industry-standard-dangerous-comparison-concept

There is more than one type of dirty industry standard.

Yeah, I know industry standard is two words, but the title is much catchier this way.

On their own those two words are great for describing major economic segments and mediocrity. When combined they form one of the most dangerous and misleading phrases in business and marketing.

Since the beginning of capitalism – I assume – marketing and business leaders everywhere have used industry standards as a benchmark to measure performance. For a long time it probably was the best way to measure performance in the marketplace. But today, with the plethora of technology to measure performance we have at our disposal, we are still talking about industry standards. This is most prominent in the digital space. Why does the ecommerce conversion rate or email click rate of others in your industry matter?

It doesn’t. Hear me out…

Why Industry Standard Is Dangerous

It’s Misleading

Exact competition is extremely rare. How many firms can you name that are providing the exact same products and services to the exact same audience? Probably not very many. In that case, we can’t confidently compare the marketing efforts of one firm to another without a true apples-to-apples comparison and precise knowledge of each organization’s marketing mix.

The performance of your competitors says very little about the state of your own business. While your email open rate or website conversion rate might be lower than industry average, it’s possible that you’re driving twice as many transactions and producing higher revenues than your competitors can even dream about.

It Fosters Complacency

Industry standard is inherently average. Brands need to aim for far more than that. Would you call your organization’s products, services or team average? I sure hope not, or you likely have larger concerns than just how you’re measuring performance. Imagine you are a business owner and your marketing team reported key metrics for the previous month to be well above industry standards. Would you be satisfied? Hell no.

industry standard complacent feet up

Better than industry standard doesn’t mean you can sit back and relax.

An organization with the attitude of “be slightly better than average” is not one that I want to be a part of, because continued growth and innovation is critical to long-term success.

So if we shouldn’t compare performance to industry standard, how do we measure ourselves?

How to Measure Performance

Improvement

I want to be clear: I am not suggesting that goal-setting is bad, and in fact, I advocate for it. But we need to set those goals based on the performance of your own organization, not the performance of others.

sample-industry-standard-sucks-conversion-rate

Strive for consistent improvement over time.

If your online conversion rate was 0.8% for the previous period aim for a 25% improvement to reach 1.0% by the end of next quarter. If your goals happen to line up with industry standards, so be it, but your own business is the best benchmark against which to measure performance. Analyzing historic performance will help us set realistic goals for consistent long-term growth that produces real business results.

Business Results

Now that every digital activity is measurable there are literally thousands of metrics to keep an eye on, and some of these are pretty far from the things that matter. While improving efficiency metrics like website conversions and email opens is a good way to move your business forward we can’t lose sight of the things that really matter.

Conversions. Revenue. Profit.

At the end of the period, if all else remains the same and conversions rates are down but total conversions are up, your business is in a better place than it was before and that’s what really matters. Just go ask one of your board members.

Wrapping It Up

There is certainly a place for industry standards, such as in tech or in consumer electronics. USB is an excellent example of industry standards benefitting businesses and consumers alike. In marketing, however, it has very little place.

Focusing on previous performance and the metrics that are attributable to business results is going to provide a clear picture of business health and set you up for long-term success. Industry standard can give you a mediocre outlook of the industry as a whole, but it has become so widespread because we are always seeking to beat the competition.

Sometimes we spend so much time looking out that we forget to take a look at our own performance.