Benchmarking Location Performance in Retail Chains & Restaurant Groups

Source: ServiceDock dashboard

In response to the frequently asked question about the best piece of advice I have ever received, I typically respond with the following:

“Don’t benchmark yourself off the bottom… benchmark yourself off the top!” (Thanks JOS)

This advice genuinely changed the way I view everything that I do. But taken too literally it can make for a very unhappy life, or in retail and restaurant groups, very unhappy store managers. That is why it is a slightly modified version of this approach that I would like to pass onto anyone looking to set an NPS benchmark in such a multi-location business.

Why Benchmark Location Performance?

Benchmarking store performance in terms of customer experience is critically important in multi-location businesses. One poorly performing location can do untold damage to the brand and therefore the rest of the chain.

It may be a one-off catastrophic event that is amplified by social media (e.g the infamous taco licking scandal below). Or it might be more akin to death by a thousand cuts if the restaurant is gradually turning customers off the brand one by one.

A photo of an unnamed employee licking taco shells at a Taco Bell restaurant that was posted to Facebook in 2013. Source: Facebook

Either way, instead of that location building the reputation of the brand and spreading its sphere of influence, the store is stunting the chain’s growth on either a local or national level.

Benchmarking customer experience across the chain is one of the key tactics to combat this risk. While it’s always important, it is absolutely critical in the early stages of expansion when the brand is still nascent.

Choosing Your Benchmark

By default we set the benchmark performance in ServiceDock to the average of the top 25% of locations. That can be changed but our rationale for choosing 25% is as follows:

1. Benchmarking against the average performance breeds mediocrity. Using the average means under performers are not put under any significant pressure, while there is little incentive for average performers to improve. At the same time, top performers may get lax because they are so far ahead of the curve. You can see where that is going to end up!
2. Benchmarking against the top location or even the top 5% can do more damage than good in the long run. Winning is good for the morale of any team, so you want as many winning managers/franchisees as possible. At the same time, you want to design a system that pulls standards upwards. Creating a situation where there’s only one winner or no expectation of being able to become a winner, can reduce the enthusiasm for achieving CX improvements. That can lead to apathy, which is the true enemy of customer experience management. On top of that, external forces that influence CX results, such as the demographics of the customer base, are out of the control of the manager/franchisee. This means two equally excellent managers can have slightly different results. Frustration may kick in if such a quality operator is not perceived to be better than the benchmark.
3. Using the average of the top quartile of locations creates a mini-league among your leading operators, while giving the average operator an achievable target. By choosing this benchmark you have created two separate competitions. The first is to be the best of the best within the top quartile. The second is to break into that elite group and leave the ordinary 75% behind you. Backed up with bonus structures and rewards, a system like this will be engaging and motivational for far more players than a winner takes all approach. That should naturally lead to an upswing in NPS or whatever other metrics you’re using to track CX.

In a future blog post we will cover what the features of a strong location benchmarking system look like.

Conclusion

Benchmarking is not rocket science. But to maximise the benefit of your benchmarking programme requires it to be set up correctly at the outset and then actively managed on an ongoing basis.

To do it well you will need some sort of software to capture customer feedback, compile the results and then communicate them with your managers and/or franchisees.

There are lots of options out there, but unlike ServiceDock, few are built from the ground up for multi-location businesses and none use messaging apps to capture customer feedback. If we can be of any assistance to you, please get in touch.

Originally posted on the ServiceDock blog.