Sales benchmarking allows salespeople to better manage their most precious resource: time. Data-driven decision-making eliminates non value-adding activities that consume selling time and focuses on opportunities with the highest probability of success.
For a quota-bearing salesperson, waiting for others to make decisions is a reactive strategy that can result in failure in today's fast-paced business environment.
Furthermore, it assists individuals in making informed decisions about which types of companies to work with.
In short, benchmarking is a sales representative's GPS device, helping to map out routes that were either successful or time-consuming in the past in order to devise a more efficient course.
Sales benchmarking for the individual at the corporate level
To operate leaner, companies require employees to assume added responsibilities even as they reduce support resources.
When market conditions dictate that these companies lay-off employees to conserve costs, those who remain will find themselves saddled with more and more: customer care, administrative minutiae, and seemingly endless demands for management status updates (without an appreciable improvement in compensation). Data-driven decision-making at the representative level can help support the rescinded resources.
For instance, individuals who optimise their time management approach can free themselves from overdependence on the marketing department for leads, tools, or differentiators. Benchmarkers demonstrate a degree of self-sufficiency that is unique in the marketplace.
An example of benchmarking for the individual sales rep
Jane Doe uses sales benchmarking to improve personal productivity using the Sales Benchmark Index Formula for Sales Success as shown below:
She begins by applying this model to her individual professional situation. To do this, she has to answer these questions:
- What is her annual sales projection?
- Is she on track to meet her quota?
- How do her metrics compare with those of her peers?
- On which inputs should she focus going forward?
-
Annual sales projection - Based on her current performance, the input values Jane needs to calculate are:
- Outbound activity: 10 calls / day
- Close rate: 5% close / call
- Deal size: $8,000 / close
Jane's annual sales projection ($960,000) is calculated as follows:
-
Quota tracking - Next, Jane needs to know how her annual sales projection stacks up to her quota. Jane has to reach $1 million. With $960,000 in projected sales, she is already $40,000 off pace - and she hasn't even started making sales calls yet!
How can Jane close the gap? She could increase the outbound (call) activity, close rate, deal size, or any combination of all three inputs.
- Increase outbound activity. Look what happens when Jane adds just one more call per day (from 10 to 11) to her task list. That change alone gets her over quota by $60,000.
- Increase close rate. Look what happens when Jane uses a slightly higher close rate (5.5% versus 5%). This change also gets her over quota by $60,000.
- Increase deal size. Look what happens when Jane increases the average deal size by about 12% (from $8,000 to $9,000). That change gets her over quota by almost $80,000.
- Increase all three. Look what happens when Jane aims for the trifecta of improvement - outbound (call) activity, close rate, and deal size. Taken together, these changes would probably get her into accelerators, as they put her $310,000 over goal.
-
Peer comparison - Jane starts by asking those working within her organisation what their outbound activity, close rate, and deal size are. She explores how peers who excel are performing in a given area.
Sharing best practices, even in a non-systematic fashion, can really boost sales performance. Once Jane obtains this internal sample set, she begins looking outside the organisation for comparison.
One way to do this is to contact her internal sales operations group and ask for support in obtaining relevant data. Or Jane might network through formal sales associations or participate in any number of Internet-based affiliate groups focused on the sales profession.
-
Choosing an input - Based on the scenarios Jane ran, she knows what needs to be done to close the gap to quota. By speaking with peers or reaching out to gather external data, she knows how her data stacks up against others'.
Now it is time for Jane to reflect on all the data gathered to determine which inputs to focus on - outbound activity, close rate, or deal size - and what actions she needs to take to improve her success rates. It's time for her to assess the information in her GPS device to map a smooth drive.
The variables selected should be a combination of ones that will help her exceed her quota and make the biggest relative impact on her annual sales projection for the effort she expends.
-
Wrap-up - Sales benchmarking deployed at the sales representative level allows individuals to:
- Better allocate their time
- Focus selling activities on the best opportunities
- Self-assess skill areas and improve on weaknesses
- Provide insight quickly on customer buying cycles
- Make decisions based on actual market performance rather than on generalisations
- Test ideas with instant feedback