It is possible your business is underperforming.
Yes, you’re probably making more sales than you used to, and your customers are probably increasing as well. However, you could still be underperforming against your competition.
Competitive benchmarking can help you understand where you stand compared to leading businesses in your industry.
Table of contents:
- Selecting Your Competitive Peer Group
- Look Beyond Sales
- What You Can Learn From Insider Transactions Data
- Know What Not To Benchmark
- Use Your Findings To Create Action Plans
- Always Update Your Competitive Benchmark
- Summary
Selecting Your Competitive Peer Group
It’s easy to compare apples and oranges.
Sure, it can be fun to compare your revenue with Apple or Microsoft, but how is that helping your business grow? Perhaps they are great at managing their spending or keeping their customers; maybe you should use them as your competitive peer group then.
Competitor Peer Group #1
Identify businesses that have a similar target audience, products, marketplace, and source of revenue. By finding similar companies, you’ll begin to get an understanding of what is considered normal revenue, customer, and profit growth rates.
Competitor Peer Group #2
After building your first competitor peer group, think bigger. How do companies that have been in business for decades operate their businesses? Perhaps there is a key area you should start focusing your time and money on to compete at a higher level.
These businesses have probably been around for quite some time, are successful, and lead their industry. Find these companies and learn why they are doing what they are doing.
Just because a company operates in the same industry doesn’t mean its revenue, profit, and customer base will be the same.
Always know where they do business and how long they’ve been doing it.
As you can see, finding your competitor peer group isn’t as simple as it appears. It’s best to find companies that can truly give you accurate information to work with. Companies that are listed on a public exchange will have tons of information that you can utilize. If the company you want to compare against isn’t a public company, find industry-related studies or speak to customers to learn what you need to know.
Don’t fall for the false information; just because you have a number doesn’t mean it’s 100% accurate.
Look Beyond Sales
Once you have found companies to compare yourself against, you’ll need to pull their financial information. Use consistent ratio definitions and align the reporting periods, adjusting for differences in fiscal year ends when necessary.
For listed US companies, US stock screening and analysis can draw on SEC filings, reported financial ratios, and insider ownership records available through market data APIs.
Here are some things you can compare:
- Revenue Growth: Is the company making more money each year, or has it begun to decline?
- Gross Profit Margin: What percentage of revenue the company keeps after paying its expenses to provide the service or product.
- Operating Profit Margin: What percentage of sales remains after operating costs, before interest and income taxes?
- Customers: Does the company retain its customers long enough to grow?
- Profit: Are they actually making money with their sales?
Use percentages, ratios, or per-customer measures when raw totals would make the comparison unfair, and check that each measure is calculated consistently.
Maybe use the amount of sales a company makes per employee? Well, what about companies that outsource their work? They would appear to underperform based on this statistic.
In a report published in January 2026, McKinsey found that respondents from top-performing companies were nearly twice as likely as their peers to report tracking performance in more detail than business units or geographies
What You Can Learn From Insider Transactions Data
Companies report financial information to their investors; what about insiders that buy or sell shares?
At US public companies, officers, directors, and holders of more than 10% of a class of registered equity securities generally file SEC beneficial-ownership reports. Form 4 reports many subsequent changes, including purchases and sales. By understanding what changes managers are making to their stock, you can analyze their movements with strategies, earnings, and the financial health of the company.
But don’t use insider trading as a benchmark; remember there are other reasons why they may be selling their shares. They could be needing money for taxes, salary, buying a house, etc. Exercising stock options is not the same as purchasing stock from your own pocket either.
When researching, make sure to look at what they sold/bought and how they acquired/sold those shares. Form 4 transaction codes help distinguish purchases, sales, and option exercises. Check the separate Rule 10b5-1 plan disclosure, where applicable, to see whether a trade was made under a qualifying prearranged trading arrangement. Remember, every human is different; don’t assume one stock trade is all there is to someone selling or buying stock.
Make sure to use this data as additional information when researching, don’t believe it will make or break the company or its share price in the future.
Again, if you can’t find the information for your private companies, don’t worry; you can just leave it off your competitive benchmark.
Know What Not To Benchmark
Now that you know what you should and shouldn’t look at, make sure you’re comparing the correct information as well. Let’s take a look at a company’s gross profit margin. If they provide software, you can assume there is less expense involved in providing that product. Now, if they sell widgets, they would need to manufacture, transport, etc which will lower their margin. It can be misleading to use these statistics if you don’t know how the business generates its revenue.
Remember, use similar financial year-end dates; some companies are season-based, so their month of Nov will differ from another company that sells year-round.
Also, use common sense; if they changed their financial accounting, acquired a business, increased their spending to develop a new product, etc. Remember that when using their information. Revenue may have risen after an acquisition rather than through stronger demand. Selling shares can raise capital, but does not count as sales revenue.
A larger competitor may have more capital available, but its spending alone does not prove that. Check its cash flow, financing, and financial position first. They may invest more in R&D to stay ahead of their competition. So, figure out what they are doing and see if you can imitate those ideas.
Use Your Findings To Create Action Plans
So, now that you have built your competitor peer group, pulled their financial data, checked insider transactions, and double-checked everything, what do you do with that information? Well, start developing plans!
Let’s say you run a subscription-based business; your customers and sales are up, but you aren’t retaining your customers like your competitors. Instead of just spending more money on advertising, learn why your customers are leaving. Maybe there are better ways to onboard them, get them used to using the product, or prevent them from canceling their accounts.
Steps you can follow when creating your action plan:
- Identify what your benchmark is and create some baseline metrics.
- Research your benchmark; start with your Competitor Peer Group #1, then move to Peer Group #2.
- Why are your competitors outperforming you? Once you know, start taking steps to fix those areas of weakness.
- Change one variable in your business; you could change your prices, marketing budget, product, onboarding process, etc. Whatever it is that will affect the area of weakness you found.
- Did your metric improve? Make sure you’re not dropping anything else while you accomplish your goals. Cutting customer service costs might improve operating margin, but check whether weaker service is causing customers to leave.
As you can see, there are many variables you can control once you create your benchmark and know your weak points.
Always Update Your Competitive Benchmark
Once you have created your benchmark, always update it! Review internal operating measures monthly when available. Update comparisons with listed competitors as their new financial reports appear.
Remember, the more you dig, the more you’ll find; just make sure you can back everything up with solid evidence.
Summary
Always look at who is leading your industry, find what they’re doing better than you, and begin applying it to your business.