What is benchmarking?

At a glance

• systematic comparison of performance, processes, and KPIs to identify best practices and targeted improvements
• the goal is to identify weaknesses, analyze their causes, and derive concrete improvement measures
• internal and external KPIs provide the data-based foundation for objective comparisons

Benchmarking definition

Benchmarking can be understood as “comparing standards” and refers to a strategic analytical tool for systematically improving performance in companies. The defined benchmarks – i.e. reference standards – serve as points of orientation for identifying internal weaknesses and taking targeted corrective action. Benchmarking is therefore a method of continuously comparing a company’s products, services, processes, or structures with the “best practices” in the industry or with direct competitors.

The goal of benchmarking is to uncover performance differences, understand their causes, and derive targeted improvement measures. The focus is on learning from the methods and approaches used by the best performers within or outside the company’s own industry. Benchmarking thus becomes an effective management tool for driving innovation and continuously improving performance.

In the context of business intelligence (BI), benchmarking often means comparing quantitative key performance indicators (KPIs) across different companies, departments, or periods in order to support data-driven decisions.

What is a benchmark?

A benchmark is the specific reference value against which performance, quality, or efficiency can be measured. While benchmarking describes the overall process of analysis and learning, the benchmark itself is the reference level that serves as a target, point of orientation, or evaluation standard. It can be derived from internal best-in-class values, industry-specific standards, competitor data, or historically established target values. Benchmarks can include both quantitative data and qualitative criteria.

In controlling, IT, and business intelligence, benchmarks play a central role because they make abstract measures tangible: they translate KPIs into a target level and make it possible to analyze deviations objectively. Benchmarks can be static – such as predefined thresholds or target values – or dynamic, adapting continuously to changing market conditions, technological developments, or internal improvements. Benchmarks are particularly valuable where performance is to be assessed not only in absolute terms but also in comparison with best practices. They help companies set priorities, identify potential, and initiate data-driven improvement measures.

How does benchmarking work? – the 5-phase benchmarking process

The 5-phase benchmarking process describes the structured sequence of a benchmarking initiative. It helps companies systematically collect and analyze comparative data and derive concrete improvement measures from it. The benchmarking process typically consists of five steps:

• 1. Define the benchmarking object: First, the area to be optimized is identified – for example, a process, product, service, or organizational structure. The relevant benchmarking KPIs to be analyzed are also defined.
• 2. Select comparison partners: Suitable benchmarking partners are then selected. These may be internal departments, direct competitors, or “best-in-class” companies from other industries. Sufficient comparability in terms of processes or target values is important.
• 3. Collect data: In the next phase, the relevant data is collected from internal sources, public reports, or targeted primary research, such as interviews or site visits.
• 4. Identify performance gaps and causes: The collected data is then compared to determine where the company is falling behind the benchmark. Based on this, the causes of these deviations can be identified and realistic target values (target state) developed.
• 5. Derive and implement improvement measures: Finally, concrete recommendations for action can be derived to close the identified performance gaps. An implementation plan with responsibilities, timelines, and regular performance monitoring is advisable.

What types of benchmarking are there?

Depending on the objective and comparison basis, different types of benchmarking can be distinguished. The most important types of benchmarking are:

What does a company need for benchmarking?

Successful benchmarking requires a solid data basis, clear comparison benchmarks and suitable analysis tools. The following points form the most important foundations.

What are examples of benchmarking?

Benchmarking can be used in a wide range of business areas – from finance and marketing to customer service. The following benchmarking examples illustrate typical application areas:

Summary

Benchmarking is much more than comparing KPIs: it is a structured learning process that helps companies objectively assess their performance, identify improvement potential, and make data-driven decisions. The range of applications extends from internal efficiency comparisons to strategic competitive benchmarking. With DeltaMaster, Bissantz makes benchmarking an integral part of controlling and reporting – continuously, automatically, and with a focus on decision-making.