The Q1 2008 Assessment of the World's Top Producing Sales Forces
Sales Metrics and Best Practices of World-Class Sales Organizations
Sales Benchmark Index
World Class 100
The Q1 2008 Ranking of the World's Top Producing Sales Forces
Contents
Abstract World Class 100 Overview World Class 100 Trends Industry Trends How To Use The World Class 100 Industry Benchmarks Industry Top 10s World Class 100 Benchmarks World Class 100 Rankings World Class 100 Benchmark Discussion World Class 100 Selection Methodology 3 3 4 4 5 6 8 10 11 14 18
Sales Metrics and Best Practices of World-Class Sales Organizations
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Sales Benchmark Index
World Class 100
The Q1 2008 Ranking of the World's Top Producing Sales Forces
Every quarter, Sales Benchmark Index’s research team ranks companies according to their Return on Sales for the Trailing Twelve Months. What is Return on Sales? It is a measure of profitability per dollar of revenue generated. Our research shows that the companies who lead the pack in this critical sales metric have been rewarded with shareholder appreciation greater than their peers. For those organizations not listed in the Sales Benchmark Index: World Class 100 report, now is the time to understand better how and what your peers are doing to improve their Return on Sales. Rankings for those organizations that did not make the World Class 100 are available from Sales Benchmark Index upon request.
Abstract World Class 100 Overview
The Sales Benchmark Index: World Class 100 is the definitive report card on corporate sales force performance. It includes the 100 top performing sales forces from 19 industries, direct/indirect sales models, and companies offering both products and services. The 100 companies highlighted in this Report were selected from the Sales Benchmark Index information repository, which contains 200+ metrics and covers over 10,900 companies. In the last year, the World Class 100 sales force’s have produced: Revenues of $1,876B Revenue Growth of $255B Return on Sales of $619B Shareholder Return of $562B
Our research shows, unquestionably, that organizations who have attained the elite designation of World Class 100, demonstrate sales capability that is driving shareholder wealth creation and a source of competitive advantage.
Sales Metrics and Best Practices of World-Class Sales Organizations
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Sales Benchmark Index
World Class 100
The Q1 2008 Ranking of the World's Top Producing Sales Forces World Class 100 companies continue to outperform their peers in all aspects of sale force productivity.
World Class 100 Trends Industry Trends
A World Class 100 company generates $30 in Revenue for every $1 a non-World Class 100 company produces, $6.5B vs. $217M. And, World Class 100 companies are widening the gap. Revenue Growth for a World Class 100 company is 16%, nearly double the benchmark of non-World Class 100 organizations at 9%. This growth is fueled by a continuous investment in their sales force. World Class 100 companies spend 40% more than non-World Class 100 organizations on SG&A – 31% of revenue vs. 22%. And, World Class 100 companies can make this investment because their sales volume results in economies of scale, as they have a COGS spend that is less than half the competition, 29% vs. 61%. The ultimate measure of sales force performance, Return on Sales, for World Class 100 companies is a staggering 5x that of their peers, 24% vs. 5%. Their shareholders are rewarded. World Class 100 shareholders receive Market Capitalization returns of 13%, 63% greater than the benchmark of 8%. Finance & Insurance companies continue to lead the pack Finance & Insurance companies occupy 8 of the top 10 World Class 100 spots, have a Revenue benchmark double that of the other Industries and have a median Return on Sales that is more than double the next closest Industry, Professional/Business Services, 15% vs. 7%. The Top 10 Finance & Insurance companies produced a Return on Sales of $288B, a 186% return on their $155B SG&A expenses - validating that a heavy but smart investment in SG&A, 32% of revenue, produces the greatest returns for their shareholders. The Difference Between Haves and Have-nots is Greatest in Pharmaceuticals Pharmaceuticals had the widest disparity between World Class and Benchmark performance. In fact, World Class Pharmaceutical organizations more closely resemble other World Class organizations than Pharmaceutical firms do. One of the key drivers for poor ROS performance is turnover and the impact it has on opportunity costs. World Class 100 Pharmaceutical companies have a turnover rate of 16%. This is significantly lower than the Pharmaceutical benchmark of 46% and an overall benchmark across all industries of 37%.
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Sales Metrics and Best Practices of World-Class Sales Organizations
Sales Benchmark Index
World Class 100
The Q1 2008 Ranking of the World's Top Producing Sales Forces
Chief Executive Officers Use the Sales Benchmark Index World Class 100 to benchmark your company’s Return on Sales. Find out if you measure up to your peer group and World-Class companies. Understand which companies are driving shareholder wealth creation by being ‘World-Class’ in the sales function.
How To Use The World Class 100
Chief Financial Officers Use the Sales Benchmark Index World Class 100 to understand if your capital deployed in the sales force is generating an adequate return. Find out if your company should increase or decrease dollars allocated to the sales force. Understand which companies are driving efficiency in their sales forces as explained by those described as ‘World-Class’. Chief Sales Officers Use the Sales Benchmark Index World Class 100 to find out how your sales force stacks up to the best. Find out if your department’s quota attainment is translating into share price appreciation at the same rate as the competition. Understand which companies are most effective at driving sales force effectiveness and learn their best practices. Chief Marketing Officers Use Sales Benchmark Index World Class 100 to learn if your demand generation activities are producing a yield equal to or greater than those of World-Class organizations. Determine if your marketing activities are converting into closed sales on pace with those of your peers and World-Class companies.
Sales Metrics and Best Practices of World-Class Sales Organizations
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Sales Benchmark Index
World Class 100
The Q1 2008 Ranking of the World's Top Producing Sales Forces
Revenue ($M)
Basic Materials Consumer Products Finance & Insurance Healthcare Hospitality & Food Service Pharmaceuticals Professional/Business Services $93 $197 $107 $10 $106 $318 $376 $282 $6,235
$4,692 $1,028 $11,364 $3,597 $11,805 $10,946 $1,840 $2,623 $100 $1,000 World Class $10,000
Industry Benchmarks
Technology & Software
Benchmark
Figure 1: Industry Revenue Benchmark
Cost of Goods Sold
Basic Materials Consumer Products Finance & Insurance Healthcare
Hospitality & Food Service
50% 14% 29% 33% 50%
78% 73% 64%
64% 59% 22% 39% 53% 46% 53% 20%
Benchmark
Pharmaceuticals Professional/Business Services Technology & Software
23% 10%
0%
30%
40%
50%
60%
70%
80%
World Class
Figure 2: Industry Cost of Goods Sold Benchmark
Sales Metrics and Best Practices of World-Class Sales Organizations
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Sales Benchmark Index
World Class 100
The Q1 2008 Ranking of the World's Top Producing Sales Forces
Selling General and Administrative
Basic Materials Consumer Products Finance & Insurance Healthcare
Hospitality & Food Service
13% 13% 29% 34% 32% 37% 36% 35% 18% 24% 34% 31% 22% 28% 31% 29% 15% 20% 25% 30% 35% 40%
Pharmaceuticals Professional/Business Services
Industry Benchmarks
Technology & Software
0%
5%
10%
Benchmark
World Class
Figure 3: Industry Selling General and Administrative Benchmark
Return on Sales
Basic Materials Consumer Products Finance & Insurance Healthcare
Hospitality & Food Service
6% 5%
14% 13% 15% 18% 17% 24% 19% 24% 5% 10%
Benchmark
36%
5% 6% 2% 7% 3%
Pharmaceuticals Professional/Business Services Technology & Software
0%
15%
20%
25%
30%
35%
40%
World Class
Figure 4: Industry Return on Sales Benchmark
Sales Metrics and Best Practices of World-Class Sales Organizations
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Sales Benchmark Index
World Class 100
Basic Materials
Benchmarks Revenue: COGS: SG&A: ROS: $376M 78% 13% 6%
Revenue ($M) $20,170 $5,529 $15,337 $1,991 $2,992 $4,467 $10,460 $6,940 $1,371 ROS 27% 21% 18% 18% 15% 13% 11% 11% 10% Overall Rank 43 63 74 76 114 137 159 160 165 214
The Q1 2008 Ranking of the World's Top Producing Sales Forces
Consumer Products
Benchmarks Revenue: COGS: SG&A: ROS: $282M 64% 29% 5%
Revenue ($M) $13,357 $75,046 $1,620 $2,002 $4,217 $15,948 $5,166 $3,499 $6,176 $1,994 ROS 20% 20% 17% 14% 13% 13% 13% 12% 12% 11% Overall Rank 66 67 88 119 128 136 138 150 153 154
Rank 1 2 3 4 5 6 7 8 9 10
Company Name INTERNATIONAL PAPER ALLEGHENY TECH NUCOR CORP FASTENAL PACTIV CORP SEALED AIR CORP PARKER HANNIFIN RELIANCE STEEL & ALUM BARNES GROUP
Rank 1 2 3 4 5 6 7 8 9 10
Company Name COLGATE PALMOLIVE PROCTER & GAMBLE DELUXE CORP HERBALIFE STANLEY WORKS NIKE ECOLAB HARMAN INTERNATIONAL NEWELL RUBBERMAID PHILLIPS VAN HEUSEN
$19,148 7% WEYERHAEUSER Table 1: Basic Materials Industry Top 10
Table 2: Consumer Products Industry Top 10
Finance & Insurance
Benchmarks Revenue: COGS: SG&A: ROS: $1,028M 29% 32% 15%
Revenue ($M) $90,090 $84,560 $18,587 $2,536 $123,947 $19,805 $11,364 $4,640 $54,060 $112,344 ROS 72% 68% 66% 59% 53% 51% 44% 44% 43% 41% Overall Rank 1 2 3 4 5 6 8 9 11 12
Healthcare
Benchmarks Revenue: COGS: SG&A: ROS: $106M 50% 36% 5%
Revenue ($M) $3,674 $12,086 $3,519 $5,646 $1,887 $6,196 $8,248 $2,754 $1,557 $1,179 ROS 34% 30% 21% 21% 18% 18% 13% 12% 10% 9% Overall Rank 23 30 61 62 80 83 135 144 176 187
Rank 1 2 3 4 5 6 7 8 9 10
Company Name MORGAN STANLEY GOLDMAN SACHS BEAR STEARNS TD AMERITRADE BANK OF AMERICA US BANCORP PNC FINANCIAL SCHWAB CHARLES WACHOVIA J P MORGAN CHASE
Rank 1 2 3 4 5 6 7 8 9 10
Company Name ZIMMER HOLDINGS MEDTRONIC ST JUDE MEDICAL STRYKER CORP DENTSPLY INTER BECTON DICKINSON BOSTON SCIENTIFIC PATTERSON COMP APRIA HEALTHCARE STERIS
Table 3: Finance & Insurance Industry Top 10
Table 4: Healthcare Industry Top 10
Sales Metrics and Best Practices of World-Class Sales Organizations
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Sales Benchmark Index
World Class 100
The Q1 2008 Ranking of the World's Top Producing Sales Forces
Hospitality & Food Service
Benchmarks Revenue: COGS: SG&A: ROS: $318M 64% 18% 6%
Revenue ($M) $1,883 $27,458 $37,511 $87,648 $16,416 $3,640 $12,226 $11,384 $4,129 $5,122 ROS 43% 25% 19% 18% 17% 17% 17% 16% 15% 13% Overall Rank 10 47 73 82 85 86 91 102 111 121
Pharmaceuticals
Benchmarks Revenue: COGS: SG&A: ROS: $93M 39% 34% 2%
Revenue ($M) $1,449 $10,946 $14,862 $3,313 $21,373 $2,987 $57,137 $2,063 $48,441 $16,967 ROS 36% 36% 33% 31% 26% 24% 23% 20% 20% 16% Overall Rank 18 20 25 29 45 53 57 65 69 99
Rank 1 2 3 4 5 6 7 8 9 10 UST
Company Name
Rank 1 2 3 4 5 6 7 8 9 10
Company Name MYLAN GENENTECH AMGEN FOREST LABORATORIES WYETH BIOGEN IDEC JOHNSON & JOHNSON KING PHARMACEUTICALS PFIZER LILLY ELI
COCA COLA CO PEPSICO ALTRIA GROUP ANHEUSER-BUSCH UNITED RENTALS GENERAL MILLS KELLOGG WYNDHAM WORLDWIDE CONSTELLATION BRANDS
Table 5: Hospitality & Food Service Industry Top 10
Table 6: Pharmaceuticals Industry Top 10
Professional/Business Services
Benchmarks Revenue: COGS: SG&A: ROS: $197M 53% 22% 7%
Revenue ($M) $1,840 $1,742 $845 $1,586 $7,893 $8,328 $1,204 $5,324 $3,127 $2,506 ROS 39% 27% 27% 26% 24% 19% 18% 18% 17% 17% Overall Rank 14 41 42 46 49 70 81 84 90 92
Technology & Software
Benchmarks Revenue: COGS: SG&A: ROS: $107M 53% 31% 3%
Revenue ($M) $575 $49,555 $17,018 $13,431 $327 $33,473 $2,623 $1,372 $5,936 $1,588 ROS 48% 37% 33% 32% 27% 25% 24% 24% 20% 19% Overall Rank 7 16 24 27 44 48 50 56 68 71
Rank 1 2 3 4 5 6 7 8 9 10
Company Name PAYCHEX EQUIFAX ITT EDUCATIONALSERV DUN & BRADSTREET GANNETT CO ADP MONSTER WORLDWIDE TRIBUNE REPUBLIC SERVICES IRON MOUNTAIN
Rank 1 2 3 4 5 6 7 8 9 10
Company Name CHECK POINT MICROSOFT ORACLE GOOGLE MICROSTRATEGY CISCO SYSTEMS INTUIT WATERS CORP PITNEY BOWES CADENCE DESIGN
Table 7: Professional/Business Services Industry Top 10
Table 8: Technology & Software Industry Top 10
Sales Metrics and Best Practices of World-Class Sales Organizations
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Sales Benchmark Index
World Class 100
The Q1 2008 Ranking of the World's Top Producing Sales Forces
Revenue ($M)
$10,000 70%
60%
Cost of Goods Sold
$1,000
50%
40%
$6,586
$100
30%
20% 10%
61% 29%
Benchmark World Class 100
$217
$10
Benchmark World Class 100
0%
World Class 100 Benchmarks
Figure 5: WC100 Revenue Benchmark
Figure 6: WC100 COGS Benchmark
Selling General and Administrative
35%
30%
Return on Sales
30%
25%
25%
20%
20%
15%
10% 5%
31% 22%
15%
10% 5%
24% 5%
Benchmark World Class 100
0%
Benchmark World Class 100
0%
Figure 7: WC100 SG&A Benchmark
Figure 8: WC100 ROS Benchmark
Sales Growth Rate
18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 14%
12%
Shareholder Return
10%
8%
16% 9%
6%
4% 2%
13%
8%
0%
Benchmark World Class 100 Benchmark World Class 100
Figure 9: WC100 Sales Growth Benchmark
Figure 10: WC100 Shareholder Return Benchmark
Sales Metrics and Best Practices of World-Class Sales Organizations
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Sales Benchmark Index
World Class 100
The Q1 2008 Ranking of the World's Top Producing Sales Forces
World Class 100 Rankings
Benchmarks Revenue: COGS: SG&A: ROS: $217M 61% 22% 5%
Ticker MS GS BSC AMTD BAC USB CHKP PNC SCHW UST WB JPM ETFC PAYX NCC MSFT WFC MYL WM DNA KEY RHD ZMH ORCL AMGN QCOM GOOG FITB FRX MDT Industry Finance & Insurance Finance & Insurance Finance & Insurance Finance & Insurance Finance & Insurance Finance & Insurance Technology & Software Finance & Insurance Finance & Insurance Hospitality & Food Service Finance & Insurance Finance & Insurance Finance & Insurance Professional/Business Services Finance & Insurance Technology & Software Finance & Insurance Pharmaceuticals Finance & Insurance Pharmaceuticals Finance & Insurance Media Healthcare Technology & Software Pharmaceuticals Telecommunications Technology & Software Finance & Insurance Pharmaceuticals Healthcare ROS 72% 68% 66% 59% 53% 51% 48% 44% 44% 43% 43% 41% 40% 39% 38% 37% 37% 36% 36% 36% 35% 34% 34% 33% 33% 33% 32% 31% 31% 30% Industry Rank 1 2 3 4 5 6 1 7 8 1 9 10 11 1 12 2 13 1 14 2 15 1 1 3 3 1 4 16 4 2 Revenue ($M) $90,090 $84,560 $18,587 $2,536 $123,947 $19,805 $575 $11,364 $4,640 $1,883 $54,060 $112,344 $3,261 $1,840 $12,911 $49,555 $50,557 $1,449 $26,804 $10,946 $7,897 $2,618 $3,674 $17,018 $14,862 $8,564 $13,431 $8,628 $3,313 $12,086 Revenue Rank 4 7 27 72 2 25 95 42 56 79 10 3 65 80 38 12 11 86 21 43 48 70 59 29 35 46 36 44 64 41 COGS 4% 7% 3% 7% 13% 13% 6% 17% 6% 25% 21% 18% 25% 33% 21% 19% 15% 47% 26% 13% 22% 45% 22% 23% 15% 30% 40% 24% 22% 25% COGS Rank 4 8 3 9 15 17 5 23 6 44 33 26 45 54 32 29 22 75 47 16 35 71 37 41 21 52 62 42 36 46 SG&A 27% 24% 32% 31% 27% 32% 35% 36% 47% 29% 33% 35% 30% 29% 37% 29% 43% 14% 32% 30% 40% 5% 38% 26% 23% 17% 16% 36% 31% 34% SG&A Rank 37 27 55 53 38 57 65 71 88 46 62 66 47 42 74 45 82 9 59 48 79 2 75 36 25 16 13 70 52 63
Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Company Name MORGAN STANLEY GOLDMAN SACHS BEAR STEARNS TD AMERITRADE BANK OF AMERICA US BANCORP CHECK POINT PNC FINANCIAL SCHWAB CHARLES UST WACHOVIA J P MORGAN CHASE E TRADE FINANCIAL PAYCHEX NATIONAL CITY MICROSOFT WELLS FARGO MYLAN WASHINGTON MUTUAL GENENTECH KEYCORP R H DONNELLEY ZIMMER HOLDINGS ORACLE AMGEN QUALCOMM GOOGLE FIFTH THIRD FOREST LABORATORIES MEDTRONIC
Sales Metrics and Best Practices of World-Class Sales Organizations
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Sales Benchmark Index
World Class 100
The Q1 2008 Ranking of the World's Top Producing Sales Forces
World Class 100 Rankings
Rank 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 Company Name ADVANTA CAPITAL ONE CENTURYTEL LOEWS GENERAL ELECTRIC 3M AMERICAN EXPRESS RAYMOND JAMES SYNOVUS FINANCIAL FIRST HORIZON EQUIFAX ITT EDUCATIONAL SERV INTERNATIONAL PAPER MICROSTRATEGY WYETH DUN & BRADSTREET COCA COLA CISCO SYSTEMS GANNETT CO INTUIT CLEAR CHANNEL COMM KNIGHT CAPITAL GROUP BIOGEN IDEC WESCO FINANCIAL LEGG MASON WATERS CORP JOHNSON & JOHNSON PIPER JAFFRAY KENNAMETAL VIACOM ST JUDE MEDICAL STRYKER CORP ALLEGHENY TECH UNION PACIFIC KING PHARMACEUTICAL Ticker ADVNA COF CTL LTR GE MMM AXP RJF SNV FHN EFX ESI IP MSTR WYE DNB KO CSCO GCI INTU CCU NITE BIIB WSC LM WAT JNJ PJC KMT VIA STJ SYK ATI UNP KG Industry Finance & Insurance Finance & Insurance Telecommunications Finance & Insurance Conglomerates Conglomerates Finance & Insurance Finance & Insurance Finance & Insurance Finance & Insurance Professional/Business Services Professional/Business Services Basic Materials Technology & Software Pharmaceuticals Professional/Business Services Hospitality & Food Service Technology & Software Professional/Business Services Technology & Software Media Finance & Insurance Pharmaceuticals Conglomerates Finance & Insurance Technology & Software Pharmaceuticals Finance & Insurance Construction Media Healthcare Healthcare Basic Materials Transportation Pharmaceuticals ROS 30% 30% 29% 29% 29% 28% 28% 28% 28% 27% 27% 27% 27% 27% 26% 26% 25% 25% 24% 24% 24% 24% 24% 24% 24% 24% 23% 22% 22% 22% 21% 21% 21% 21% 20% Industry Rank 17 18 2 19 1 2 20 21 22 23 2 3 1 5 5 4 2 6 5 7 2 24 6 3 25 8 7 26 1 3 3 4 2 1 8 Revenue ($M) $535 $17,165 $2,518 $18,686 $166,260 $24,038 $29,797 $2,960 $4,383 $3,585 $1,742 $845 $20,170 $327 $21,373 $1,586 $27,458 $33,473 $7,893 $2,623 $6,975 $913 $2,987 $608 $4,254 $1,372 $57,137 $548 $2,272 $12,157 $3,519 $5,646 $5,529 $16,048 $2,063 Revenue Rank 97 28 73 26 1 22 19 68 57 61 81 93 24 99 23 85 20 17 49 69 50 91 67 94 58 87 9 96 75 40 62 53 54 32 76 COGS 12% 14% 35% 12% 43% 52% 12% 59% 20% 21% 41% 43% 73% 17% 28% 29% 36% 36% 55% 19% 38% 23% 10% 25% 14% 43% 29% 3% 64% 55% 28% 32% 74% 61% 22% COGS Rank 13 20 56 14 67 84 12 88 30 31 64 65 97 24 48 51 57 58 87 28 60 40 11 43 19 66 50 2 92 86 49 53 98 89 38 SG&A 41% 45% 15% 57% 25% 21% 54% 14% 50% 49% 25% 30% 15% 46% 31% 40% 39% 25% 17% 39% 29% 51% 26% 52% 61% 28% 33% 75% 24% 21% 37% 39% 5% 10% 35% SG&A Rank 81 85 11 96 32 22 95 8 91 90 31 49 10 87 51 80 77 28 14 76 43 92 33 93 98 39 61 99 26 21 73 78 3 5 67
Sales Metrics and Best Practices of World-Class Sales Organizations
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Sales Benchmark Index
World Class 100
The Q1 2008 Ranking of the World's Top Producing Sales Forces
World Class 100 Rankings
Rank 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 Company Name COLGATE PALMOLIVE PROCTER & GAMBLE PITNEY BOWES PFIZER ADP CADENCE DESIGN KLA TENCOR PEPSICO NUCOR OPPENHEIMER HOLDING FASTENAL LAMAR ADVERTISING COMCAST ALLTEL DENTSPLY INTER MONSTER WORLDWIDE ALTRIA GROUP BECTON DICKINSON TRIBUNE ANHEUSER-BUSCH UNITED RENTALS BEA SYSTEMS DELUXE CORP CANON REPUBLIC SERVICES GENERAL MILLS IRON MOUNTAIN AT&T MSC INDUSTRIAL STEWART ENTERPRISES SPSS INTEL ILLINOIS TOOL WORKS LILLY ELI ALLERGAN Ticker CL PG PBI PFE ADP CDNS KLAC PEP NUE OPY FAST LAMR CMCSA AT XRAY MNST MO BDX TRB BUD URI BEAS DLX CAJ RSG GIS IRM T MSM STEI SPSS INTC ITW LLY AGN Industry Consumer Products Consumer Products Technology & Software Pharmaceuticals Professional/Business Services Technology & Software Technology & Software Hospitality & Food Service Basic Materials Finance & Insurance Basic Materials Media Media Telecommunications Healthcare Professional/Business Services Hospitality & Food Service Healthcare Professional/Business Services Hospitality & Food Service Hospitality & Food Service Technology & Software Consumer Products Technology & Software Professional/Business Services Hospitality & Food Service Professional/Business Services Telecommunications Capital Goods Professional/Business Services Technology & Software Technology & Software Capital Goods Pharmaceuticals Pharmaceuticals ROS 20% 20% 20% 20% 19% 19% 19% 19% 18% 18% 18% 18% 18% 18% 18% 18% 18% 18% 18% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 16% 16% 16% 16% 16% Industry Rank 1 2 9 9 6 10 11 3 3 27 4 4 5 3 5 7 4 6 8 5 6 12 3 13 9 7 10 4 1 11 14 15 2 10 11 Revenue ($M) $13,357 $75,046 $5,936 $48,441 $8,328 $1,588 $2,575 $37,511 $15,337 $848 $1,991 $1,170 $29,912 $8,623 $1,887 $1,204 $87,648 $6,196 $5,324 $16,416 $3,640 $1,200 $1,620 $34,917 $3,127 $12,226 $2,506 $89,897 $1,624 $530 $283 $35,965 $15,653 $16,967 $3,511 Revenue Rank 37 8 52 13 47 84 71 14 34 92 77 90 18 45 78 88 6 51 55 31 60 89 83 16 66 39 74 5 82 98 100 15 33 30 63 COGS 44% 48% 46% 17% 52% 13% 45% 45% 78% 2% 49% 34% 8% 43% 48% 39% 69% 49% 50% 65% 65% 22% 37% 50% 63% 63% 46% 40% 54% 78% 6% 51% 65% 22% 18% COGS Rank 69 77 74 25 83 18 70 72 100 1 79 55 10 68 76 61 96 78 80 95 93 34 59 81 90 91 73 63 85 99 7 82 94 39 27 SG&A 36% 32% 31% 32% 26% 36% 20% 36% 4% 80% 33% 23% 54% 22% 34% 44% 13% 26% 28% 18% 17% 46% 47% 25% 10% 20% 28% 25% 29% 6% 59% 15% 18% 32% 44% SG&A Rank 72 56 50 58 35 69 20 68 1 100 60 24 94 23 64 83 7 34 40 18 15 86 89 29 6 19 41 30 44 4 97 12 17 54 84
Sales Metrics and Best Practices of World-Class Sales Organizations
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Sales Benchmark Index
World Class 100
The Q1 2008 Ranking of the World's Top Producing Sales Forces
World Class 100 Benchmark Discussion: Sales Growth Rate Best Practice
“My company is having a hard time setting performance targets for the sales force. The field is complaining that we are setting unrealistic quotas and it is having an impact on morale. Senior executives feel the goals are not high enough and are getting tired of the complaining coming from the sales force. Can you share with me a best practice from the membership that might help us insert some objective science into this process?” Sales Growth Rate (or SGR) is defined as the percentage increase in sales (in either units or dollars) of an industry, market segment, firm, or product category. It is determined by first measuring the total sales in the market and then comparing this figure to the sales changes in preceding time periods (typically years). SGR data can be obtained through a company’s IT systems, a 3rd party benchmarking database, trade publications, independent market research firms, product analysts, government reports, and even trade associations. Knowing SGR assists companies in determining whether their own performance is stronger than, consistent with or weaker than the rest of the market. SGR is influenced by many factors, including demographic changes, purchase behavior patterns, product innovations and lower interest rates. Once these driving forces are understood, companies can use this information to develop new products, communication campaigns and price changes to create a competitive advantage for their products. Executives are interested in growing business in assigned marketplaces while sales management is tasked with identifying growth opportunities along two dimensions: market share and financial performance. As growth has direct implications for a firm’s competitive position, executives are keenly interested in whether sales growth is faster, equal to, or less than overall market growth since the answer will affect future sales plans about customer segments, product choices, and channels.
Sales Metrics and Best Practices of World-Class Sales Organizations Page 14 of 20
Response
Inquiry
Sales Benchmark Index
World Class 100
The Q1 2008 Ranking of the World's Top Producing Sales Forces
World Class 100 Benchmark Discussion: Sales Growth Rate Best Practice
Sales Growth Rate Indicators SGR can serve as a good indicator of dynamics in the marketplace. It provides guidance on or insight into: A market’s potential (the total number of customers in a target market) The level of customer penetration (how many customers have entered the market)
Response Cont…
The rate of customer entry (how quickly new customers enter the market). Important trends, which can be further understood by comparing SGR rates for past years and/or projected SGRs for future years.
Sales Growth Rate Drivers However, executives should be mindful that when measuring SGR it is important to understand the underlying drivers. For instance, is the high SGR due to: Growth of total market revenues? Growth of total market dollars available for purchasing? Rate at which new customers are being acquired? Rate at which the top 3 competitors are growing? Answers to these questions are typically highly industry dependent. Furthermore, even within industries there are segments that may skew the answers even further.
Sales Metrics and Best Practices of World-Class Sales Organizations
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Sales Benchmark Index
World Class 100
The Q1 2008 Ranking of the World's Top Producing Sales Forces
World Class 100 Benchmark Discussion: Sales Growth Rate Best Practice
Sales Growth Rate (SGR) Formula = ℎ
Example: Sony Walkman vs. Rest of Digital Music Player Market. Sony sold 850K units of its Walkman digital music player in 2004. It forecast sales of 4.5M units in 2005, for a SGR of 529%. The sales volume for portable digital music players in 2004 was 37M units and was expected to be 57M units in 2005, for a SGR of 54%.
Response Cont…
So what meaning does this comparison have?
2005
2005
(
(
)=
4.5 850
)=
= 529% 37 20
= 54%
Sony’s projected Sales Growth Rate of 529% appears quite strong when compared to the market overall. Further analysis would have revealed that part of Sony’s projections were influenced by the launch of new models in 2005, probably with the hope these new devices would capture the attention of consumers and eat into the market-leading position of its rival, Apple. In Sony’s case, its projected pace of growth, during this time period, far exceeded that of the overall market, which meant that Sony would have wrongfully expected to gain share at the expense of Apple’s iPod. Therefore, Sony sales management would want to understand the forces driving SGR, and, in this instance, the reasons Sony’s growth far exceeds the pace of the market.
Sales Metrics and Best Practices of World-Class Sales Organizations
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Sales Benchmark Index
World Class 100
The Q1 2008 Ranking of the World's Top Producing Sales Forces
World Class 100 Benchmark Discussion: Sales Growth Rate Best Practice
Knowing the market growth rate can provide sales management with insight into the future potential for their business, although there is no guarantee that historical growth rates will continue in the future. A company’s own SGR must be measured first for two reasons:
Conclusion About This Discussion
1. To see what the growth trend has been over the past few years and to determine if whether the current pace is above or below the recent historical average 2. To compare its SGR to that of its relevant peer group and World-Class organizations. In addition, SGR provides strategic guidance regarding the attractiveness of a given market in the years to come and assists Sales leaders in understanding the associated opportunities and challenges. It is also a useful tool for senior executives when evaluating sales investments, since it provides a snapshot of likely growth opportunities.
Sales Benchmark Index offers an ongoing series of best practices discussion documents to compliment the sales benchmarking services provided to each advisory member. These documents help Sales Benchmark Index members connect cause and effect and enable them to take the next step to address the deficiencies revealed through relevant peer group comparison. This discussion addressed the member’s initial question and Sales Benchmark Index hopes it can help you as well. Any follow-up questions or further assistance should be directed to the Sales Benchmark Index Team. Please contact them at 888-556-7338 or visit www.salesbenchmarkindex.com.
Sales Metrics and Best Practices of World-Class Sales Organizations
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Sales Benchmark Index
World Class 100
The Q1 2008 Ranking of the World's Top Producing Sales Forces To create the World Class 100 report, Sales Benchmark Index, performed an analysis of over 10,900 companies, across 19 Industries, over 200 sales metrics, and 11 years of history utilizing the Sales Benchmark Index Relative Index (RI). The RI measures the Return on Sales results for each industry category in relation to one another. RI is a relative-ranking methodology, not a formula, and is determined by comparing global industries on a common measure, ROS. To create the top 10 Industry lists, SBI asked executives, directors, and analysts to rate companies in their own industry on twelve criteria, from revenue growth rate to selling expenses using the Sales Benchmark Index Absolute Index (AI). The AI measures absolute Return on Sales (ROS) for each company in an industry and compares the result to the mean for the industry to arrive at a performance factor. This is useful for determining overall performance. Only the top 8 industry breakouts were included in this report. For example General Electric is No. 35 on the overall list even though its industry, Conglomerates, did not make the top 8. If you would like additional details on the 11 Industries that did not make the list (Capital Goods, Conglomerates, Construction, Energy, Industrial & Chemical, Manufacturing, Media, Retail, Telecommunications, Transportation, Utilities), please email worldclass100@salesbenchmarkindex.com. Find out what top executives in your peer group think. For detailed scores and analysis of the twelve key drivers of World-Class sales results for all companies within a peer group, including those not published, please email worldclass100@salesbenchmarkindex.com.
World Class 100 Selection Methodology
Special appreciation goes to the research team at Sales Benchmark Index for analyzing the data. To have your company benchmarked against the world’s largest sales benchmarking database, please visit www.salesbenchmarkindex.com or call 888-556-7338.
Sales Metrics and Best Practices of World-Class Sales Organizations
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World Class 100 research is differentiated from other sales research in that it is only concerned with: Metrics utilized by World Class sales forces Contrary indicators signaling the beginning or decline of sales force excellence Empirical data significantly above or below the benchmark mean Operating statistics that enable sales leaders to perceive the future chain of events triggered by an action in the present
Sales Benchmark Index
World Class 100 Sales Benchmark Index
The Q1 2008 Ranking of the World's Top Producing Sales Forces Web: www.salesbenchmarkindex.com Email: info@salesbenchmarkindex.com Phone: 888.556.7338
Sales Performance
Best Practice Benchmark Growth
Growth
External Benchmark Growth
Internal Benchmark Growth
Non-Benchmark Growth
Time
About Sales Benchmark Index Sales Benchmark Index is a strategic advisory firm that helps executive leadership understand how well they are performing relative to a peer group and World-Class levels. Sales Benchmark Index is differentiated through its use of empirical data, a repository of over 10,900 companies, across 19 industries, 11 years of history and over 200 sales metrics. Through SBI’s sales benchmarking services a company can deploy comparative data sets to identify the improvement opportunities available through leveraging best practices of World-Class sales forces.
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