Top reasons to benchmark & how to go about it
Melanie May | 15 November 2022 | News
From campaign response rates to supporter loyalty and ROI, there are many areas where benchmarking can help fundraisers gain a better understanding of performance.
In fact, whether it’s internal or external, benchmarking is an immensely valuable tool because without understanding performance on all levels, it’s impossible to know with any certainty what works and what doesn’t. And without that insight, to know where or how to make improvements in order to maximise results and ROI.
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Caroline Danks, Director at LarkOwl says:
“Whether you benchmark against yourself (from previous years) or against others (ideally those who are as similar to you as possible), using data as part of your planning process will help you to make better decisions. You’re using evidence to inform your choices rather than guesses or aspirations.”
Making decisions based on anything less than fact, benchmarking experts agree, is problematic, leading to opinions and beliefs being acted upon rather than actual evidence-based insight.
Fiona Pattison, UK Digital Benchmarks Lead at Rally adds:
“Without benchmarking, myths build up. And we see poor performance being accepted as the norm or in some cases being presented as success. If we are to truly unlock the potential of our programmes to drive change, we need access to better data.”
On top of this of course, benchmarking is a great way to get a charity looking up and out at the competition and learning how it is performing in relation to others. And this process also provides useful insights that can be taken to the senior management team and board when you’re making the case for change – whether it’s more investment, more staff or more activity in a certain direction.
Michelle Chambers, Managing Director at THINK Consulting Solutions comments:
“Benchmarking will support you to get that all-important board buy in, by helping the Executive Directors, CEO and Trustees to whom you are reporting develop their understanding of the external operating environment for the activity. This way they can ask the right questions of you, supporting investment proposals for development and growth, and ensuring cost efficiency.”
What to measure
So what should fundraisers be benchmarking? Essentially, it’s something that holds value for just about any area an organisation measures.
Such as:
- ROI
- Key metrics for your overall fundraising portfolio
- Channel performance – from digital to direct mail
- For individual and regular giving – everything from attrition rates to average monthly gifts, average time as a regular giver, legacy giving, and loyalty
- For a trust programme – everything from the number of grants in specific value bands, to number of donors, and repeat giving
In terms of measuring loyalty, Roger Lawson, Director of About Loyalty, says:
“For us it’s about benchmarking how supporters feel about the charity. The three most important factors in creating long-term donor loyalty are commitment, satisfaction and trust, so we need to benchmark these. We need to understand supporters’ levels of these key drivers and then see what actions we can take to grow them.”
As another example, if you’re looking at digital performance, Zoe Amar, Founder and Director of Zoe Amar Digital and Chair of The Charity Digital Code of Practice, says:
“From a digital perspective, looking at numbers of followers and also the engagement that other organisations are getting will give you a sense of how you compare. It will be harder to get information on how much they have raised online but you may be able to get an idea of how digital campaigns have performed if they report on this.”
Tips for getting started
In a nutshell, the first step is to work out what you want to measure and why, and to prioritise what’s most important. Then, devise your methodology – it has to be one that can be replicated so that future comparisons are valid. Make sure too you’re also comparing like with like.
Here are some expert tips.
- Work out what’s important
Ashley Rowthorn, Managing Director of the Legacy Futures Group comments:
“Peter Druker, the father of management consulting, famously said “if you can’t measure it, you can’t manage it”. When it comes to benchmarking, we need to focus on the metrics that matter – some things might be nice to know, but what are the factors that we can try to influence in order to improve our future performance?”
“Think about what it is you want to learn and your focus area – for some it’s marketing, for others regular giving, and for Legacy Monitor consortium members, it’s legacy giving.”
- Measure like for like
James Briggs, Co-founder of Open says:
“They say comparison is the thief of joy and that can certainly be true in charities if you compare the wrong things. Make sure you’re comparing apples and apples, and that other people are doing the same. Otherwise you’ll find that benchmarking becomes a bit of a Pandora’s box – with colleagues and board members quoting impressive sounding KPIs from other organisations which aren’t actually fair comparisons.”
- Understand the context
Allan Freeman, Director at Freestyle Marketing advises:
“Context is very important in benchmarking, because without it your numbers don’t really mean anything. Every organisation is different – there’s no point in my local charity for example looking at how British Red Cross is doing because we’re talking about a charity with half a million pounds of annual income versus one that makes £100 or £250 million. Similarly, lists of the biggest events show you how much they raise but they don’t tell you how much is being spent to achieve that. You have to understand what you’re looking at.”
- Make sure you’re consistent
Lawson says:
“By definition a benchmark has comparisons, so it is essential that the methodology and all other factors are as consistent as possible. For example, every charity has its own definition of ‘Active donor’. Therefore, in our benchmarking we use the same definition of ‘Active’ across all charities to ensure that everyone is comparing like with like.”
- Know what you’re going to do with it
Amar says:
“One of my rules is to always ask myself what the data is really telling me and what I will do with this information. When my team and I are benchmarking charities’ digital performance we look at what kind of content has been successful for their peers, and what lessons the charities we work with can learn from this. This is actionable insight so you need to have really clear recommendations or ideas for what can be done differently.”
Benchmarking options & resources
There are a number of options for getting started with benchmarking, from free DIY approaches, to joining an established programme, of which there are a number in the nonprofit sector, and which will help you benchmark your organisation against others on a defined set of criteria and identify challenges and opportunities. There’s also a growing number of benchmarking studies covering many fundraising disciplines that are made freely available or at least release a free public version.
And if you’re looking for information on other similar organisations, quite a lot can be found for free. Annual reports are a good source and there are often a few years’ worth on a charity’s website. The Charity Commission site also holds useful information, and other charities’ social media, website and email newsletters cost nothing to look at but can reveal valuable insights on digital activity.
And then of course there’s good old-fashioned networking and chatting. Seeking out similar organisations to share data with is a great way to understand what others are doing well and to get ideas about how to improve your own performance.
Briggs comments:
“It’s worth talking to people who are operating at a level – or in an area – to which you aspire. If you’re lucky they can help you understand the metrics, the challenges and the costs that are important as and when you want to grow.”
“The charity sector is famous for its willingness to share information and the great thing about benchmarking is the fact that it’s reciprocal. So seek out people who are doing similar stuff to you and have a chat! They might not give you the secret sauce on how they got their best results (and they might well bury their worst). But you’ll probably get some useful insight. Just don’t go sharing it further without their permission.”
At the end of the day, benchmarking alone of course won’t fix anything, and ideally the aim is always to beat the benchmark anyway. But what it does do, is give you an idea of your performance in key areas, enabling you to identify where you’re doing well, or not so well, and where to invest and improve.
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About Melanie May
Melanie May is a journalist and copywriter specialising in writing both for and about the charity and marketing services sectors since 2001. She can be reached via thepurplepim.com.