Why should a company use Sales Benchmarking?
Improvement is the one-word answer.
But what do you need to do to implement Sales Benchmarking?
Your current Sales Performance Management framework and systems are probably collecting hundreds and thousands of data points, so you have the raw data, right? Unfortunately, having all that data does not mean you could benchmark your organization against other ones, let alone against itself at a previous point in time.
The first step (of five), then, is to identify which key sales-related metrics to measure in order to set up a comparison benchmark.
Fine, but how to wade through the hundreds and thousands of possible sales metrics and operating statistics to pick the key ones? For starters, use the Sales Benchmark Index Formula for Sales Success as your filter.
The first four categories are non-constant (only the Selling Time Days is constant.) For each of the first four categories, you will have to define the term for your situation. For example, how do you define an activity? Is it a lead? Is it an e-mail? Is it a phone call? Is it a virtual sales call? Is it a face-to-face sales call? A proposal? Is it something else? Or is it all of the above?
It is important to keep in mind that the goal is to identify the key activities performed by your sales team that have the most significant impact on whether you win a deal tomorrow, next week, next month, or at all.
But even sorting through the measurements available for these 4 categories is daunting. So, you should consider asking these questions for each possible metric your SPM is collecting:
- Relevance to your company’s overall sales performance
- Connection between corporate performance and sales performance
- Degree to which each can be a leading indicator of sales performance
- Availability of the internal data and the effort required to collect it
- Availability of the external data that correlates to the internal data
- Conformance to a corporate strategic objective
Identifying your strategic sales metrics will set the stage for the next steps in enabling benchmarking. In the next blog entry, we’ll take a look at an example of how “Acme” has done this.
Detailed information on the complete Sales Benchmarking methodology can be found in the book “Making the Number: How to Use Sales Benchmarking to Drive Performance”. An appendix in this book lists some top key sales metrics that you might consider starting with.