Sales Benchmarking Methodology: What, Why and How to Measure
Executives are often drowning in data. Knowing what to benchmark requires expertise. Alexander Group has more than 35 years of experience practicing the art and science of sales benchmarking to help you make strategic sales decisions with confidence.
What Is Sales Benchmarking?
Sales benchmarking is a process businesses use to gain or maintain a competitive edge in their industries. Like any organization, your business has areas in which it excels and others where it could improve. The first step for a company developing strategies to improve or hold its position is to determine its successes and shortcomings. Benchmarking is a critical tool for assessing your current state, defining your strategy for future growth and guiding your efforts for continuous improvement.
Through sales benchmarking, businesses determine reference points to compare their sales processes against. These benchmarks can be internal or external. Internal sales benchmarking assesses your organization’s high- and low-performing departments, processes or products. Alternatively, an external benchmark is a standard set by a competitor in the industry. In either case, sales benchmarking means an opportunity to innovate based on actionable data.
The Process for Benchmarking Sales Performance
Harnessing the power of relevant industry benchmarks to inform decision-making requires three critical inputs:
- Select the right benchmarks
- Obtain the right data
- Interpret the results
1. Select the Right Benchmarks
Alexander Group’s sales benchmarking database provides a powerful set of benchmarks that consistently provide sales leaders with actionable insights. Focus areas include:
- Sales productivity
- Sales time
- Sales deployment ratios (by role type)
- Sales investment/expense
- Sales readiness
- Sales compensation pay levels and practices
- Industry-specific benchmarks and practices
2. Obtain the Right Data
The value of sales analytics and benchmarking is only as good as the quality and relevancy of the data. Alexander Group maintains one of the richest databases of sales benchmarks in the world. Each set of new data goes through a detailed cleansing and validation process before it is added to the database. Comparison benchmarks are balanced by harvesting data from similar companies based on size, industry, sales model and selling roles.
3. Interpret the Results
The answer is not always to be “at the benchmark.” Where you need to be relative to the benchmark depends on your marketing and sales strategies. There are legitimate reasons to target above or below benchmark. Experience and time-tested expertise in sales strategy and management is the key to unlocking valuable insights from the data. Alexander Group works closely with you to carefully prepare an objective review that will interpret the benchmark data in light of your situation.
The Value of Sales Benchmarking
As one of the most versatile tactics for improving a business, the goal of benchmarking will differ depending on the current situation. Benefits of sales benchmarking include:
- Boosting performance: Benchmarking helps identify issues and root causes and direct efforts to course correct them. The goal, in this case, is to directly address areas that are below your benchmark. Examining your sales organization against external benchmarks and practices provides clarity and confidence in your efforts to improve.
- Hiring top talent: Leveraging data during the hiring process helps businesses determine the best candidates to fill critical sales roles. Every job candidate is different, but the traits necessary for success are consistent. These characteristics can be present in jobseekers from virtually any background. Sales benchmarking can help you develop pre-hiring assessments that show which candidates possess the traits you’re looking for, such as confidence, self-motivation and resiliency.
- Updating your sales processes: Market shifts and competitor moves create the need for your organization to update its sales model. Benchmarking will help your business pioneer new products, new markets and new channels according to your destination. You’ll find opportunities to compare your sales organization to companies that resemble the future of your business.
- Maintaining leadership in the market: Innovation and continuous improvement are critical components of holding your market position when competitors try to overtake you. Benchmarking helps leaders stay ahead by focusing on internal best practices and analyzing the greater market for new ideas to improve performance.
- Expanding into new markets: The right information can ensure success when executing a sales merger or acquisition. Your business leaders can make informed decisions by establishing benchmarks that an asset must meet before it becomes a true consideration. For example, decision-makers could determine the potential of expanding into a new region by assessing the cost of operation in the area and how well the local market responds to their type of business. Benchmarking will unify stakeholders around clear parameters for a merger or acquisition.
Choosing Alexander Group
Alexander Group is uniquely positioned to bolster your organization’s sales benchmarking processes. We will draw insights from one of the world’s deepest, most accurate databases to set benchmarks that will strengthen your sales force by enhancing its talent level, optimizing its essential processes and developing new ways to meet customers’ needs. Alexander Group also arms decision-makers with the information and advice needed to make profitable merger and acquisition decisions.
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If you want to learn more about how our Sales Benchmarking practice provides meaningful insight and can help you make sales decisions with confidence, contact us today.
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