Benchmark data isn’t just a set of numbers - it's a tool that top-performing businesses use to uncover insights that help them win. By understanding how your organization stacks up against peers, you can make smarter decisions, optimize processes, and gain that competitive edge.
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Benchmark data, often referred to simply as "benchmarks," is a collection of key performance indicators (KPIs), metrics, or data points that represent the typical or average performance within a specific sector or field. These internal data points are compared to other organizations to assess their own performance. Benchmark data can cover a wide range of areas, including financial performance, operational efficiency, and customer satisfaction.
The goal of benchmarking is to identify areas for improvement, learn from best practices, and enhance an organization's competitiveness and efficiency. Here are the 10 key steps to follow:
Determine the specific area, process, or performance metric that you want to benchmark. This could be a particular aspect of your organization's operations, such as customer service, product quality, cost efficiency, or any other relevant area.
Identify organizations, competitors, or leaders in your sector to benchmark against. The key thing here is to ensure that they are relevant to the area you are benchmarking. If the comparators are not relevant, then stakeholders won't trust or use the results.
Gather data and information related to the area of interest from both your organization and your benchmarking comparators. This data can include performance metrics, processes, policies, and best practices.
Tip: Try out benchmarking platforms like CompanySights for functional, headcount, and cost benchmark data.
Analyze the collected data to identify performance gaps, differences and opportunities for improvement. Common analytical methods include statistical analysis, data visualization, and trend analysis.
Note: In the next section we do a deep dive on benchmarking analysis and look at the tools that you can use to gain the best insights.
Study the practices, processes, or strategies employed by benchmarking comparators that contribute to their superior performance. Understand what makes them successful in the area you are benchmarking and then set your own performance targets.
Create action plans to bridge the performance gaps identified during the benchmarking analysis. This may involve process redesign, technology adoption, training, or other initiatives.
Put your action plans into action. Implement the necessary changes or improvements in your organization based on the best practices and insights learned throughout the benchmarking process.
Continuously track and monitor your organization's performance against the established benchmarks and targets. Regularly update your benchmarking analysis to measure progress and make further improvements as needed.
Share the benchmarking findings and improvement plans with relevant stakeholders within your organization to ensure alignment and commitment to the improvement process.
Benchmarking is an ongoing and iterative process. Regularly revisit and update your benchmarking efforts to stay competitive and adapt to changing dynamics in the world.
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Benchmarking analysis is a systematic process of comparing an organization's performance, practices, processes, or outcomes against those of other similar organizations, industry standards, best-in-class companies, or predefined benchmarks.
For example, if we think that the Finance function in our business is overstaffed, then we can perform functional benchmarking analysis to evaluate this hypothesis. Let's look at a common benchmark metric used to evaluate the size of the finance workforce:
This benchmarking metric shows the portion of employees who work in the finance function.
Finance as % of Employees = Finance employees / Total employees x 100
The company that we're benchmarking has 34 Finance employees and 400 employees in total. The calculation is 34 / 400 x 100, which results in 8.5%.
We’ve selected benchmarks from companies in the same industry and country (United States) with annual revenues between $40M and $80M:
With 8.5% of staff in Finance, the company is well above the Upper Quartile benchmark of 4.9%. This indicates that the Finance function is larger than those in companies of a similar size and industry. It suggests there may be opportunities to streamline the finance team, reallocate resources, or evaluate whether processes can be made more efficient. Benchmarking in this way provides actionable insight to align staffing with industry norms.
Benchmarking analyses can be hard to interpret. To gain insight from the company's performance metrics that you have measured requires skill and experience. The key skill required when you compare performance with industry peers or a direct competitor is to have a general understanding of statistical expressions. Most benchmarking analysis will be presented as the Lower Quartile (a.k.a. 25th Percentile), Second Quartile (a.k.a. Median), and Upper Quartile (a.k.a. 75th Percentile).
If the benchmarking metric from your own company is in the Lower Quartile, then this is typically understood to be a top performer. However, if your company is higher than the Upper Quartile for specific metric, then this is not good, and usually suggests there is an opportunity for improvement. Between the Lower and Upper Quartile is known as being in the mid-range, which is in line with the peer average.
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There are five broad categories of benchmarking tools available, as follows:
Platforms like Gartner, APQC, and CompanySights aggregate and validate all types of business data to be used for benchmarking purposes. Users can subscribe or pay for specific data points on an ad hoc basis. These platforms are a key source of data for professionals to perform fast benchmark analysis.
Access to online databases and research reports can be valuable for benchmarking analysis. Companies can subscribe to services like Bloomberg, Statista, or industry-specific databases to access relevant benchmarking data and reports.
BI tools like Tableau, Power BI, and Alteryx allow users to create interactive dashboards and reports, making it easier to analyze and visualize benchmarking data. They can connect to various data sources, including internal and external data, and enable users to identify performance gaps.
Tools such as R, Python, and SAS provide robust statistical and data analysis capabilities. Data analysts and data scientists can use these tools to perform in-depth benchmarking analysis, including advanced statistical tests and predictive modeling.
Tools like SurveyMonkey, Qualtrics, and Google Forms allow organizations to gather feedback from customers, employees, or other stakeholders. This feedback can be compared to sector benchmarks to assess customer satisfaction and employee engagement.
Leverage benchmarking tools - Search CompanySights
Benchmarking can be a time consuming exercise because of the new processes required by companies to measure and compare performance to the competition. However, it's critical to gain continuous insight into your organization, identify trends occurring and even achieve cost savings if you want to survive in this highly competitive and changing world.
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