By Diane M. Calabrese / Published April 2019
Surveyors put benchmarking in our lexicon. Rightly so, as the surveyor’s mark cements position and altitude to provide a reference point.
Established reference points take the guesswork out of the “where are we” and “where are we going” questions. The business world embraces its own form of benchmarking to answer the same questions.
The Cleaning Equipment Trade Association (CETA) offers a benchmarking program. Profit Planning Group (PPG) in Boulder, CO, is the third-party entity that administers the CETA program. Alkota Cleaning Systems Inc., Kärcher North America, and Mi-T-M Corporation are the sponsors of the CETA benchmarking program; their sponsorship makes it possible for their distributors to participate without paying a fee.
“I think benchmarking is often overlooked by our members,” says Jim O’Connell, president of Hotsy Pacific in Modesto, CA. “It is sponsored by some manufacturers, so there is no cost to the members. It is completely confidential, even to the CETA board. It is an invaluable tool to help guide your business and compare your company to others of the same size. It has allowed me to focus on areas of my business that needed attention I was not aware of.”
Can O’Connell share an insight he has taken away from benchmarking results? “One example of something that I learned was that my operating expenses are higher than the average CETA distributor, so we are currently analyzing this to determine where we can adjust. This will add dollars directly to the bottom line for us. I had not really thought about this before looking at benchmarking as I had nothing to compare to.”
There are many ways to participate in benchmarking programs, such as through large business organizations. What makes participation in the CETA program a good choice?
“CETA’s benchmarking is completely free to CETA distributor members,” explains O’Connell. “It also compares you to other companies that do exactly what you do. You also get a very detailed Performance Analysis Report that is very comprehensive but easy to understand.”
With the performance analysis in hand, goals can be reevaluated and recalibrated. “You can see what an
average CETA distributor does as well as what a high profit distributor does, so you have a goal to strive for,” explains O’Connell.
“Benchmarking is a great comparison tool to help a company measure its performance against performance of other companies within the same industry,” says Joe Battles, CFO, Etowah Chemical Sales and Service in Gadsden, AL. “CETA’s benchmarking program compares different size firms to your firm and it calculates critical profit variables to show how changes in certain accounts can alter profitability.
“It provides me with all the data I need to compare our company with its peers and make ideal changes to operations to improve profitability,” continues Battles. “Since the program is free with membership, participating is ideal for companies wanting to be the best company possible.”
Yes, it takes some time to submit data needed to participate in benchmarking. But it does not take an inordinate amount of time.
PPG estimates the required survey form can be completed in as little as one hour. For the time invested, the participant will receive a great return on information that can be used to keep a company competitive and profitable. Moreover, the participating company will receive quantified verification of what it is doing exceedingly well—i.e., where it ranks at the top of similar companies.
“It is important as distributors to see where you stack up against industry leaders and be able to make adjustments to your business based on the benchmarking results,” says Brenda Purswell, president of Alklean Industries in Pasadena, TX. “We always worried about the production per employee. With benchmarking we learned that we were not out of line for the annual sales bracket we fall into.”
The CETA benchmarking program is special because it is industry specific. It is also special because of the commitment its supporters and its participants bring to the mix.
“The CETA benchmarking program is an excellent benefit,” says Purswell. “Manufacturers see the value of distributors participating and pay for the program. Most CETA-certified distributors have been working on their business and not just in their business for years to become certified. That is who you want to compare your company to when looking for places to improve.”
Purswell emphasizes “working on their business” in contrast to “just in their business” as a significant distinction. When working on a business, there’s an eagerness to identify modifications that can make it stronger. It’s all about much more than the day-to-day activity.
The more clear-eyed a benchmarking participant can be when studying results, the more benefits that accrue. “Early on, about three years ago, when I first participated in the program, I noticed that some of my metrics compared to other dealers were not as good as I would’ve liked,” says Greg Sprunk, president of Superior Cleaning Equipment Inc. in Phoenix, AZ. “Some were better, but some were worse.”
Sprunk took the information and moved forward. “It really helped me hone in on areas I needed to improve on,” he explains. “It was nice that there were three different categories of dealerships that benchmarking divides the dealers into. I feel that this narrows it down ever further. And it is very complete.”
Moreover, Sprunk says he understands privacy concerns some non-participants express. He, too, once had them.
“Like other dealers, I was wondering about confidentiality, but now that I’m on the board, I see that CETA has a third-party independent company handle the analysis and takes great pains to keep it separate and confidential.”
Sprunk concedes he cannot understand why there are not more dealers participating in the CETA benchmarking program. “I think it’s an incredible benefit to being a CETA member.”
(As the 2019 chairman of the membership committee, Sprunk explains that he aims not only to increase membership, but also to highlight benchmarking as one of the many important benefits of membership.)
Dennis Black, president of McHenry Pressure Cleaning Systems Inc. in Frederick, MD, gave us a great nugget about benchmarking last year at this time. To paraphrase Black: A business will know if it’s making money without benchmarking. But the business will not know it should be or could be making more money.
“Benchmarking is a gauge to determine how your business is doing,” says Black. “It allows you to see if you are weak or strong in certain areas.”
The CETA benchmarking program opens participants to new possibilities as they review the profile of their business. It provides “many ways” for an owner to compare a business to others in the same industry, says Black. “We benefit by comparing our business with like businesses. And it is supported by the only national organization supporting distributors.”
A whirlpool is not the 180-degree opposite of a benchmark. But it makes a good metaphor: “I Know Where I’m Going!” is a 1945 British film set in the Hebrides. It has something for everyone—falconry, castles, fresh rabbit for dinner, a curse, gorgeous vistas, rugged landscape, and a romance. It also has a determined protagonist who, while “going” with absolute certitude against all advice and odds, ends up in a whirlpool.