Most of us are well over the halfway point in our fiscal year, and it is already time to begin putting together our sales plans for next year. In fact, many Sales Ops teams already have their planning process well under way, but despite best efforts and lessons learned from past history, even the most experienced Sales Ops professionals make mistakes. In this two-part blog we will uncover 6 common planning mistakes and some tips on how you can avoid them. Read on to see if you’re guilty of any of these missteps.
- Underestimating how long it takes to hire sales resources – particularly in tight job markets. Planners have the best intentions in figuring out what resources need to be added and when, but often do not take into consideration how long it takes to find them. Every month that a position stays vacant can cost thousands of dollars in lost sales productivity. Some recent studies have shown that it can take twice as long to hire Sales reps today as it did 5 years ago. Competition is fierce. As an example, an industry colleague in the Bay Area recently tried to hire an SDR; according to his recruiter’s sources, there were nearly 2000 similar job openings, but less than 100 active candidates available! In the face of that kind of competition, it could take some time to fill that role. To ensure your hiring plan is realistic, study your recent hiring trends and work with your Human Resource team to build realistic hiring times into your plans. You might find that you need to start recruiting for those Q1 hires sooner than you thought.
- Underestimating the true impact of ramp on productivity. While most of us understand that getting a Sales rep up to full quota productivity takes a few months, we tend to be optimistic when building our plans and underestimate how long it actually takes. This is particularly true when you are rapidly expanding a sales team. Managers have to divide their coaching time among more people, training resources are spread more thinly, and in this job market, you may be hiring less experienced sales reps than in the past. If your ramp time to full productivity was 4 months before expansion, it could easily increase by a month or two. If, for example, you were planning on 50 new reps each delivering $100,000 by month 5 but instead they are only 75% ramped, that adds up to a $1,250,000 shortfall from your plan. To avoid this becoming a problem, take a deeper look at your recent ramp history, ensure your ramping plan assumptions allow adequate time to get reps up to full productivity and, if necessary, adjust your bookings expectations accordingly. To find out more on what ramp time is really costing you and other factors that affect ramp, read this blog.
- Focusing on pipeline and forecast at the expense of sales capacity. Don’t get me wrong, pipeline is a major driver of your plan. Developing an understanding of the quality of your pipeline and your coverage ratios are fundamental to successful planning. You might have a really strong pipeline, but if you don’t have enough sales people to close the business, you are likely to miss your target, costing your company lost revenues. While some companies have developed a fairly sophisticated understanding of their true sales capacity, many still apply an overall coverage factor of x% as a contingency to cover ramp, time to hire, attrition and expected average rep performance against quota. These numbers often vary by region or market, and as your sales teams grow, figuring out the effect on your “real” sales capacity gets more complex. To avoid this mistake, take a hard look at your actual numbers in these categories over the past couple of years. If you understand and carefully track those variables, you can more accurately forecast your true productive sales capacity and have a better chance of closing all those opportunities.
These three sales ops planning slipups could have a huge impact on bookings and sales productivity within your organization. When it comes to planning, it’s important to be realistic, examine historical data, and monitor your progress by verifying if your ramp, hiring and attrition assumptions and scenarios played out the way you thought they would. Check back next week to get the next 3 missteps sales ops sometimes makes during planning season.