Using Sales Benchmarks to Predict Revenue

Using Sales Benchmarks to Establish Activity Targets

Benchmarking is the process of comparing a company’s performance against the industry average. Benchmarks help companies to answer, are we performing better or worse than similar firms in similar industries against specific metrics (benchmarking against top salespeople is also helpful). Below are six benchmarks identified by Boston firm, OpenView Venture Partners, geared toward organizations with outbound sales methodologies and processes. Three of the benchmarks involve pipeline generation and three involve revenue forecasting. The six benchmarks are:

Pipeline Generation:

  • Calls-to-Connections = 9%. Divide the number of outbound calls by number of client connections. This metric indicates how effective sellers are at getting prospects to answer the telephone.
  • Connections-to-Meetings = 23%. Divide the number of client meetings by the number of client connections. Low conversions may indicate bad accounts, ineffective messaging or poor selling.
  • Meetings-to-Opportunities = 38%. Divide the number of qualified opportunities by the number of client meetings. This metric indicates the quality of client meetings being scheduled.

Revenue Forecasting:

  • Opportunity Wins = 27%. Divide the number of wins by the number of opportunities. This metric indicates how many opportunities need to be closed to hit the revenue target.
  • Pipeline Coverage = 306%. Divide the amount of pipeline by the quota for the period. This metric reveals how much pipeline is needed to achieve quota during the forecasting period.
  • Pipeline Slippage = 21%. Divide the number of opportunities forecasted to close, but pushed into next period, by the number of opportunities forecasted to close. High slippage may indicate pipeline fluff or poor forecasting.

In addition to comparing performance against industry and internal averages, benchmarks can help reverse engineer sales activity to predict revenue outcomes. For example, from 500 client calls, 45 client connections will be made (9%). From 45 client connections, ten client meetings will be scheduled (23%). From ten client meetings, four qualified opportunities will be generated (38%). From four qualified opportunities, one win will result (27%). Pipeline coverage and pipeline slippage can then be factored into the equation to complete backing into the revenue target.

All contents copyright © 2014, Josh Lowry. All rights reserved.


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