The Power of Benchmarking

| June 23, 2017

By Curt Fowler | Fowler & Company

I was just reviewing a report on the banking industry by Boston Consulting Group that benchmarked 12 of the top 30 retail banks across North America. These “top” institutions, BCG refers to them as the “premier league” of banks, account for 430 million customers, 51,000 branches and more than $13.5 trillion in assets. These are some huge banks and the top performers in their field.

What left me completely awestruck about this report is the massive variation in performance among these huge, top performers in their industry. You’d think that the top performers would have copied each other enough to perform at similar levels. These banks have the best consultants in their offices daily and access to loads of data on their competitors. Why wouldn’t they perform similarly?

One reason is that they may have different strategies to serve different marketplaces. But, all of these banks serve most customer segments.

It looks like there is really a ton to be gained from benchmarking, even if you are considered the “best” in your industry.

Check out the ranges on these Key Performance Metrics. Remember, these are global organizations that are considered the best in their industry.

  • Cost to Income Ratios – Ranged from 40% to more than 70%
  • Number of Customers per Full-Time Equivalent Employees – Ranged from 310 to 1,270
  • New Accounts Gained per Full-Time Sales Person – 110 to 800
  • Sales Conversions per Inbound Call – 2.0 to 16.0
  • Customer Attrition Rate – 4.5% to 7.5%
  • Branch Wait Time – 2.2 minutes to 12.5
  • Call Resolution Time – 2.6 minutes to 5.4

In addition to these metrics, 15% of these banks took less than 1 hour to take a mortgage from application to approval. 30% of the group take longer than 3 days to complete the same process!

And the list goes on and on. What became incredibly clear to me is that even the best in an industry have a ton of room for improvement. That improvement should translate into massive value for their shareholders. It is right there to be found if they’d only look.

Action Item: Get the benchmarks for your industry. Your competitors have figured out things you have not. Find the areas you are getting smoked and learn from your competition.

Operational excellence is just the beginning of performance improvement. But, it is clear that we all have a long way to go before we can consider ourselves operationally excellent.

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 Curt Fowler is an organizational growth expert and President of Fowler & Company, a business advisory firm dedicated to helping leaders create and achieve a compelling vision for their organization. He has an MBA in Strategy and Entrepreneurship from the Kellogg School, is a CPA, and a pretty good guy as defined by his wife and four children.
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