The dangers of misusing benchmarking
November 13, 2012
This post is by Darren Woolley, Founder of TrinityP3. With his background as analytical scientist and creative problem solver, Darren brings unique insights and learnings to the marketing process. He is considered a global thought leader on agency remuneration, search and selection and relationship optimisation.
I have written previously about the failing of benchmarking in advertising and marketing, and yesterday I was talking with an agency CEO who is currently going through an audit with one of their clients and the audit is being undertaken by a procurement contractor known for getting paid a percentage of the savings they deliver.
I was recounting to him the origins of benchmarking. How surveyors would ‘benchmark’ the height above sea level on a substantial building in the village or town to use as a reference point to measure the height of other structures in the area.
The point is they did not knock down any of the other buildings to the benchmark level or build up any low-lying building to the benchmark height. No, they simply use the benchmark to assess those building that were lower and those that were higher and by how much.
After all, who wants to live in a village were every building and structure is exactly the same height?
Rather than cutting all of the timber to the benchmark, the saw mill uses the benchmark to categorise the timber into the respective stacks.
Then I told him about a more commercial example, and one that directly relates to the ‘benchmark’. In the timber industry they cut down the tree and mill the timber and when it comes to cutting the sizes they place ‘benchmarks’ on the saw bench.
The may mark the 1.8 m, 2.4 m, 3.6 m and the 4.2 m marks on the the bench. The benchmarks.
Then as each piece of timber comes off the mill it is compared to the ‘benchmark’. But they do not then cut the timber to the benchmark. If the timber is 4.35 m long they do not cut it to 4.2 m. Or if it is 2.6 m long they do not cut it to 2.4 m. If you did all you would get is a whole lot of useless short offcuts.
The benchmarks are used to classify the lengths of timber into the required lengths. Then the person that is buying the timber can cut it to the specific length they need.
The agency CEO smiled and said this was the problem with the approach from the procurement contractors. They had their benchmarks and they were trying to fit the agency to these benchmarks.
Now this client has two creative agencies. One is a big multinational that handles all of the mainstream brands. And the other agency is a smaller boutique run by a handful of very senior advertising people who got sick of the multinational approach.
On one hand this agency has a large team of people they can draw from to service the marketer’s business depending on their needs. But the marketer selected this smaller agency because they wanted the more personal, hands on approach for their smaller brands.
The procurement contractor is treating both agencies as if they are the same. They are trying to make all of the structures in the marketing mix the same height. They are milling all of the resources provided by the agency to the same length.
These benchmarks are often the industry average. The question we ask our marketing and procurement clients is “Will you be happy with average?”
The fault is not with the benchmarks and often the conversation starts with an attack on either the source, the rigour or appropriateness of the benchmarks. The problem is really with the application of the benchmarks.
Mindlessly applying the benchmarks and forcing the agency to conform can dangerously reduce a high performing creative relationship into an incredibly average one.
Benchmarks have an important place in the process, in allowing people to see where the level, mix and cost of agency resources sit within the continuum of the industry range. But the next step is to make decisions on what this means and how to work with these benchmarks to get the outcome desired.
Simply cutting away at your agency on the saw bench will leave them bloody and weakened. And is that really what you want?
Let me know your thoughts by leaving a comment.