What you need to know about industry benchmarks
February 28, 2023
| BusinessFocus-Business Focus
We hope 2023 has gone well for you and your business so far! One thing 2022 showed us is how much things that affect businesses throughout our area can change. Two of those things are inflation and interest rates. With things ever-changing, we thought this month’s article on the importance of finding good benchmarks for your business could be a powerful tool.
Learn about industry benchmarks and how to find the right ones
By: Adobe Communications Team 11/15/2022
How you stack up against competitors has a big impact on your organization’s long-term success. 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.
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 aquisition 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.
It’s good to track performance metrics internally. However, 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.
- Outdo competitors
- Improve efficiency
- Track your goals
- Increase accountability
- Invest in what's working
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.
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.