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:


Example of a correct benchmark:


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. 

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