Benchmarks are most useful if based on the specific situation. The ideal benchmark should be based on "how well does the current method forecast in this situation." However, this is not always easy to assess. In such cases, it may be useful to evaluate how accurately forecasters have been able to forecast in such situations (and how did they do that).

  1. Corporate Earnings Forecasting
  2. New Product Forecasting
  3. Sales Forecasting
  4. Employment Forecasting

1.Annual corporate earnings forecasts; one-year horizon

  1. Management forecasts were superior to professional analyst forecasts (the mean absolute percentage errors were 15.9 and 17.7, respectively, based on five studies using data from 1967--1974) and

  2. Judgmental forecasts (both management and analysts) were superior to extrapolation forecasts on 14 of 17 comparisons from 13 studies using data from 1964-1979 (the mean absolute percentage errors were 21.0 and 28.4 for judgment and extrapolation, respectively).

Source: J. Scott Armstrong (1983), “Relative Accuracy of Judgmental and Extrapolative Methods in Forecasting Annual Earnings,” Journal of Forecasting, 2, 437-447

2. New product forecasting

3. Sales forecasting

Mentzer & Cox (“Familiarity, application, and performance of sales forecasting techniques,” Journal of Forecasting, 3, 1984, 27-36) examined forecast errors for various levels in the product hierarchy and for different horizons:

Typical Errors for Sales Forecasts (Entries are MAPEs)
Level Forecast Horizon
Under 3 months 3 months to 2 years Over 2 years
Industry   8 11 15
Corporate   7 11 18
Product group 10 15 20
Product line 11 16 20
Product 16 20 26

Source:  Mentzer and Cox’s survey results from 160 corporations are crude because most firms do not keep systematic records.  Further, the study was ambiguous in its definitions of the time interval.  “Under 3 months” probably refers to ‘monthly’ in most cases, but the length of time is not apparent for “Over 2 years.”

4. Employment forecasting

Mean Absolute Percentage Error in Forecasts of Engineering Employment, 54 Firms, 1957-1976
 
  Forecasting Horizon (years)
Industry 0.5 2 5 10
Aerospace 10.3 15.9 41.2 88.7
Electronics   4.6 12.4 15.4 26.5
Chemicals   3.2   5.7 17.3 22.0
Petroleum   2.8   5.5 13.1   9.4
Average   5.2   9.9 21.8 36.6

Source
:  Brach, Peter and Edwin Mansfield (1982), "Firm's Forecasts of Engineering Employment," Management Science, 28, 156-160.