How to Benchmark in Marketing

Applying benchmarks to your marketing initiatives lets you determine the effectiveness of your efforts compared to the best practices in your industry. When you determine which companies are achieving better results, you can study their approaches and improve your own marketing performance. By establishing benchmarks -- or measurable standards -- that serve as a valid basis for the comparison of your marketing activities with those of your competitors, you can save money by eliminating waste and gain more benefits from your marketing.

Financial

  1. You can get financial data about marketing costs, sales revenue and profitability from the annual reports of large companies in your industry. This information lets you compare variables such as cost per sale, marketing expenditure as a percentage of revenue and return on investment for your marketing budget. You can identify the best performers and establish corresponding benchmarks, which become the targets for your own operations. Once you have established the financial benchmarks, you can use other performance benchmarks to evaluate how to meet your financial targets.

Promotion

  1. Effective promotion of your products is a key function of marketing and vital to marketing success. You can check how much money companies are spending on promotion in their annual reports and study what they are doing in the market to determine what promotional activities they are carrying out. Relating their spending and activity to their sales volume lets you establish benchmarks, such as promotional cost per item sold and sales per ad. These benchmarks let you compare the performance of your own promotional activities to the performance of market leaders and study what they are doing to improve the results from your own promotion.

Sales

  1. Benchmarks derived from sales performance indicate how effectively your marketing is driving sales. Typical variables are sales volume and market share. You can get some of the sales data from annual reports, but for statistics such as market share, you either have to perform your own market surveys to find out what consumers are buying or purchase surveys from industry associations or market specialists. Relating your various marketing activities to sales statistics lets you derive benchmarks such as percent market share per salesperson, market share due to direct marketing and percent of online marketing that is generating online sales.

Customers

  1. When your marketing produces satisfied customers, your business prospers. Benchmarking based on customer surveys establishes what your customers like about your company and what they prefer in your competitors. Your benchmarks evaluate marketing performance based on indicators such as customer retention, repeat business, number of customer complaints and general customer satisfaction. Setting your benchmarks at the highest survey levels achieved by a company that was part of your survey lets you continuously measure your performance against those competitors whose marketing is the most effective in achieving high customer satisfaction.