12 Benchmarks Across Integrated Channels

By Sephen R. Lett

Benchmarking is a set of performance standards for a specific task. Many are standards for all markets, but they need to be adjusted to meet the requirements, limitations and needs of your specific business.

There are many benchmarks you can set; no one performance model or standard works for all businesses. But these 12 metrics should be measured within all marketing departments. Understanding your current performance levels in these terms will help you set new goals and map out the steps toward greater efficiency.

For Catalog Programs
1. 12-Month Buyer Count. If your 12-month buyer count declines, your sales will decline by about the same percentage. Therefore, track your 12-month buyer count from one period to another within the same time frame — i.e., August 2009 vs. August 2008.

2. Catalog Page Count (percent increase or decrease). As a rule of thumb, you'll recognize one-half of any percent increase in pages in actual demand increase. Know the effect that page-count changes have on your sales.

3. Selling Expense to Sales Ratio (print and web). Track your direct selling expenses as a percent of net sales after returns. This ratio shouldn't exceed 30 percent for a consumer company, 20 percent for B-to-B.

4. Repeat Buyers Percentage. Repeat buyers make your business profitable. How many buyers make a repeat purchase within one year? If you can benchmark your current rate of repeat buyers and focus on turning one-time buyers into two-time and more customers, you'll see significant gain. Your profitability will increase as a result, since it's difficult to make money on first-time print buyers.

5. Ratio of Housefile vs. Prospect Circulation. Mailings to prospects should represent 50 percent to 60 percent of your total circulation, depending on the season. Don't get overly aggressive by increasing the ratio of prospecting to housefile mailings. At the same time, avoid cutting the amount of prospecting you do and over-relying on your housefile.

For Email Programs
1. Open Rate. This differs by industry segment, but higher rates indicate effective subject line copy with compelling offers, incentives or calls to action.

2. Clickthrough Rate. A higher percentage means that once the email has been opened, customers are interested enough to clickthrough to your website to learn more or make purchases.

3. Conversion Rate. The best indicator of effectiveness because these are actual orders/sales.

4. Average Order Value (AOV). This is a traditional historical tracking statistic that's meaningful for any company. Compare the AOV from email campaigns with your catalog AOV.

5. Bounce Rate. This benchmarks your list management/maintenance tool. Rising bounce rates over time mean you're not keeping up with the general email address turnover rate, which is about 30 percent per year. It points to the need to perform appropriate periodic email list hygiene.

Search Engine Optimization Benchmarks
1. Site Traffic Origins. Compare percentages of traffic driven by organic searches, direct access, referrals from other sites, email, pay per click and other specific sources. A high percentage of direct traffic speaks well for brand awareness. High organic search traffic generally indicates good website content optimization for search engines.

2. Conversion Rates. To verify actual sales from these sources.

The bottom-line dollar return from each of these marketing methods is the ultimate indicator of its effectiveness. But the numbers behind these benchmarks and their trends tell you how to maximize the return on your marketing investment.

Financial performance against budget and last year's year-to-date sales is another critical benchmark. Compare key ratios on the income statement with your historical ratios. There are industry guidelines to compare your ratios against as well.

By setting benchmarks — there are many to consider beyond what I've discussed here — you'll improve your customers' order experiences and, therefore, loyalty. You'll also find opportunities to save money by improving efficiency. In short, benchmarks help you manage your business.

Stephen R. Lett is president of the catalog consulting firm Lett Direct (steve@lettdirect.com).