Making The Number
How To Use Sales Benchmarking
To Drive Performance
Sales benchmarking - are you doing
it? Are you doing it right?
Everybody wants to make their numbers.
Though not everybody knows exactly how to make it happen. There's a new book
scheduled to be released October 16, 2008. The title is Making The Number:
How To Use Sales Benchmarking To Drive Performance.
I had a chance to interview the authors.
What follows is their response to 15 questions.
1. How does benchmarking
differ from other sales improvement programs?
Sales management is today and has
been historically an art. Therefore, sales leaders launch improvement programs
not knowing at the outset what the return will be. This is like filling the
car up with gas and driving around with no directions. Sales benchmarking is
a formal discipline that uses empirical data to determine what should be done
based on the expected return. This is like filling the car up with gas and punching
in the address on the GPS system before starting to drive.
2. What motivated you to
co-author the book titled, Making the Number: how to use sales benchmarking
to drive performance, due out in October 2008?
The authors all came to the subject
of sales benchmarking from separate paths. Greg came from the sale management
world and was tired of the claim that sales artistry trumped sales measurement,
Aaron came from the sales operations community and was frustrated at the lack
of a defined taxonomy that could establish means of comparing one organization
to another. Mike came from the Marketing angle and struggled to find a way to
depict where the inefficiencies existed in the Sales-Marketing interface.
3. I'm sure not everyone
is familiar with the concept of sales benchmarking. Can you briefly define it?
Simply stated it's an analytics methodology
that helps executives understand how they are performing relative to a peer
group. The output is a recognition of one’s top priorities.
4. There are not a lot of
books written for sales managers. What makes your book a must read?
We could not agree more on the lack
of thought leadership for sales managers and the situation is worse because
most of the commercially available sales methodologies do not address sales
management as a discipline, nor do any major American universities carry dedicated
sales curriculum. This is crazy considering that the sales profession is the
#1 destination for college graduates. Given the current dearth of sales management
books, we find that ours is compelling because it is not a memoir or a puff
piece – it is a real-world how-to manual on getting your organization
5. What are some of the biggest
challenges facing today's sales executives?
Driving revenue upwards while decreasing
costs. Gaining access to new markets without major investment in new channels.
6. What are two or three
takeaways for everyone who reads your book?
Take-away #1 – you
can and should compare yourself and your sales force to peers.
Take-away #2 – Look at world-class sales organization performance
to determine where you should close the gap.
Take-away #3 - use best practices benchmarking as the means of closing
the gap and driving shareholder appreciation.
7. When you look into your
crystal ball, what's the future look like for the sales profession?
Globalization and the loss of legacy
means of competitive advantage are putting the sales force on notice that it
must be a strategic difference or else the corporation loses.
8. Can you discuss how benchmarking
will affect those who consider sales an art form, not amenable to measurement?
Salespeople make their money through
talking and dealing, so they have thought of sales as an art, not a science,
and prefer to discuss topics that cannot be measured, like their client relationships.
This reliance on sales artistry represents job security and market worth in
their minds, and they closely guard it.
This lack of introspection on the
key issue of whether sales can be evaluated in a consistent and quantitative
fashion has been exacerbated by the persistent memory of times when sales compensation
reached extraordinary levels. Our new book will shed light on areas of the business
that have been hidden in the past.
9. What are the benefits
of sales benchmarking to the business?
The title of the book says it all.
A sales leader will make his numbers after reading our book. It is a how-to
10. What are the benefits
of sales benchmarking to the individual?
There is a whole chapter on just
this very topic. Let me quote: “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 that consume selling time.
Furthermore, it can assist individuals in making more informed decisions about
which types of companies and for what kind of sales leadership to work. “
11. What does it mean to
be a world class sales force?
World class sales forces have a Return
on Sales (ROS) in the top 25% of all companies in our database. You might ask,
what is ROS and why is it the ultimate measuring stick? ROS is a measure of
profitability for each revenue dollar generated.
The reason it is the ultimate measuring
stick is because there is a high correlation between ROS performance and shareholder
returns. For example, the companies in our quarterly World Class 100 report
produced an annual shareholder return of 18.6% vs. a median loss of 5% for all
12. What is type of results
have your clients received from this approach?
After completing a benchmarking project,
clients typically see growth in revenue, profits, and equity value, above their
peers between 20%-65%. We are working with one client today, a manufacturing
company in the water treatment business, who is cutting their sales expense
in half while maintaining the revenue line.
13. What are the first steps
in getting started with a benchmarking effort?
There are 5 things you can do immediately.
Visit our site www.salesbenchmarking.com home page which will point you towards
buying a copy of the book, downloading a copy of the World Class 100, watching
a video from NetSuite CEO, Zach Nelson, who discusses how sales benchmarking
helps his company close business, taking a sample benchmark at www.salesbenchmarkindex.com/benchmark
or watching a video about how Bill James and his Sabermetrics approach helped
the Boston Red Sox win the World Series and why this has relevance to sales
14. Who is most likely to
benefit from a sales benchmarking program?
The greatest beneficiaries are shareholders
of B2B companies, most importantly, employees of the firm holding stock because
sales benchmarking drives the share price higher. If that is something of interest
to you, focus on ROS and watch the chart go up.
15. How much does something
like this cost?
This is the best part. Our programs
start at $1,500 and go to $500,000 plus. It is based on a pay as you go cost
per metric. Typically, the cost of a sales benchmarking program is less than
1% of the benefit it provides.
Return from Sales Benchmarking to Sales Management
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