Everything you need to know about benchmarking

28/09/2022 article
Stuart Harle Qorus Benchmarking Lead

In today’s dynamic financial services market to stay relevant and competitive, executives must regularly ask themselves three simple questions:

1. Where are we?

2. Where do we want to be?

3. How will we get there?

Executives can commission competitor research to understand what they are offering and how they deliver it. Then try to work out the best practice and how to implement it, which is time-consuming and expensive and often delivers superficial results. 

Alternatively, they could hire management consultants to undertake a diagnosis that often tells you what you already know. 

Wouldn’t it be good to have industry expertise from peers to help you answer those three questions? 

Peer benchmarking answers question one by helping you highlight your strengths and weaknesses directly against your industry and offers insight that helps you answer question two and three.

What is benchmarking?

Simply: ‘benchmarking assesses you against criteria or a standard to improve your performance’.

There are four main categories:

1. Strategic benchmarking

This type compares your strategy to other successful companies, in your industry or in the general marketplace to identify the differences and find opportunities. It may help innovate, but simply copying and pasting rarely works because of differences between industries and can harm customer expectations

2.  Performance benchmarking

This compares product and service attributes, such as product features, price, speed of delivery, within your local marketplace. It is often compiled by consumer organisations or price comparison sites. In a bank it might cover account opening, mobile app functionality, or product features, and in an insurance company policy set-up and claims management.

Because what is measured is influenced by local consumer organisations or practices, its insight can be limited.

3. Process benchmarking

This examines how best-performing companies within your industry operate and can be effective at finding improvements to performance that can be made quickly and efficiently. 

It is often difficult to undertake without a coordinator or collaboration between organisations, which is the purpose of the next type.

4. Collaborative benchmarking

These benchmarks are created by associations, such as Qorus, who have an interest in helping their members improve their performance by collecting and publishing data from all their members who wish to take part, allowing them to spot industry-wide trends and improve their performance. 

In line with Qorus’s purpose and with a wide range of members in different geographies, our benchmarks use this approach. 

Many banks say they are customer-centric in their annual report, but the way they interact with customers and manage the business reveals that they are still product-centric.

We’ll discuss two types of collaborative benchmarking:

1. Best practice benchmarking

Because processes often evolve in response to changes outside of the organisation's control they can become disjointed, unproductive and detrimental to customer and employee engagement. For example, consumers wanting more control over their relationship, layers of new channels or an unplanned new way of employees performing their duties.

This type of benchmark is based upon what actions and processes lead to consistently successful outcomes and helps you get clear insights into your strengths and weaknesses to prioritise teams and processes for improvement, and to deploy resources more wisely.

It is action orientated and helps break down internal misconceptions about how well the organisation is performing, cutting through any managerial biases to get the c-suite executives ‘all on the same page’.

This type of benchmarking is flexible and can apply to a wide range of strategic challenges, such as becoming customer-centric, digital transformation or employee engagement in a hybrid environment.

Customer-centricity – many financial services organizations say they are customer-centric in their annual report, but the way they interact with customers and manage the business reveals that they are still product-centric.

This benchmark helps the Chief Executive Officer, and the Brand, Marketing and HR Directors understand whether the strategy to change their culture is working. It does this by assessing how it understands its customers, uses data and customer insight to design and offer products that customers want to buy and use and how it optimises the customer experience to improve satisfaction, trust and loyalty. 

2. Performance benchmarking

Most people are familiar with KPIs that measure performance against internally designed metrics and rarely against best practice that stretches the organisation to achieve what the market expects.

Productivity benchmarking helps the Chief Financial Officer understand whether their business units, channels and functions are productive at a level of granularity that can’t be got from any commercially available market reports.

Because customer journeys, for products such as mortgages, now involve many channels and functions this benchmark exposes weaknesses in the value chain and identifies productivity improvements.

Investment benchmarking helps you understand whether you are investing enough resources in new technology, such as artificial intelligence and machine learning, to make sense of the vast amount of data to improve the customer experience and productivity and to better manage risk. 

By creating a peer benchmark, financial services organizations can understand whether they are using their specialist data science and analytics resources effectively and whether they have the right mix of marketing, operational and risk use cases.

Maturity analysis benchmarks are closely linked to the two previous types.

Many executives believe that by having the newest technology they’ll succeed, but without the right vision and strategy, leadership, talent, structure, agile mindset and governance, they’ll fail. 

Maturity analysis benchmarks uncover the critical gaps and what the Chief Technology Officer needs do to ensure that IT can support the business’ transformation plans.

Qorus benchmarking is confidential and a participant’s performance against the benchmark is reported only to them.

Internal benchmarking

There’s no reason banking or insurance groups can’t benchmark their business units, functions, teams and their processes, even across different geographies to uncover differences in performance, helping executives better allocate resources.

Competitor research and mystery shopping

Isn’t benchmarking just competitor research and mystery shopping?

No, benchmarking identifies the best practice performance, and the point isn’t to compare how well you do compared to competitors as you are comparing your current performance against best practice.

Confidentially assured

Qorus benchmarking is confidential and a participant’s performance against the benchmark is reported only to them.

What Qorus offers

Qorus exists to help its members go further, faster, together. 

We recognise the power of benchmarking and are partnering with industry experts to offer our members solutions that help them solve strategic challenges.

You can find out more about our current benchmarks on our dedicated webpage here.

Get in touch about your needs

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