Continuous improvement is the mantra of high performance sales organizations. They are always looking for ways to improve performance and increase sales productivity. Like all sales organizations they invest in resources and programs to improve the sales person’s ability to find, win and retain customers. They analyze their people and organization, review the impact of operations and enablement and evaluate management execution to identify where there are opportunities to get better.
Measuring improvement requires a basis for comparison. Benchmarking the sales organization provides sales leaders with a foundational source of consistent metrics from which comparisons can be made. Establishing benchmark data points for performance, resources and sales behaviors creates a composite view of what the sales organizations is doing and how it is performing. Benchmark comparisons provide guidance to sales leaders as they evaluate the contributions of their current programs and make decisions as to which initiatives to continue to fund and which to consider.
Once established, benchmarks measure change as the benchmark data points increase or decrease. For sales organizations looking to increase sales headcount, they would want to look at how to reduce new hire time to productivity. Changes to the hiring strategy like using profiling to get better matches might reduce new hire fail rates, which drags the time to productivity metric down. Revamping new hire training curriculum or investing in automated learning systems might also be part of the strategy. Only by establishing the baseline metric for new hire time to productivity can sales leaders factually assess if and where they are improving.
Benchmarking is a core component of the sales strategic decision-making process. It provides sales leaders with a foundational set of comparison metrics to incorporate into their strategic analysis and decision-making process. In absence of benchmark data, sales leaders must rely exclusively on their instinct, judgment and their leadership team to make decisions on how to improve performance. Benchmarking creates a point in time set of metrics that allows them to identify strengths, target weakness and prioritize resources based on their impact to performance.
Benchmark data can be classified into two general types:
Performance: Performance benchmarks integrate data from financial systems to create an operational profile of the resources, costs and results for the sales organization. These data points focused can be segmented by any demographic like vertical market, sales role or geography. Performance benchmarks generate metrics of quantity. They capture the number of sales reps of each type in territory and how much quota do they carry. They analyze cost of sales and compare it with sales results in data points like cost of sales, revenue per headcount or expense to revenue. Most commonly, sales organizations perform comparisons of performance based on quota or revenue achievement. Variable data input by sales into CRM systems will add data on sales activities and opportunities
Behavioral: Behavioral benchmarks capture the beliefs and attributes of how the sale organization thinks and behaves. This is not financial data, rather it is a measurement of sentiment and beliefs ranging from strongly agree to strongly disagree on a given issue or topic. Behavioral benchmarks capture way the sales organizations think and act in any given situation. These benchmarks capture the quality of the activities they engage with their clients and prospects.
Compared to What?
Benchmark data can be compared in a variety of ways. The most powerful and impactful benchmark comparison is done internally. Creating and establishing internal benchmark data for performance and behaviors comparisons allows sales organizations to measure improvement, more on that below. And because it is data from your organization about your organization it relevance and immediacy are strong.
External benchmarks comparisons compare your data with others. External benchmarks can be done against a peer group of organizations (companies of similar size), a vertical segmentation (companies in similar markets), geographic segmentations (companies in common locations) or a superset of high performance, world-class companies. External comparisons provide context and focus for realistic analysis of the sales organization.
The drive for continuous improvement requires benchmark data to establish foundational data for comparison. Performance and behavior benchmarks can be compared against internal or external segments. Measuring improvement requires sales organizations can demonstrate increases against the established benchmark data.