# Sales Benchmarking: Measure Reps Against Your Own Best > Sales benchmarking without industry figures: the gap to your own top quartile as the distance between two expected values, in euros. Canonical: https://funneleconomics.ai/resources/patterns/benchmark-arbitrage Internal Benchmark Arbitrage is the gap between a rep’s bEFV and the bEFV the same pipeline would have at the stage win rate of the organisation’s own top quartile. The calculation: open pipeline amount times the pooled stage win rate of the top quartile, minus actual bEFV. The organisation’s overall stage win rate is the baseline, not a best value. ## How do you notice that an average hides the differences? The team is on plan or just below it. On average, open deals turn into closed business about as often as in the quarters before. The sales meeting gives little reason to ask questions. The one-on-ones show a different picture. Some reps bring far more deals to a close from the same phase of the sales process than others. Everyone in the leadership team knows that. Nobody can say what the distance amounts to in money. Three everyday observations point to the pattern: - Performance is discussed in percentage points, and a few percentage points sound like little. - The comparison is the team average. Anyone above the average counts as unremarkable. - Asked where coaching would yield the most, everyone answers from personal experience. An average does not answer that question. The average blends the strongest and everyone else into one number. How far the two are apart is no longer in that number. The internal comparison asks what your own organisation already achieves. Funnel Economics calls the distance, expressed in euros, Internal Benchmark Arbitrage: the distance between two expected values, not a lost amount. From here on, this article speaks of the **internal benchmark**: the comparison of one rep with the top quartile of the same organisation. ## Why your own top quartile is the better yardstick The internal benchmark needs two terms: the stage win rate and bEFV. ### The stage win rate belongs to one rep The stage win rate is the share of deals won among the deals that stood in a stage and were decided. Funnel Economics measures the stage win rate from periods that have run, per stage, [opportunity type](https://funneleconomics.ai/resources/glossary/opportunity-type) and sales rep. A stage is a phase of the sales process. Opportunity is the name a deal carries in the CRM. The stage win rate is neither estimated nor set as a fixed value. Fixed percentages per stage do not appear in the calculation. The stage win rate is measured per sales rep; the organisation’s is pooled across all reps. That is exactly why reps can be compared on the stage win rate. :::hinweis Conversion rate is a family name for four quantities. This article means the stage win rate throughout: of the deals that stood in a stage and were decided, what share was won? It is measured per stage and sales rep. It is not a rep’s win rate across all their decided deals, and it is not a transition from one stage to the next. ::: ### bEFV values the open pipeline The second term is [bEFV, the expected value of the pipeline](https://funneleconomics.ai/resources/glossary/befv). bEFV (Baseline Expected Funnel Value) is the structural expected value of the funnel: each opportunity’s amount multiplied by its stage win rate, without regard to current sales hygiene. bEFV therefore says what value a pipeline can be expected to produce, going by its own history. The internal benchmark does not accept bEFV as given. The internal benchmark asks: how much money would be in the pipeline if this rep had the stage win rate of the top quartile? ### Three yardsticks, three questions Three rates can serve as the yardstick. Each rate answers a different question. | Yardstick | Rate | Question | |---|---|---| | Whole organisation | the organisation’s rate for the stage | What if every rep converted like the organisation on average? | | Top quartile | the pooled rate of the best quarter of reps | What if everyone worked like the best group? | | Single top rep | the highest rate of one rep | What if everyone worked like the best rep? | The stage win rate of the whole organisation is the baseline, not a best value. A gap against that rate is the distance to the average, not to the top. Calculated across the whole organisation, such a gap compares the organisation with itself. At Funnel Economics, the top quartile has a name: hero cohort. The hero cohort is the best quarter of sales reps by current stage win rate, with one joint rate. The hero cohort is a group, never a single person. More on this is in the entry [hero cohort, the best quarter](https://funneleconomics.ai/resources/glossary/hero-cohort). The hero cohort is an ambitious yardstick carried by a group. The yardstick is therefore steadier than the value of a single rep. Where too few sales reps have a current stage win rate, there is no hero cohort; the comparison counts as not measurable. ## How is the gap calculated? :::formel bEFV at the top-quartile rate = open pipeline amount × pooled stage win rate of the top quartile Gap = bEFV at the top-quartile rate − actual bEFV - Open pipeline amount – the amounts of the rep’s open opportunities - Pooled stage win rate of the top quartile – the joint rate of the group with the highest rates for the same stage and the same opportunity type - Actual bEFV – the same pipeline, valued at the rep’s own stage win rate ::: Pooled means that the cases of the group are put together and one joint rate is formed from all of them. A rep with many cases weighs more in that rate than a rep with few. The comparison is like with like. The top-quartile rate applies to the same stage, the same opportunity type and the same period. :::example Illustrative example with invented numbers: a sales rep has open opportunities in one stage worth €745,000 in total. The rep’s own stage win rate for that stage is 18%. Stage win rates are measured; there are no fixed values per stage. Actual bEFV of this pipeline is €745,000 × 18% = €134,100. The pooled stage win rate of the organisation’s own top quartile for the same stage is 31%. bEFV at the top-quartile rate is €745,000 × 31% = €230,950. The gap is €230,950 − €134,100 = €96,850. For this pipeline, the distance of 13 percentage points therefore corresponds to €96,850. The numbers are invented and are not guide values. ::: The example shows why percentage points alone say little. The same distance in the rate means a small amount on a small pipeline and a large amount on a large one. Only the amount makes gaps comparable. ### The top quartile as a daily value The distance between the organisation and its top quartile can also be read as a daily value. For that, the pipeline open today, weighted by SLA Health, is valued twice. One valuation uses the organisation’s stage win rate, the other the hero cohort’s stage win rate. Both values are divided by the average sales cycle. The daily value is a value spread over an average full sales cycle. The daily value is not a payment stream. If the top quartile cannot be formed, the second value does not exist. The second value is not replaced by any other rate, including the rate of the single best person. The daily value is not [Sales Velocity](https://funneleconomics.ai/resources/glossary/sales-velocity). Sales Velocity looks back at a completed period; the daily value values the open pipeline. Both are normalisations: they spread a value over the days of an average full sales cycle. Neither is extrapolated to the remaining days of a period. ## What should you do with the gap? The gap is a finding about a pipeline, not a verdict on a person. The gap shows where a conversation can start. Whether coaching closes the gap is not something the calculation says. This article recommends four steps: 1. **Name the yardstick.** Beside every gap stands what it was calculated against: the top quartile, not the single best rep. 2. Read the gap per stage. The rate exists only per stage, so the gap shows for the deals of which stage the distance exists. 3. Put the case count beside it. A rate built on few cases carries little. 4. Look at the group first, then at the person. The first check is whether a whole team is affected or a few people. ### What the gap does not say The calculation of the gap contains no target. The gap therefore does not say whether a rep will still reach the target in the current period. The question about the pipeline itself belongs beside the gap. Coaching starts where pipeline exists and has not yet been turned into closed business. Where the pipeline is missing, coaching does not change that. New pipeline comes first. ### How leaders use the gap This article recommends that the sales leader lay the gaps side by side across teams and stages in the sales performance analysis. This article recommends that the first-line leader take the gap as the starting point for the one-on-one. The gap names an amount and a stage. Why deals from that stage are won less often than in the top quartile is for the conversation to establish. The gap needs no names of other people for that. The yardstick is the rate of a group, not the value of a single person. :::merksatz The fairest yardstick is in your own data: the gap to your own top quartile, a distance between two expected values in euros, shows where a conversation can start. ::: ## What the internal benchmark is not ### PAS and CIF work on decided deals Two Funnel Economics measures describe sales performance per rep: [CIF, the share of the team result](https://funneleconomics.ai/resources/glossary/cif), and [PAS, which combines win rate and contribution](https://funneleconomics.ai/resources/glossary/pas). CIF (Commercial Impact Factor) measures a sales rep’s share of the deals won and the revenue won by the team in one period, combined into one weighted measure. PAS (Performance Adjusted Score) multiplies a sales rep’s win rate across all their decided deals by their CIF. That is not the stage win rate. PAS and CIF work on decided deals, meaning on what was won or lost. The internal benchmark, by contrast, values the open pipeline. ### Global Stage Attrition is not a local pattern In Global Stage Attrition, the stage win rate of one stage falls not for individual reps or regions but for the majority of teams and regions. In the internal benchmark, individual reps sit below the top quartile. The other pattern is covered in the article on [Global Stage Attrition, when the stage win rate drops across most teams](https://funneleconomics.ai/resources/patterns/global-stage-attrition). A drop that cannot be traced to any single rep or region speaks against an execution problem in sales. ### Industry figures are a different comparison The internal benchmark works without figures from outside: both rates come from your own organisation; a comparison with industry figures is not the subject of this article. ## FAQ ### How do I compare sales reps fairly? A fair comparison measures like with like. The internal benchmark compares a rep’s stage win rate with the pooled stage win rate of the organisation’s own top quartile, for the same stage and the same opportunity type. The yardstick is therefore a group from your own organisation, not a single person and not another company. Every rate carries its case count beside it, because a value built on few cases carries little. ### What does the gap between the top quartile and the rest cost in money? The gap can be calculated per rep. The open pipeline amount is multiplied by the pooled stage win rate of the top quartile. Actual bEFV is then subtracted, meaning the same pipeline at the rep’s own stage win rate. The result is an amount of money instead of a distance in percentage points: the distance between two valuations of the same pipeline, not a loss. There is no general value: the gap depends on your own pipeline and your own rates. ### Do sales productivity metrics like this need industry benchmarks? No. The internal benchmark compares inside your own organisation: a rep’s stage win rate with the stage win rate of the top quartile. Both rates come from your own data. The stage win rate of the whole organisation is the baseline in that comparison, not a best value. A comparison with industry figures is a different comparison and answers a different question. ### How does the internal benchmark differ from PAS and CIF? CIF measures a sales rep’s share of the deals won and the revenue won by the team. PAS multiplies a sales rep’s win rate across all their decided deals by their CIF. That is not the stage win rate. Both measures work on decided deals. The internal benchmark values the open pipeline: it calculates what the same pipeline would be worth at the stage win rate of the top quartile, and states the gap as an amount of money.