Benchmarking is a process of measuring the performance of a company’s products, services, or processes against those of another business considered to be the best in the industry, aka “best in class”. Preferably, these comparisons are made with businesses from the same sector, but it is possible to use benchmarking between businesses from other sectors as well. The term benchmarking was first used by cobblers to measure one's feet for shoes. They would place the foot on a "bench" and mark to make the pattern for the shoes. Benchmarking can help identify effective marketing strategies, ways to identify best practices in your sector and to evaluate the scope for improvement.

Example: A popular bike manufacturing company released a new bike, the sale of the bike was initially good but gradually the sales started declining towards winter session, they starting getting complaints and dissatisfaction from the customer, due to cold start engine issues. The company prepared a team to conduct process benchmarking for this purpose. The team observed and researched the strategy of one of its competitors who were manufacturing bikes on the same segment, was taking the market by storm. The research analyst team found the competitive brand had adopted twin spark technology to overcome this issue.  

The company followed the same strategy and was able to regain the customer’s trust over the brand and increased the level of satisfaction from its service.

Few popular types of benchmarking are:

• Internal Benchmarking: Comparison of practices and performance between teams, individuals, or groups within an organization.
  
• External benchmarking: Comparison of organizational performance to industry peers or across industries.
  
• Performance benchmarking: Organizations usually look at one particular aspect of their business in order to establish performance metrics that allow them to measure their output against their own previous results as well as seeing how they compare to their competitors.
  
• Competitive benchmarking: In competitive benchmarking, your performance is compared with direct competitors. Data collection is considered tough here but one can gain more inner ideas about the competitor’s performance and its reasons.