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Benchmarking requires two things: your data and data to measure it against.
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This article first appeared in the May/June 2024 issue of Pro Builder.

The genius of the now-famous “Got Milk?” advertising campaign that started in the 1990s was its simplicity. Not only was it effective in boosting milk sales, but it grew to have a life well beyond that purpose. The subject of parody and knockoffs (the title of this column, for example), the campaign permeated pop culture and had a lasting cultural impact. 

I’m not here to tell you that “Got Benchmarking?” will have similar resonance, but I am hoping it leads to a measure of lasting impact about how you view and judge the performance of your home building operation. 

Beyond Secret Shopping

Of course, many builders “secret shop” their competition, visiting rival communities and websites to gather intel in the form of floor plans, model home merchandising, and sales and marketing materials and messaging to compare against their own for the same consumer. That’s a worthy exercise. 

But benchmarking is different. It’s measurable, objectively comparable, and far more valuable to a company that wants to perform better—and better than its competition—be it in one aspect or across the operation.  


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Why Benchmarking?

Benchmarking requires two things: your data and data to measure it against. Both must be clean, reliable, and, ideally, gathered in a similar and trustworthy way, or at least from a similar and trusted source, be it other builders, consumers, or Google Analytics. 

Let’s assume you gather and track key performance data, such as sales traffic, conversions, and job costs, among a thousand other data points easily derived—using technology or not—from a building operation. How do you know it reflects success unless you compare it to something? Sure, it may show progress toward an internal goal, but unless that goal is based on an external metric, an industry standard outside of your walls, then it’s just navel-gazing and not really benchmarking. 

The problem is: All but the most enlightened builders believe that few, if any, meaningful sources of external data exist with which to compare their own data with a high degree of reliability or value.  

Benchmarking Sources

But I’d argue that many sources exist. You’re not the only builder inputting data into business software programs, or using a third-party construction quality or customer satisfaction partner, or responding to industry-specific surveys about costs of doing business, or perhaps engaging in programs such as our National Housing Quality Award, which challenges you to “show your work” against 180-plus operational benchmarks.  

Still not compelled to give it a go? Then explain to me why you sought out our annual list of the top-grossing home builders to see where your company—or maybe a close competitor—ranks, which ones rose or fell, and the share of homes the Top 20 Giants closed last year.  

Congratulations. You just benchmarked.

 

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