What Are Benchmarking Metrics?

Maggie Worth

A benchmark is a number, state, or condition against which future results can be compared. Metrics are quantifiable data points that can be clearly demonstrated and proven. Benchmarking metrics, then, are existing-condition data points that people can test, measure, and report and can use to evaluate future performance. Such metrics are used in a wide variety of business, educational, political, and manufacturing functions.

Logistics benchmarking allows a company to review each part of this process and determine if it is paying too much.
Logistics benchmarking allows a company to review each part of this process and determine if it is paying too much.

Benchmarking metrics may be based on an entity’s own baseline. For example, a company wishing to grow its sales might use the sales volume of its first metric year as the benchmark for sales. All future numbers are measured against this to see if sales have fallen, grown, or remained static.

Often, however, benchmarking involves external standards, performance, and best practices. The company might, for example, wish to outperform a competitor or an industry average. In this case, the competitor or industry average sales volume would become the benchmarking metric against which performance is measured.

Virtually all data points that can be recorded or measured can be used as benchmarking metrics. This can include sales or profit numbers for a business, standardized test scores for a school, voter approval levels for a political candidate, and production quantities for a manufacturing facility. It can also include number of games won or points per game for a sports team or accident-free days for an industrial plant and more.

Benchmarking metrics are, however, used more commonly in some functions than in others. IT professionals, accountants, and strategic planners often work with benchmarks, as do project managers. Sales and production management fields also traditionally work closely with benchmarking.

Individuals frequently use benchmarking metrics in their personal lives, thought they may not realize they are doing so. Perhaps the most common example is an individual striving to lose weight. In this case, the person’s starting weight would be the benchmark against which future performance is measured.

The ultimate purpose of benchmarking metrics is to provide clear points of reference for performance of some kind. This allows individuals, teams, and businesses to assess success or failure. Benchmarks are often associated with performance goals. For example, a company may benchmark its profit margin at 10 percent in the current year, with a goal of reaching 20 percent in four years’ time. If the next year’s profit margin is 12 percent, the company knows it has gained two percent on its benchmark.

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