Sales Benchmarks Help Independent Reps6 Jan, 2009 By: Mike Drapeau imageSource
Sales Benchmarks Help Independent Reps
a quota-bearing salesperson, waiting for others to make key decisions is a
strategy for failure in today’s fast-paced business environment. Techniques like
benchmarking, thought previously to be the sole concern of corporate number
crunchers, are tools of use to the individual as well, particularly one in the
business-to-business (B2B) office equipment and supply industry.
Sales benchmarking allows salespeople to better manage their
most precious resource—time. It allows salespeople to focus on those
opportunities with the highest probability of success. Data-driven decision
making enables sales reps to eliminate non value-adding activities. Furthermore,
it can assist individuals in making more informed decisions about which types of
companies and for what kind of sales leadership to work. Overall, benchmarking
in the sales profession allows the salesperson to put some truth in the slogan
“Work smart as well as hard,” with “smart” now providing leading indicators of
potential future success.
Sales Benchmarking for the Individual at the Corporate Level
To become leaner, companies are requiring employees to assume added
responsibilities, even as they reduce support resources. And when market
conditions dictate that these companies lay off employees to conserve cost,
those who remain will find themselves saddled with more responsibility for
customer care, administrative minutiae, and seemingly endless demands for
management status updates—but without appreciable improvement in compensation.
Data-driven decision making at the rep level can replace support previously
received from headquarters. For instance, individuals can free themselves from
overdependence on the marketing department for leads, tools, or competitive
information. Benchmarkers demonstrate a degree of self-sufficiency unique in the
marketplace. A salesperson skilled in benchmarking will be better prepared to
A specific Example of Benchmarking for the Individual Sales Rep
Here is how a fictional salesperson, John Doe, can use sales benchmarking to
improve personal productivity using the Sales Benchmark Index Formula for Sales
Success as shown below.
To begin, John (a fictional sales manager for an office equipment
dealership) needs to apply this model to his individual professional situation.
To do this, he has to answer four critical questions first:
1. What is his team’s annual sales projection?
2. Is he on track to meet his quota?
3. How do his metrics compare with those of his peers?
4. On which inputs should he focus going forward?
Question#1: Annual Sales Projection
To answer the first question, John determines that, based on his current
performance, the input values needed to calculate his Annual Sales Projection
Outbound activity: Ten calls a day to offices/supply stores to buy
Close rate: 5% close rate of all calls.
Deal size: $8,000 as the average size of equipment/ supplies “deal.”
John’s Annual Sales Projection should be $960,000 is calculated as follows:
Question#2: Quota Tracking
To answer the second question, we first need to know how big a “portfolio”
John is carrying. His team has an aggregate $1 million quota
so, with $960,000 in projected sales, he is already $40,000 off pace. How can
John close the gap? He could increase the Outbound Activity, Close Rate, Deal
Size, or some combination of all these three inputs. Below is a representation
of what happens when each variable is impacted.
Increase Outbound Activity. If John adds just one more call per day
(from ten to eleven) to his or his team’s task list, that change alone, with
everything else held equal, gets him over quota by $60,000.
Increase Close Rate. If John uses a slightly higher close rate (5.5%
vs. 5.0%), this change also gets him over quota by $60,000.
Increase Deal Size. If John ups the average deal size by about 12%
(from $8,000 to $9,000), that change gets him over quota by the most—$80,000.
Increase All Three. If John assumes the trifecta of improvement—
outbound (call) activity, close rate, and deal size. taken together, these
changes would probably get him into accelerators, as they put him $310,000 over
But is all of this really possible? Can such arbitrary changes be
realized in reality in addition to a paper exercise? The only way to tell is to
check out and see what relevant peers do.
John should start by doing some internal comparison, asking those working
within his organization, what their outbound activity, close rate, and deal size
are. He should explore how peers are performing better in a given area. Sharing
best practices, even in a non-systematic fashion, can really boost sales
performance. Once John obtains this internal sample set, he should begin looking
outside the organization for comparison information. John might also network
through formal associations or participate in any number of Internet-based
affiliate groups focused on the industry to gain more insight.
Based on the scenarios John ran, he then knows what needs to be done to close
the gap to quota. Based on speaking with peers or reaching out to gather
external data, he knows how his numbers stack up against others and, more
importantly, if his proposed improvements are achievable. This is critical to
Question#4: Choosing an Input
Now it is time for John to reflect on all the data he’s gathered to
determine which inputs to focus on—outbound activity, close rate, or deal
size—and what actions he needs to take to improve his success rates. The
variables selected should be a combination of ones that will help him
over-achieve quota, but also be ones for which the effort he will expend in
making improvements will be met with the biggest relative impact on his annual
Sales benchmarking deployed at the sales rep level allows individuals to
better allocate their time, focus selling activities on the best opportunities,
select the best companies for which to work, self-assess skills areas and
improve on weaknesses, provide insight quickly on customer buying cycles, make
decisions based on actual market performance rather than on generalizations, and
test ideas with instant feedback.
For more on the discipline and power of sales benchmarking, read the book
Making the Number: How to use sales benchmarking to drive performance.
Mike Drapeau serves as EVP of Sales Benchmark Index, a strategic advisory
firm to help executive leadership understand how well they are performing
relative to a peer group and world class levels. SBI is differentiated through
its use of empirical data, a repository of over 11,000 companies, 12 years of
history, 19 industries and over 250 sales metrics.