How do I select the appropriate benchmark?

A benchmark is a point of reference and is used for comparative analysis. They are used to compare geographies or customer lists - showing how similar or different populations, households, or customers in a trade area are from those in the benchmark. Some common purposes for using a benchmark include:

  • Comparing distributions and penetration within a desired market.
  • Comparing performance amongst store networks, along with performance relative to the competition. This can further be compared against industry averages.
  • Measuring the penetration of a specific population, group, or sub-group within your database.
  • Measuring and testing campaigns (eg. response analysis).

Your benchmark is used as the denominator for the penetration and Index calculations. Determining the proper benchmark requires a good understanding of how, where, and to whom the product/service is being marketed, or who is represented in your customer list. A poorly selected benchmark can lead to faulty analysis, so it is important to consider the following:

  • The benchmark must include the entirety of the population, households, or customers being analyzed.
  • The benchmark must include the entirety of the population, households, or customers who had the opportunity to purchase or respond.

Examples of incorrect benchmarks:

mceclip4.png 

Example of a correct benchmark:

mceclip3.png

Note: The trade area must be completely surrounded by the benchmark. Ensure that the trade area you create or select represents an area that is fully encompassed by the benchmark. 

Powered by Zendesk