Exec Summary

• Benchmarks can be misleading
• They don’t take into account every variable
• However, they can be useful in the right context
• Make sure the benchmark you measure follows the right criteria
• Popular benchmarks can come with their own pitfalls
• Try not to use benchmarks as definitive targets
• Instead, benchmark against your own relative progress
• Benchmarking can also show us how to challenge the status quo

Listen to the full podcast, “The Death of the MQL with Renee Cohen” here.

According to a recent benchmark study, USC has determined that the optimal sales cycle is 30 days. If your sales cycle is over or under that number, something is wrong with your business.

Before you go looking for that unsubscribe button, that was a joke!

We’ve never done a sales cycle benchmark study, but these kinds of reports are nothing new. It’s hard to resist the temptation of seeing how we compare to everyone else.

Here’s the issue: Benchmarks cannot be universally applied because businesses are not universally the same. 

Does that mean we shouldn’t be looking at benchmarks at all?

Or do we just need to find the right contexts in which to use them?

Let’s explore this…

First, What Are We Measuring?

If you’ve been following USC for a while, you likely have a few ideas in your inbox on what metrics to focus on. Measuring the right things for your business can be hard to get right. Certain benchmarks may be trendy online, but completely misleading as indicators of your own business’s success.

Here are the requirements for a useful benchmark:

1. Frequency: It should be measurable more than once per quarter
2. Accuracy: Data collection methods should be reliable and consistent
3. Relevance: It should be a leading indicator of an objective you care about
4. Historical Data: You should have some information on it from past performance
5. Clear Definitions: Everyone involved should be adhering to the same metric definition

Here’s an example of a benchmark people love to talk about: Email open rates.

The pitfalls of this benchmark:

• “Good” open rates are not the same across industries
• The definition of “email open” has gotten messy over the years (thanks, Apple and Google!)
• Being in the optimal range for this benchmark (around 30%) may have zero impact on your revenue

Let’s look at another popular benchmark: Cost per lead (CPL).

The pitfalls of this benchmark:

• We don’t all define “leads” the same way, let alone MQLs
•  In some markets, you have to spend more per lead to acquire higher-value deals
• Simply knowing the cost of the lead doesn’t mean much down the road in terms of how we convert that lead to revenue

How Should We Use These Benchmarks?

As Relative Targets for our Own Business

Instead of using benchmarks as an absolute goal for a metric, it’s better to track the relative improvement and progress towards your target. This can eliminate the maddening process of trying to understand why you don’t “measure up”.

This is what we mean when we say we take benchmarks with a grain of salt.

For example, most would argue that close rates on SQOs should be 24%-33%. Historically, USC’s close rate has been around 45% – but that was solely from partner referrals.

As we increased our pricing and inbound lead flow, we saw our close rate shrink.

At the same time, our business was growing.

While these benchmarks might spark important questions on how we’re qualifying leads or conducting our sales process, they don’t perfectly apply to our business. We have to zoom out and look at the bigger picture to get accurate insights into the health of the company – and forcing that analysis is where benchmarks really shine.

So, when it comes to benchmarks, pick your poison and just track it.

Don’t worry so much about comparing yourself to industry standards for other companies if your company is doing things a little differently. In my experience, to beat the industry standard, you tend to have to do things a little differently anyway!

Which leads us to the other way we can use benchmarks…

As an Insight into our Market 

Good benchmark data can be useful in the right context.

We’ve seen several reports come out in the last year that show us not what we should be doing/how we should be performing, but where there are opportunities to strategize differently.

We recently published a podcast episode with Renee Cohen from Norwest Venture Partners, where we discussed their 2023 B2B Sales and Marketing Benchmark Report.

Most of the companies in the report were still relying on MQLs as their #1 KPI – despite “The Death of the MQL” being a consistent industry topic for the last 5-6 years. The thing that surprised Renee the most, was that these companies had not even worked to tighten their MQL definitions.

“Benchmarking can shine a light on where we should challenge the status quo to operate differently in the future.”

– Renee Cohen, The 2023 B2B Sales and Marketing Benchmark Report

Where Do Benchmarks Become Necessary?

Sometimes – like during fundraising – you’re going to be judged by industry benchmarks whether you like it or not.

At this point the question becomes, “how do we tell our story through metrics that may or may not match industry standards for benchmarks”?

For example, in businesses with different product lines or multiple segments, the blended average for acquisition cost might not be favorable. We might have to filter our data to get the numbers to “look right” and tell a more accurate (and favorable) story for our business.

Whatever way you slice the data, make a footnote so that investors understand how you’ve pulled it together.

In closing, benchmarks are a useful tool, and they can help us ask the right questions about our business, but they should never be the primary method for evaluation.