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The Value of Benchmarking in Sales

Jul 10, 2019
3 min read
To stay ahead of the competition, organizations must implement data-driven planning. Discover how benchmarking in sales enables growth and effective planning.

This is the second in a series of blogs by Xactly Sr. Product Marketing Manager, Michelle Howard, focused on the impact of data in order to help sales leaders make strategic decisions. (Check out part one on data-driven sales.)

Benchmarking in sales allows leadership to leverage key data to ensure they pay reps fairly compared to their industry peers. Businesses that implement benchmarking in their sales planning efforts are at an advantage because their decisions are data-driven.

So why benchmark? Sales is a highly competitive market, and companies must ensure they can offer competitive pay to attract and retain top sales talent, increase overall sales performance, and drive growth.

Consider the following: How much research went into your last major purchase?

For anything significant—be it a house, car, major appliance, etc.—probably a fair amount. The cost, service, support and other aspects require the right data to evaluate and justify a purchase. And usually this is not done in a vacuum.

But why wouldn’t that same due diligence be standard in building or correctly compensating a sales organization? Sales stakeholders often rely on gut intuition on what the market is paying. As a result, they may not consider other factors like sales ramp up time, quotas, hitting targets, top performer incentives and more. This is where benchmarking comes in.

The application of data to each part of a strategic sales plan is critical to building a successful sales team. To help, here are four ways benchmarking in sales has a positive impact on organizations.

Hiring Top Sales Talent

To bring in the best and brightest sales reps, hiring is an important area to leverage data for benchmarking in sales.

Many sales leaders hire based on similar traits they like to find in top performers. And while that occasionally pans out, it’s a best practice to have data to baseline a hiring decision. The most successful sales organizations aim to hire self-motivated sales reps and leverage tools such as pre-hiring assessments that cover personality and acumen to assess potential fit—even before the interview process fully gets underway.

While this may initially screen out a number of candidates, this ultimately makes it easier to find the right people for your team. This data can actually protect your compensation investment over time with stronger candidates from the outset.

Assessing the Sales Market

After a rep gets through the interview process, sales team compensation becomes an important part of the conversation. How enticing of an offer do you have to make to attract the best and brightest?

Compensation itself can be a quick internet search. However, those values aren't always accurate since pay data available on most employment websites is often reflective of opt-in responses. Consider the following:

  • Is the data credible when it’s from an employee exit interview?
  • How does the pay data compare by location and by industry?
  • Does the rep’s tenure within an organization reflect their worth?
  • What is the expectation of pay mix (base + variable)
  • What’s appropriate for different locations and industries?

Given the amount of questions posed above, it’s clear that data needs to go deeper and paint a better picture of the overall market. Especially when markets like New York City or the Bay Area and industries like technology and SaaS are hot, identifying these variables will help your sales organization stand out in the crowd and hire the best around.

Sales Merger & Acquisition Activity

Let's think back to our example of individual purchases. You’d never buy a house without the proper research. Price is one thing, but there's a lot more to consider in the final decision. Location, school, crime rates, neighbors, proximity to highways, etc. are among the many factors that help influence such a crucial decision.

A potential merger and acquisition (M&A) is influenced by many of these same factors. Choosing a location, for example, should rely on key data to understand the overall cost and align expectations in order to make it successful. It also helps ensure that sales teams integrate and maintain high performance throughout the M&A.

Without an understanding of this, a gut instinct could only take you so far. For example, Xactly is headquartered in San Jose, but in recent years, has expanded into offices in Denver, London, Toronto, Bangalore and Australia. With many different locations and markets, bringing in top sales reps requires the ability to leverage the right data to make these big decisions, especially when the implications are huge.


Everything You Need to Know About Incentive Compensation

Tools Exist for Benchmarking in Sales

The Harvard Business Review found that companies spend nearly $15 billion a year on training sales reps and another $800 billion in incentives. Another recent Xactly survey found that companies spend at least 10 percent of annual revenue on compensation. Given the spend on sales compensation is so significant, getting it right early on is crucial.

Xactly Benchmarking can help. Built on more than 14 years of aggregated and anonymized pay and performance data, Benchmarking can be applied in order to make key market and hiring decisions. With data as the driver behind planning and decision making, sales organizations are stronger, more strategic, and can stay ahead of the competition.

Want to learn more about how to use benchmarking in sales? Download the guide, "How to Build and Retain Sales Reps to Drive Top Performance."

  • Benchmarking
  • Incentive Compensation
  • Sales Performance Management
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Michelle Howard
Senior Product Marketing Manager

Michelle Howard is a Senior Product Marketing Manager at Xactly Corp., responsible for the strategy and go-to-market activities for Xactly Insights, SimplyComp, and Objectives. She has a strong background in product marketing for software companies in the events, telecom, internet marketing and insurance industries and is inspired by the applications of data across all of them.