6 illuminating competitive benchmarking use cases.

Competitive benchmarking is an impactful tool for a savvy corporate executive. Astute leaders know that a well-executed benchmarking analysis can deliver insights beyond comparing your company’s performance against peers. 

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Want a peek into your competitor’s playbook? Or maybe you want to assess the performance of your CEO? Or of an executive you’re considering hiring?

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You can use competitive benchmarking for any of these tasks, and more. Let’s dive into these ideas to see how this type of analysis can suit the needs of a company and its executives. We’ll also explore PivotXY, the leading software for creating an accurate, thorough comparative benchmarking report in minutes. (You can also buy a single report anytime you want. Get your first report free!)

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1. Benchmarking your company’s performance against peers

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This is probably the most common use of competitive benchmarking. You want to measure your company’s performance over a chosen time period against a comparable set of peer companies. 

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The analysis will gather data and calculate the necessary metrics for the benchmarking comparison. PivotXY’s Competitive Benchmarking module includes these, among others:

• Revenue
• EBITDA
• Invested Capital
• Economic Profit
• Total Shareholder Return (TSR)
• Sources and Uses of Cash
  
  • Cash from operations
  • Net debt issued
  • Equity issued
  • Divestments
  • Total cash
  • CAPEX
  • M&A
  • Share buybacks
  • Dividends
  • Held as cash
  • Pensions
  • Interest paid
  • Miscellaneous 

Finding and assembling all this data on peer companies typically requires a prohibitive amount of work, but PivotXY handles it with a few clicks.

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A well-done competitive benchmarking analysis can be revelatory, starting with the metrics that affected each company’s indexed TSR over a chosen period. From there you can see if a peer earned a higher TSR and how much capital it deployed to achieve that. And you’ll also see how the other companies used their capital.

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You might find that your focus on M&A differs significantly from your most successful competitors, or that shareholders rewarded them for other operational priorities, or some other telling detail in the charts. The ability to see this so quickly is a difference-maker, but it's not the only way you can use competitive benchmarking.

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2. Benchmark a competitor against different sets of peers

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You don’t have to put the focus on your company, of course. Put the lens on your toughest competitor and see the moves they’ve made and the TSR they earned. 

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It’s like having the competitor’s full playbook laid out in front of you, with the most impactful plays highlighted and their record against competitors clearly displayed. Again, having access to this intel whenever needed can provide a decisive advantage.

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3. Competitive benchmarking to assess CEO performance

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If competitive benchmarking can be so insightful about a company’s performance, why not use it to grade the team leading that company? Say you’re a board member wanting to dig deeper into your CEO’s performance before an upcoming salary negotiation. A good benchmarking study will give you relevant insights into the priorities of the CEO and their team, and whether their strategies paid off.

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You can also assess a potential executive hire by running a quick benchmarking analysis on their previous company. Their moves will be in plain sight to give you a full picture of their performance, capabilities and strategic priorities.

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Conversely, if you’re a CEO going into said salary negotiation, having your successes spelled out clearly in a competitive benchmarking analysis can give you ammo to get the pay boost you deserve.

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4. Inform any meeting with data-backed insights

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Strategy discussions need not rely on gut instinct. Within minutes you can run a competitive benchmarking report to inform any meeting. This tool can provide illuminating analysis and insights to make many meetings more productive and decisive.

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Use it to break down your last decade of CAPEX, compared to that of your competitors, before a meeting to discuss your future approach to deploying capital. Or benchmark your Economic Profit against similar companies to bolster your ideas on a strategic shift. Having the ability to run a competitive benchmarking report at your whim has the power to change your very approach to forming corporate strategy.

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5. Competitive benchmarking shows how high the bar is set

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PivotXY’s Competitive Benchmarking module has an interesting value-add: segmentation. The software doesn’t just compare you with the peers you choose, it segments every company into one of four categories:

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• Champions consistently outperform competitors in shareholder value creation with their approach.
• Agile Transformers embark on disciplined transformations in an effort to achieve the sustained performance of Champions.
• Chasers aggressively pursue growth but fail to achieve sustained profit growth.
• Idlers prioritize dependable, stable dividends, typically underperforming in share price trajectory.

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Why does this matter? With your competitors neatly segmented by their approach to capital deployment, you know at a glance who’s winning and who isn’t. You’ll find them in the Champions segment. What the companies in that segment are doing, which is spelled out in detail, works consistently to deliver shareholder value.

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6. Uncover a new strategic direction

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A recent client came to us for help to determine why business was down. Were their challenges unique to them, or were peers having similar issues?

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It was a moment for PivotXY’s Competitive Benchmarking module to shine. We chose a peer set of competitors selling similar products, and the analysis showed that business was down for every one of them. 

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So we broadened the comparison with a new set of peers selling products in a different but related sector. Same result: They were all down.

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We then broadened the analysis again, moving further and further from the core. We looked at companies with products related to our client’s but with less in common. Business for those companies was flat but clearly not facing the same challenges as our client. 

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We broadened our lens with one more analysis, benchmarking against companies selling products that have at most a tenuous relation to our client’s business but represent a possible new growth path. Those companies were up strongly.

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So, in the five minutes it took us to run these analyses, we showed our client a potential new product direction that’s already delivering growth for related companies. Their stunned gratitude was all the validation we needed about the power of competitive benchmarking.

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In minutes, you can make benchmarking work for you

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PivotXY’s competitive benchmarking analysis could be helping your company and executive team in the above ways. Today. We make it fast and easy to benchmark the company of your choice against peers or other companies. Contact us and we’ll create your first report free (a $300 value).