Learn about industry benchmarks and how to find the right ones

Whether you run a startup company or a Fortune 500 enterprise, you need to know how your business performs compared to others in your industry. From your products to your expenses to annual revenue, how you stack up against competitors has a big impact on your organization’s long-term success.

But your competitors aren’t keen to share their performance metrics. So how can you know if you’re beating them out — or if they’re leaving you in the dust?

Industry benchmarks can help you gauge success and failure in your business. As a decision-maker, benchmarks help you forecast, budget, and plan for growth in realistic and sustainable ways. And it doesn’t hurt that they can help you outshine your competitors too.

In this article, we’ll share key metrics to compare yourself against industry standards and show you how to source data to quantify those metrics. Specifically, you’ll learn:

• What industry benchmarks are
• Why you need to set industry benchmarks
• How to find industry benchmarks
• Examples of benchmarking in business
• What to do once you have your benchmarks

What are industry benchmarks?

Industry benchmarks are metrics a company can use to see how they’re performing compared to other businesses in their industry. Since business largely happens behind closed doors, it’s hard to know if your company is performing at a high standard. Fortunately, benchmarking can give you some clarity.

Every business and industry values different metrics, which can include key performance indicators (KPIs) such as:

• Social media engagement
• Employee retention
• Customer lifetime value
• Customer acquisition costs
• Annual revenue
• Close rate
• Customer churn

Benchmarking is the process of measuring your business performance by checking certain metrics. The goal is to take those metrics and compare them against direct competitors, indirect competitors, other industries, and even global averages.

Why you need to set industry benchmarks

It’s good to track performance metrics internally. But without benchmarks, you have nothing telling you if your internal metrics are any good. This is why benchmarking is a must-have for both new startups and legacy enterprises. Your business should also invest in industry benchmarks for five important reasons.

1. Outdo competitors

Regardless of how unique you think your business is, you have competitors. Other solutions are vying for your customers’ business, and it’s your job to know everything about any brand that competes for your customers.

Benchmarking isn’t perfect because you can’t see your competitors’ internal metrics — they’re usually a secret. But even so, looking at what your competitors are doing can help you improve your business. For example, maybe you realize your competitors stopped investing in PPC ads and instead started spending money on influencer marketing. That’s a big pivot that suggests you might be wise to do the same.

While you should never copy your competitors, benchmarking will show you that changes are in the wind, which is your cue to make adjustments. If you’re sick of being blindsided by competitors, industry benchmarks will help you see what’s coming around the corner and outdo them.

2. Improve efficiency

You might think you have the best sales processes in your industry. But once you start benchmarking, it’s possible you’ll realize that your close rate isn’t anywhere near the industry average. When you know what’s normal, you can take a closer look at your business to find efficiencies. If you want to overhaul sales, that might mean hiring more staff, retraining your team, or finding a better sales software solution.

With industry benchmarks, you can spot problems in your business and take action to fix them. It’s a great way to reduce costs, boost efficiency, and even improve the customer experience.

3. Track your goals

If you want to track industry benchmarks, you need something to compare them to. That’s why every business that invests in benchmarking also needs to track internal metrics. You can then use these internal metrics to see if your short-term and long-term goals match up with the rest of your industry. Track these metrics over time to ensure you’re on the right trajectory to achieve your goals — or if you need to take corrective action.

Industry benchmarks will also tell you if your goals are too ambitious or too lax. It’s a smart way to verify that your goals are reasonable and attainable.

4. Increase accountability

It’s much easier to measure department and employee performance when you quantify what success looks like in your business. You can assign realistic metrics to your teams based on industry benchmarks for marketing, sales, customer service, and more.

This isn’t about punishing your team for not meeting their goals. The purpose of metrics is to give your team a clear standard to shoot for. This removes ambiguity and makes it easier for leaders to support their team’s goals.

5. Invest in what’s working

Every business tries new initiatives or campaigns to inch past the competition. But do these new-fangled ideas actually work? Without industry benchmarks, you have no idea if your PPC conversion rates are actually good or if your social media engagement levels are valuable.

Instead of spending time, money, and energy on initiatives that don’t work, benchmarks will tell you what matters most for your bottom line. This way, you only spend resources on what works.

How to find industry benchmarks for your business

The tricky thing about industry benchmarking metrics is that they’re usually a secret. Your competitors certainly aren’t going to share their internal KPIs with you. You need this data, but it’s hard to track down. Fortunately, there are three places you can find much-needed benchmarking data.

The US Census

The US Census measures a lot more than population figures. It also has industry-specific and general surveys that you can use to determine business metrics.

Statistics of US Businesses (SUSB) pulls in data from multiple federal agencies, although the most recent data is from 2019. The US Census also has its Annual Business Survey (ABS) Program, which collects data from the Census Bureau and other federal agencies. The survey records data on R&D, innovation, sales, payroll, and employee demographics. It also collects data on nonprofits, so it’s a valuable resource for mission-focused organizations too.

Third-party service data companies and white papers

There are hundreds of companies out there that specialize in collecting industry- and company-specific B2B data. In exchange for a fee, they’ll share information on your competitors’ revenue, employees, marketing campaigns, and more.

However, this is third-party data, so it’s not always up to date or accurate. It can be helpful for the purposes of benchmarking, but always take it with a grain of salt. Try to work with multiple third-party data providers so you can get a complete picture.

You can also check industry reports. These are in-depth research studies and surveys from vendors, competitors, or conferences in your industry. Reports are great if you’re in a niche industry where there isn’t a lot of data from the US Census. Just be sure to look at the publishing date — some white papers rely on data that’s a few years old already, so check the author’s data-gathering methods before you rely on the report.

Local government resources

Another place you can find industry benchmark data is through your local government. This is ideal for retail businesses or any business with a physical location that relies on foot traffic. Your local government data will give insight into local trends that uniquely affect you.

The US Bureau of Labor Statistics is a good place to start, but a quick Google search for your local municipality will pull up helpful information on registered businesses in your area, consumer trends, and more.

Examples of benchmarking in business

Remember, benchmarking looks different for every industry and business. Here are five examples of the most common benchmarks you can measure, regardless of your industry.

Finance

Financial benchmarks are some of the most important data points for your company. Since you need money to stay in business, it’s a good idea to track financial benchmarks to see where you stand. We recommend tracking at least these three types of financial benchmarks:

• Sales revenue. How much did you make in sales over the last month, quarter, or year? This industry benchmark will tell you what sales figures are standard for a business of your size.
• Gross margin. While sales figures matter, you need to calculate how much money you bring home. Gross margin takes your net sales and subtracts the cost of goods sold (COGS) to calculate how much you profited. Expressed as a percentage, gross margin shows you how profitable you are on each product or service.
• Net profit margin. This is similar to gross margin, but it calculates the percentage of revenue that’s actual profit. If you want to know how much of your sales revenue you actually get to keep, this is an important metric to track.

Customer satisfaction

You don’t have a business without customers. That’s why it’s so important to check industry benchmarks for customer satisfaction. This can include metrics like:

• Net Promoter Score (NPS)
• Churn rate
• Customer service satisfaction scores
• Cart abandonment

Services

This type of industry benchmark looks at your performance in terms of:

• Shipping
• Delivery times
• Project completion times

Since you’re competing against other companies in every aspect of your business, tracking these KPIs can help you streamline your services. Check the American Customer Satisfaction Index to see what’s standard for your industry this year.

State of your market

Every industry experiences highs and lows. You need to understand the current state of your industry. For example, if you ran a restaurant business during COVID-19, you had to contend with staffing shortages and an increase in drive-thru orders.

Right now, everything from housing to consumer packaged goods is experiencing upheaval. Look at industry benchmarks like:

• Regulatory penalties or legal action
• Market demand
• Total addressable audience

By doing so, you can gain better insight into the state of your market.

Productivity

Productivity benchmarks can help you determine whether you’re outperforming competitors or lagging behind them. This includes tracking metrics like:

• Labor costs
• Human capital ROI
• Sales per employee
• Effectiveness ratio

What to do once you have your benchmarks

As a leader, it’s your responsibility to see how your business compares to the competition. Track benchmarks that are a sign of quality and not just vanity metrics. Be realistic and ensure that you’re looking at measurable data. Instead of running your business on a hunch, invest in industry benchmarks to quantify your performance. They’ll help you outdo the competition, improve efficiency, track your goals, boost accountability, and optimize your resources.

Now that you’ve identified your industry benchmarks, make management of them insightful and easy with Adobe Customer Journey Analytics. Its real-time omnichannel analysis and visualization tools allow companies to make better decisions with a holistic view of their business and the context behind every customer action. See every action in the customer journey, regardless of changing market forces.

Watch an overview video of Adobe Customer Journey Analytics, or get started now.