A peer group is the set of competitors against which you measure yourself on the dimensions that actually decide deals in your market. It's not about all companies in your sector, but about the parties you actually lose or win against with prospects.
The difference between a good and a bad peer group comes down to one question: does this party show up in your own sales conversations? A competitor that sits next to you in industry lists but never appears in a bidding process adds nothing to the comparison. A competitor that is one of the final two alongside you three times a year does.
A consultancy firm with 90 employees had ten competitors on paper: everyone with the same SIC code and a comparable size. In practice, nine out of ten times the deal came down to a choice between three parties. The remaining seven operated in a different segment, targeted different clients, or worked with a different revenue model.
The mistake that is usually made here: building a peer group based on size and sector, instead of based on who is actually present in the awarding phase. That can be traced from lost and won proposals, from what salespeople report back about 'who we were up against this time,' and from how prospects themselves describe their orientation process.
A workable peer group is formed on the basis of a few testable criteria:
An IT service provider with 140 employees used this to narrow its list of fourteen 'comparable companies' down to four. The remaining ten were never mentioned in a lost deal, despite being consistently labeled as comparable on LinkedIn and in market reports.
Once the peer group is established, it becomes visible on which dimensions each party is strong and where not. This is needed to determine what you actually win on, rather than what you think you win on. Without a sharp peer group, that question remains unanswerable: winning compared to whom, exactly?
The composition of the peer group is also linked to the question of whether distinctiveness holds up. A claim like 'personal attention' means little if three out of four peers carry the same claim. To test whether distinctiveness truly exists, it must first be established against whom that claim is being measured.
Beyond proposals and sales conversations, there are other sources that indicate whether a party rightfully belongs in the peer group. Job postings show the direction in which a competitor is investing: a sales role focused on enterprise accounts points to a different ambition than a role focused on smaller, transactional customers. What can be read from a competitor's job postings can cause a party that initially seemed comparable to drop out of the peer group after all, or add a party that wasn't yet on the radar but is scaling up toward the same segment.
These signals are also an early indication of where the market is expanding or shifting, which in turn ties into the question of which segments remain unserved. That is the domain of a white space analysis: not who your current peers are, but which space none of the peer group yet occupies.
A first indication of whether the comparison with current competitors is skewed is provided by the free lost-on-price check: eight questions that indicate which dimension is leaking, without requiring a full peer group analysis. That check shows on which front a deal is presumably being lost, which is often a direct clue as to which competitor should actually have been in the peer group.
Building the peer group itself is groundwork: going through proposal history, questioning sales teams, laying job postings and market movements side by side. Once that comparison is in place and a gap turns out to exist on one of the dimensions, the follow-up question is what closing that gap means in terms of processes, people, and systems. What that costs and which part of it can be carried by AI is worked out in detail in the werkscan on ftetoai.com.