This blog is the second in a series of sales planning fundamentals being written by Xactly Chief Sales Officer Marc Gemassmer. Read part 1 on sales planning fundamentals, part 3 on quota planning, and part 4 on territory mapping.
Understanding sales rep ramp time and anticipated attrition rates is crucial for effective sales planning. However, as outlined in my initial post, “Sales Planning Fundamentals Part One: Driving the Right Approach,” the way that you manage planning functions—including ramp and attrition—makes the difference between success and failure.
In today’s fast-paced business environment, effective sales planning necessitates an automated, continuous and data-driven approach. As the lynchpin to your team’s performance, expected ramp and attrition cannot be determined in an ad hoc or gut-based manner.
Imagine the consequences when you’re basing decisions on the wrong ramp and attrition rates:
- Your headcount is too low
- Your forecast is inaccurate
- You lose revenue from missed opportunities
Basing Assumptions on Data, Not Guesswork
Ramp time—or the time it takes for sales reps to achieve productivity—varies from rep to rep, on each rep’s experience level, and different sales roles. Additionally, ramp time can vary by product type and geography. Yet most companies still use a general ramp assumption across the board.
Consider the cost to the business with an incorrect ramp. If the actual ramp is higher—say nine months versus an estimated six months—you won’t have enough reps to hit your targets.
Companies tend to treat attrition (the rate at which reps leave a company) in a similar manner. Most companies will simplify attrition rate calculations with a flat percentage across all reps. However, if you have a higher rate of attrition than what you estimate, you’ll find yourself short on required resources to achieve your goals.
Ensuring a Correct Sales Capacity Plan
As a sales leader for more than 20 years, I’ve had many sleepless nights worrying about the efficacy of my hiring and capacity plans. If they aren’t done correctly, the consequences are huge. There’s nothing worse than looking at targets and realizing that—given actual ramp and attrition rates —I should have been hiring additional sales reps 90 days ago.
You need to be hiring at a certain pace in order to accommodate quota capacity. If you didn’t get your headcount right, it means you didn’t get your hiring plan right. And that means you didn’t accurately plan for sales ramp and attrition.
With a data-driven approach, organizations gain greater accuracy. For example, using Xactly Sales Planning, our customers can apply their historical ramp data to create a more comprehensive and accurate view into ramp outcomes.
Leveraging historical actuals, Xactly Sales Planning also lets organizations apply fine-grained modeling of a company’s attrition rates. Companies can drill down to see attrition differences across fiscal calendar months or new versus seasoned reps (Read more about the relationship between tenure and attrition here).
Comparing Plan to Execution
Sales leaders should always be going back to planning assumptions to see if they are on track or not. As a sales leader, I want my plan and execution to be linked, so I can see how my plan compares to my execution.
With purpose-built planning software, such as Xactly Sales Planning, companies can easily look back and see whether ramp times are consistent with assumptions. If it’s taking reps longer to ramp, you can model that information in the solution to determine what it means to your business and what it might require in terms of headcount.
The future of sales planning calls for a data-driven rather than the existing best guess approach. By evaluating ramp time across reps, you ensure you have capacity with the optimal ramp time to hit potential. With data-driven insights into your current course and speed, you can also make sales planning a continuous and iterative process.