The process of comparing a company’s performance metrics to industry standards or best practices. This helps businesses identify areas for improvement, set performance goals, and enhance operational efficiency.

Characteristics
– Performance Measurement: Involves analyzing key performance indicators (KPIs) such as revenue growth, profit margins, and customer satisfaction.
– Comparative Analysis: Compares a company’s metrics against those of competitors or industry averages.
– Continuous Improvement: Encourages ongoing assessment and adaptation to maintain competitiveness.
– Data-Driven Decisions: Relies on quantitative data to inform strategic planning and operational changes.

Examples
– A retail company may benchmark its sales per square foot against industry leaders to identify opportunities for increasing sales efficiency.
– A manufacturing firm could compare its production costs and cycle times with those of top competitors to streamline operations and reduce expenses.
– A service-based business might assess customer satisfaction scores against industry averages to enhance service quality and client retention.