B2B marketers want to know how their marketing ops and demand generation performance compares to industry benchmarks. I commonly hear from colleagues and clients that they want to see industry standard benchmarks. This is especially common from SaaS executives with engineering backgrounds because it’s easy to measure things like uptime and speeds and feeds. I get it. It’s natural for managers to want to compare how well their teams are performing. Benchmarks are a problem, however, because the averages are not based on comparable organizations.
Marketers can sign up with expensive analyst firms who will provide their own benchmarks based on the companies they have surveyed in their client base and how they uniquely index conversion stages. Interestingly, these benchmarks vary from firm to firm. These same firms should also provide the same disclaimer I’m giving here.
Think about how misleading benchmarks are in our everyday experiences. Government figures tell us what the median income is. The median income in Seattle or San Francisco is likely 1.5x or more than the national average. Real estate services tell us what average home prices are nationally and in various markets. There are national and state benchmarks and averages on high school GPA, graduation rates, SAT scores and more. The point is these benchmarks are mere guidelines that rarely align with specific individual experiences.
Industry benchmarks in B2B marketing must be viewed with pragmatic caution. I think too many times benchmarks compare sprinters to marathoners. There are too many variables to make benchmarks a perfect fit for every organization. Depending on who the benchmarks are sourced from, the data can be incredibly misleading with wide variations from one source to the next. A high performing company could show an average comparison to ‘best in class’ orgs surveyed by an analyst firm, yet annual growth could be at triple-digit rates. Why is that? Here are just some of the variables:
- Industry – healthcare, security, financial services
- Market – regulated, SMB, enterprise, government, regional, international
- Type of product or service
- Early to market, emerging, established market, commodity
- Pricing models
- Go to market strategy
- Marketing content
- Marketing tech infrastructure
- Management team
- Data health and quality
- Email deliverability performance
I am sure in the future that data science and AI will help create accurate marketing performance benchmark models that take into account all of the variables I listed above. Maybe then we can confidently rely on benchmarks for individual marketing performance. (Did I just come up with a new marketing technology category?)
It’s much more valuable to establish an organizational baseline on marketing performance. Every company collects data on their demand generation program and marketing performance. These data points can be used to establish a baseline on funnel conversion points, sales alignment, top performing channels, and budget effectiveness. When creating a baseline it’s critical to look at the WHAT (data points) and analyze the WHY. Unfortunately, many marketers and executives focus solely on the WHAT with the data. (What happened in the past month or quarter mainly with activity.) These numbers are then jammed into some spreadsheets and meaningless slide decks. There’s no context and very little guidance into future guidance. The WHAT is only a small piece of the story.
The missing component is the WHY. Why are conversions happening at current levels? Why are certain campaigns great at creating leads? Why is the SDR team only calling 70% of leads? Why are some marketing channels better than others for lead creation? Why are sales cycles so long? Why is the average deal size decreasing this year? Benchmarks from other companies won’t answer the WHY for your organization.
Identify the baseline for your organization. Dig into the WHY behind the WHAT. I guarantee the effort will reveal more about marketing performance effectiveness than any industry benchmark comparisons.