Recently, I was afforded the opportunity to speak to the Philadelphia Chapter of FEI, Financial Executives International. After breakfast, I was asked to speak for about 45 minutes on the importance of benchmarking company performance against peer performance. Stratascope had provided each company with a benchmark report that highlighted their performance across several important operating metrics as compared to their peers and the leaders in their industry. SAP America had sponsored the event. I thought the session went well. The group was lively and interactive. All of the CFOs and Finance VPs in the room acknowledged the importance of benchmarking. That reason alone is why it should be important to you as well. You need to care about the same things that your clients care about.
So why do they care? There are several key reasons. In today’s climate of rapid economic change, market conditions continue to evolve at a dizzying pace. None of last year’s internal benchmarks for growth or profitability seem to apply. The only place to find metrics for the same economic conditions is to look at your industry peers. The second reason points to the diminishing time to market in many industries. Barriers to entry in most industries are falling away, opening the door for new competitors accelerated by technological advances. Even Microsoft Chairman Bill Gates has been quoted as saying that his company could be out of business in 18 months if they did not continue to innovate. Peer benchmarking helps companies quickly identify these external pressures. The third reason is that benchmarking puts performance in perspective. If your DSO drops from 85 days to 55 days, is it because you did something right, or is it because the industry that you sell to started paying sooner? Benchmarking can tell you.
Now that we know why they care, why should you care? You should care for the same reasons, but from a different perspective. If your offerings help companies be more nimble, enjoy better visibility into their business, or quickly adapt to change, then you want to talk to companies that have experienced the rapid change of reason #1. You want to help them close the gap. If you can help your prospects fend off the competition, defend their customer base, or get their offerings to market more quickly, you want to talk to companies that are seeing reason number #2. If neither of those reasons pushes you to act, there is always reason #3. By putting performance in perspective, you will put yourself in a position to question your prospects management decisions and initiatives. I don’t mean for you to question whether or not they made the right decision or investment, but to question the decision itself. For example, if your benchmarking tells you that one company has higher (not better or worse) costs than another similar company, it is only proper for you point out the difference (it is fact), and ask them why? It may be by design, they may see it as a competitive advantage, it may be part of their image and value, or it may be an issue that they would like to address. By simply asking why, you open the door for meaningful dialogue with your prospect or client.
Benchmarking can be a great door opener or conversation starter. Use benchmarking to articulate your observations and then ask for an explanation. Before you know it, you will be talking about them and their business, which is right where you want to be.
In my next several blogs, I will begin a series of shorter posts that focus on basic business acumen for sales and marketing professionals.
-Bruce A. Brien, CEO, Stratascope Inc.
