dave on where his true standards lie. “Dave, you’re better than this,” you can tell him. “You’re benchmarking your chickens against the wrong standard. Your team makes grade A plastic cluckers.”

Now ask Dave:

  • Who is your true competition?
  • Who is the best rubber chicken manufacturer in the state?
  • Why are they the best?
  • What did they do to become the best?

Chances are Dave doesn’t know the answer to these questions. If he did, he wouldn’t be worried about the Cross the Road guys making more chickens than he does.

Now is the time to suggest to Dave he needs a FocalPoint Benchmarking session.

 As a matter of fact, he may find out that people prefer Dave’s fabulous fowls to any in the state.   

Comments

Benchmarking is an important

Benchmarking is an important step in assessing the health of your business. The old adage is that you can never improve something unless you measure it first.  The difficulty for many people is in determining what they should be measuring against; be they internal desires, comparison against the competition or regulatory levels required.  Often some of the key measurements will be already defined for you, but the most important ones are the standards one sets for oneself. 

There is a wide scope of things that should be examined in benchmarking processes. The easiest to attain are usually the financial standards, how much profit and loss for example. After all, the financial is key to any business or even volunteer organizations.  What is not understood is the depth of information that data can give you in highlighting challenges in business operations. Thus it is ironic, that the most easily attained information is sometimes the more challenging to determine.

The effective benchmarking needs to dial in the values of the business owner and the principles of operations the business works by. Does the owner want to be the low cost producer? Or provide the best quality and customer service? Or be recognized as the premier supplier of that good or service?  A thorough understanding of the values and principles driving the operation will generally identify the most prevalent components to focus on in the benchmarking.

With such a values-driven benchmarking process in place, that business owner is better able to tailor the changes to be in alignment.  The focussed efforts, when tied in to the operating plan and philosophy, are fundamental in accelerating the business.

Mark Lindsay - Certified Business Coach - Edmonton

Great topic again ... they

Great topic again ... they just keep on coming!

Benchmarking is definitely a way to help understand where a business fits in the overall business model vs their competition and as well can help them get clarity on what is really important to them and their ideal target clients. 

Sometimes a way to really supercharge a business is to redefine it and how you market it to the target.  Getting a clear Unique Selling Proposition is important to aid in the marketing and the sales processes.  Why do your ideal clients buy from you?  What key benefits do you provide and do it better than your competition?

Maybe this is a good time to talk about ideal clients.  For the business owners out there, we need to get them thinking about who can they serve the best given their strengths?  What type of client provides the biggest bang for the buck, i.e., minimal work to generate the best sales.  Unless the business owner has been through this exercise, roughly 20% of their current client base generates 80% of the sales.  The opposite also true ... 80% produce 20% of the sales & profits; if the business could eliminate the 80% and focus on growing the productive 20% of their client base, think about  the multiplier associated with that! 

Now that we've addressed how to think about an ideal client, what has to be true to sell big to them?  The marketing and sales processes should all directly address the benefits for these ideal clients - the USP I mentioned earlier!  If you don't really know why it is your ideal clients buy from you, ASK THEM!  There is nothing more flattering to a client than letting them know they are valued and their opinion matters.  Now do something with the data once you have it.

Good luck!

Chris Allen, Owner & Certified Business Coach for The Business Spotlight, Inc.

"Lighting the Way to Your Success!"

Cincinnati, Ohio

www.TheBusinessSpotlightInc.com

www.linkedin.com/ln/christophershawnallen

513-272-6224  (513-27COACH)

Clients of mine here in New

Clients of mine here in New Jersey have found it productive and informative to benchmark their competition and well as successful businesses in other industries. Additionally, no need to limit benchmarking to financials. Systems, process or activity cycle time can be great indicators of operating efficiency opportunities. Customer satisfaction levels can provide insight into product and service opportunities. Event attendance might be a great indicator of marketing needs or topic positioning.

The important issue when dealing with benchmarking is to determine what one or two numbers will tell you the true state of your business. Focusing on one or two at a time can have a significant impact on overall performance.

One of my clients was sending out a newsletter. Every month she was spending hours pulling it together, constantly questioning herself on the value she was offering and what could be better. When we discussed why she thought it wasn't working she couldn't pinpoint any one thing. In addition, she had never looked at the open rate. After reviewing the open rate, which turned out to be consistently over 50% for 6 months, she did some investigating and found the average open rate for newsletters was under 20%. She stopped agonizing over her newsletter, incorporated offers and increased her leadsper month (which resulted in more clients).

Another client was having trouble filling the room for his workshops. He checked around and found that various entrepreneurs targeting a similar group were able to get 15-20 per workshop. (His monthly workshop rate was 0-3). They were using a combination of print and electronic advertising. He was using print only. After some adjustments (changing newspapers and creating electronic publicity), he instantly increased attendance to 12, followed by 15...the number is still climbing and he has additional clients as a result!

Keep it simple and make sure you look at the right numbers!

Margaret Maclay

Professional Business Coach with FocalPoint Coaching by Maclay Associates

Edgewater, New Jersey

Website: http://margaretmaclay.focalpointcoaching.com

LinkedIn: http://www.linkedin.com/in/margaretmaclay

Blog: http://www.maclayassociates.com/blog1/

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