How World-Class Organizations Drive Performance: A Benchmarking Guide

World-class organizations do not get to where they are by accident. They leverage data-driven decision-making and market positioning underpinned by competitive benchmarking.

Most get help from top professional services firms, which use their in-depth industry knowledge, proprietary datasets, and years of expertise to recommend timely, actionable strategies. 

Imagine running a race without knowing the position of the other runners or making a dish for a potluck with no idea of what everyone else is bringing. You can only make strategic business decisions with your finger on the pulse.

Competitor intelligence is fundamental for everything from business growth to product differentiation. 

Understanding The Types of Benchmarking

Benchmarking involves systematically comparing data points to identify gaps or optimization opportunities. You can focus on your performance, processes, strategies, or products by changing what metrics you track.

The four core types are internal, external, functional, and generic benchmarking. 

Internal Benchmarking

Compare one of your departments or business units with another through internal benchmarking.

Its purpose is to align teams with your mission statement and objectives. You can also use it to establish a culture of continuous improvement and innovation. 

External Benchmarking

External benchmarking involves evaluating your processes, strategies, or products against your competitors or industry leaders.

You can improve strategic planning, identify performance gaps, or find hidden revenue streams. 

Functional Benchmarking

You can uncover best practices when you compare your business functions like marketing, sales, customer service, production, or research and development with those of other organizations’ operations.

Your goal is to achieve better outcomes by evaluating your strengths and weaknesses in relation to theirs. This process can involve noncompetitors from different sectors. 

Generic Benchmarking

Generic benchmarking is used to determine your strategic priorities.

You compare general business functions. It differs slightly from its functional counterpart because it assesses core processes without regard for industry.

Why Leading Businesses Use Benchmarking

No company exists in a vacuum. Supply chain activity, market changes, and geopolitical shifts impact supplier availability, material costs, brand perception, and price sensitivity. You will not notice these ripple effects if you ignore the competition. 

This is why an estimated 94% of businesses and 90% of Fortune 500 companies use or plan to use competitive intelligence to gain a market advantage. Startups and enterprises alike report that it is among their top priorities. 

It is virtually impossible to succeed when others’ moves are invisible. Even with massive budgets and expert teams, world-class organizations must continuously conduct market research and trend analyses to stay ahead of competitors.  

With benchmarking, you can quantify how you measure up to other industry players. It helps you recognize which strategies underpin business success.

That said, this technique is no silver bullet. If outperforming the competition were that easy, everyone would do it. An effective strategy hinges on a deep understanding of relevant data points. 

A Step-by-Step Guide to Setting Benchmarks

There is no one-size-fits-all approach to competitive benchmarking. However, there are five main steps companies generally follow. 

Determining Which Type to Use

Comparing all possible data points is unrealistic. It would be too time-consuming and resource-intensive.

Decision-makers must decide whether to focus on their products, strategies, processes, or performance. Then, they must determine whether an internal, external, functional, or generic approach best meets their needs. 

Identifying Key Metrics to Track  

Which key performance indicators should professionals track? The specifics vary depending on their benchmarking type, sector, and objectives.

For example, if they wanted to review competitive intelligence, they would monitor their net profit margin, operational efficiency, market share, and revenue growth. 

Extracting Insights from Datasets

Data makes all the difference in knowing what is needed to succeed and in setting concrete goals. Internal information should be easy to get. Sourcing competitors’ metrics may be challenging.

Also, it may not be as relevant, making it less actionable. Many top professional services firms have large proprietary datasets, streamlining data collection and insight extraction. 

Measuring Progress With Metrics

After executing the data-driven changes, professionals should measure their progress with relevant metrics. It is the only way to determine whether their plan is effective.

Achieving continuous improvement requires generating ongoing progress reports. 

The Benefits of Benchmarking Consulting

In practice, benchmarking can be resource-intensive and time-consuming. You must evaluate every process, design decision, and business model with a fine-toothed comb, careful not to let internal biases cloud your judgment.

While the step-by-step process is straightforward, you may lack the expertise or time to do it yourself. 

Getting help from top professional services firms can give you insights into current market conditions and trends. You can access objective internal expertise and an unbiased perspective, helping you identify valuable growth opportunities. 

Many leading consultants have specialized research channels and proprietary databases, enabling them to deliver relevant, actionable insights you cannot get elsewhere. They support competitive positioning and realistic goal-setting, helping close performance gaps and enhance decision-making efficiency. 

Comparing Top Professional Services Firms

Generally, the best partners deliver the best results. Here are the top three benchmarking service providers. 

BDO

BDO is the top professional services firm. It offers tax, audit, and advisory services and employs over 12,000 people at 70 offices nationwide.

Each engagement is tailored to clients’ needs, helping them overcome challenges, navigate complex changes, or identify new opportunities. Its focus areas are profit growth and business transformation.

The firm’s exceptional service quality has earned it several awards. In 2024, BDO placed within the top 10 in Inside Public Accounting’s Top 100 Firms. The following year, Vault recognized it as one of the top five most prestigious firms. 

G & Co.

The multinational competitive intelligence consulting firm G & Co. is trusted by numerous Fortune 500 leaders, including Nike, Marriott, Salesforce, and Toyota. It employs a team of 100 strategists with cross-industry experience and global market expertise. Its proprietary research platform fills in the gaps. 

Its core services included custom market research and advanced data analytics. On average, G & Co. creates 16 detailed strategic reports monthly.

Over the course of 120 projects, it has helped clients generate $4 billion in enterprise value. Some of its deliverables include competitive benchmarking, competitive landscape analysis, and performance benchmarking.  

ISG

ISG has helped over 900 clients, approximately 75% of the top 100 enterprises, 98% of which recommend it.

Its core services include cost, price, contract, and performance benchmarking. All engagements include custom, in-depth assessments. The results are conveniently available on a single-pane dashboard. 

The provider’s two proprietary repositories contain over 10 million real-world data points from hundreds of thousands of sourcing contracts. This information covers all sectors and regions, making it applicable to virtually any business.

What to Look for in a Consulting Provider

Which one of the top professional services firms should you partner with?

Each has a deep understanding of various sectors and a proven track record of delivering relevant insights. Their main differentiating factors are their industry expertise, data sources, analytical techniques, and research methodologies.

Consider how the minor differences in their resources and service offerings will impact your outcomes. Personalized support and regular updates are ideal. You should also evaluate their deliverables. What will you get from the partnership? Take time to ensure your decision aligns with your business objectives.