6 Types of Internal Benchmarking

John Spacey, updated on April 29, 2017

Internal benchmarking is the process of comparing internal results in a systematic and standard way. The term benchmarking is most commonly associated with comparing your results to external entities such as a competitor or industry. External benchmarking is useful when data is available and you're trying to catch up to the competition. Internal benchmarking is useful when your processes are unique, you're leading your industry or data for competition isn't available. The following are common types of internal benchmarking.

Comparable Results

Benchmarking things that are directly comparable such as the energy efficiency of your data centers.

Generic Benchmarks

Using foundational metrics such as return on investment to compare things. For example, comparing the revenue per employee for different business units.

Functional Benchmarks

Comparing unique business units, processes and practices across common functions. For example, comparing IT cost as a percentage of revenue for different business units.

Figure of Merit

Benchmarking products and services using a measurement that is meaningful to customers. For example, comparing the availability of services across all your products.

Experiments

Comparing processes, methods or communications using experimentation techniques. For example, an airline might compare the impact of free sandwiches on a domestic flight to a choice of sandwiches or sushi using customer satisfaction as a benchmark.

Baselines

Evaluating projects and strategies by comparing old and new results. For example, comparing customer acquisition cost for an new marketing process against historical results.

Overview: Internal Benchmarking
Type	Benchmarking Management Accounting
Definition	The process of comparing internal results with standard measurements.
Related Concepts	Benchmarking Return on Investment Figure of Merit Management Accounting Business Strategy Business Case