On a base level, benchmarking involves comparing a company’s performance figures against a standardised set of metrics as a way to judge how the company is doing. It may be a one-off process or a regular part of a company’s strategic management overview.
There are many specific types of benchmarking, including best practice benchmarking, whereby leaders will identify the top-performing companies and their key metrics and judge performance against these figures.
Product benchmarking compares how well a product performs in a given market compared to ‘cash cows’ and similar products from competitors.
Strategic benchmarking looks at how others compete with other firms and is not industry-specific; companies will typically look at a cross-section from a range of different industries.
Energy benchmarking looks at how energy-intensive a process is compared with similar or identical processes, either in the same company (to improve internal sustainability) or against processes run by competitors.
Benchmarking software provides an easier way for organisations to collate key data and view, often in real-time, the company’s current performance set against the standardised metrics.