article | March 24, 2011
“Acme’s” Strategic Sales Metrics for Enabling Sales Benchmarking
Remember the Formula for Sales Success from the book “Making the Number: How to Use Sales Benchmarking to Drive Performance”:
Turning to Acme, let’s see how they selected their strategic sales metrics for the first four categories (Time is the only non-variable category) and how it results in an improved formula.
Acme, a software company, has been faced with the challenge of growing top-line revenue by 20 percent in the next fiscal year. The Acme senior vice president of sales has decided to adopt sales benchmarking as a means of determining how to exceed this goal.
To accomplish this, the company turns to the Formula for Sales Success to determine where this revenue growth can be achieved. Acme Company uses the criteria (described in the last blog entry) to determine the best strategic metrics to support each of the four variables in the formula. Having screened these possible base metrics, Acme selects twenty-six different strategic sales metrics and arranges them in accordance with each of the four variables contained in the Formula for Sales Success.
Here is the complete table of strategic metrics they’ve chosen:
Having selected the strategic metrics, Acme would then go through the other 4 (of 5) steps to implement these metrics and enable benchmarking. Skipping ahead, we could assume a scenario and just focus on one of these metrics to improve.
Let’s say that Acme leadership knows, both anecdotally and via existing reports, that their existing customer churn rate is at 12%. Since the benchmark of world-class sales organizations in this industry has a churn rate of 4% or less, Acme could focus on improving this metric through an iniitiative that determines the underlying root cause and develops improving solutions. Since churn rate reduces the Transaction category in the Formula for Sales Success, improving this will have the effect of improving the formula’s result: increased revenue.
Of course, for purposes of brevity, we’ve skipped some of the other necessary steps in this article, but you can find them all in the “Making the Number” book referenced above. In Acme’s case, they would need to go through the other steps to determine which of their strategic sales metrics are the ones to focus on that will give them the “biggest bang for the buck.” In the end, it may turn out to be a different metric than churn rate that gets the focus.