What is benchmarking in CRC and how to apply it?
Have you ever wondered how much it really costs you to keep your customers? We’re not just talking about money, but also time, effort, and resources. Understanding this cost, known as Customer Retention Cost (CRC) , may seem a bit complicated, but I promise you that it has a direct impact on the profitability of your business. And this is where we turn to CRC benchmarking , a tool that allows you to measure, compare, and improve your retention strategies.
Maybe you have an amazing product, your customers seem happy, but the numbers don’t add up . Maybe you’re spending more than necessary on loyalty or on processes that could be more efficient. Without clear benchmarks, you could be missing out on opportunities to optimize your business. But by comparing your metrics to others —whether it’s your competitors, industry standards, or even other areas of your business— you can discover exactly where to adjust for better results.
In this article, we’re going to break down what benchmarking is in CRC and, most importantly, how to put it into practice. Because, let’s face it, customer retention is just another metric; it’s the foundation for building strong relationships and sustainable growth . Ready to find out how to optimize your efforts?
Definition and objectives of benchmarking
Benchmarking is a methodology that involves comparing an organization’s processes, metrics, and results with those of its competitors or with established industry standards. When we apply this concept to Customer Retention Cost (CRC) , we focus on evaluating how much we are investing in keeping our current customers compared to other similar companies.
What is benchmarking at CRC?
The main objective of CRC benchmarking is to improve the efficiency and effectiveness of retention strategies, but it also includes:
- Identify optimization opportunities: recognize areas where costs can be reduced without compromising service quality.
- Set internal standards: Use the data obtained to set achievable goals based on best practices.
- Increase profitability: Reducing CRC helps maximize long-term customer value (CLV).
As Michael Porter mentions in Competitive Advantage , “Benchmarking is a mechanism to stimulate innovation and continuous improvement.” In the case of CRC, benchmarking does not seek to imitate competitors, but to learn from them in order to adapt more effective strategies.
Main objectives of benchmarking in CRC
- Identify areas for improvement: detect weak points in CRC processes and prioritize corrective actions.
- Learning from the best: Adopting proven practices that have generated successful results in other CRCs.
- Set realistic goals: Base internal objectives on measurable and achievable standards.
- Monitor progress: Continuously evaluate the impact of implemented changes and adjust as necessary.
Differences between benchmarking and other performance metrics
It’s easy to confuse benchmarking with other performance assessment practices, such as internal audits or individual KPI analysis. However, benchmarking goes further by providing a comparative framework that puts results into context.
Main differences:
- External comparison: Unlike an internal audit, benchmarking compares the CRC to external or competing standards.
- Strategic approach: While KPIs focus on specific metrics, benchmarking evaluates the system as a whole, identifying opportunities for improvement based on best practices.
- Continuous process: it is not a one-off exercise, but rather a constant cycle of measurement, analysis, implementation of improvements and re-evaluation.