When you hit your bookings number you may chalk it up to a rep's last minute heroics or a particularly important deal "that made the quarter." But there's always an underlying reason for why things broke the way they did. Often, the seed was planted several quarters ago.
Sales capacity is more complex than leads, pipeline and reps. It's important to develop an understanding of which variables are driving your sales plan and to quickly adapt when those variables change.
Below, we discuss key elements to include in your plan. You can also download and edit the slides if you would like to use them for your own purposes.
Why is this taking so long?
Take the hiring of a new sales rep for instance. It's imperative to build into your plan the time it takes to get from "we need to hire more reps" to those reps being fully ramped. The example below shows this as 101 days. If you map out each stage you will likely find chunks of time to optimize. It's a safe bet on-boarding is going to be the top consumer of time. After that you may find surprises. More likely you'll find a number of steps taken together suddenly become significant. Below, it takes 45 days to get a rep in the door. Not that far off from the time it takes to on-board!
The Headcount Planning stage is key. This includes the step where you realize you don't have the right rep capacity in your plan to hit future quarters, either because of higher than expected attrition, lower than planned quota attainment, or extended on-boarding. Ideally, your sales (and finance) org is ready and willing to revisit the sales capacity plan so it doesn't take weeks of wrangling to set the gears in motion.
Is the math working?
Fortunately, many variables in your sales plan are simple for everyone to understand and monitor. Average deal size falls into this group. Watch it closely and break it into segments that match your business, (e.g., SMB, EMEA). If you want to get fancy you can even monitor average deal size for new reps and build that into your sales plan.
Got enough to make it?
There are many ways to look at pipeline close rates. Below we look at pipeline at the beginning of the quarter and match that to what is ultimately booked. Pipeline will of course (hopefully!) flow in and potentially close during the quarter. Track that separately. What you want is to know whether you're starting the quarter in a good place. The marketing growth team and your SDR team should care as much about this ratio and how it's trending quarter-over-quarter as you do. This enables marketing to match their long-term campaign plans and spend patterns to your sales plan.
How fast can you go?
There is an art to pipeline management. Conversion rates, velocity and deal size can all be measured, but together they become a bit of an art. The goal is to have a solid underpinning of information to make your art as beautiful as possible. That also requires consistency in definitions. It may take a few quarters to settle your pipeline stages, but it's a big gain to know the true lifecycle of a deal. Just keep it simple enough so everyone can discuss the stages without having to pause to clarify definitions.
Who can bring you over the line?
Everyone knows the percentage of reps who hit the quarter. But many do not track it quarter-over-quarter. Fewer still put a fine point on it to see the share of new reps who hit, the "stalwarts" who almost always hit, and the "unpredictables" who are a toss up. Below is a broad stroke look at the share of reps hitting quarter. But you can make separate versions for each geography, sales team or rep behavior segment.
What really matters?
Taken together, all the parameters that affect your bookings should become your dashboard. The key is to track each of these against your plan and be willing to adapt. If it seems impossible to bring down new rep ramp to your target, then you need to make adjustments. Is pipeline velocity slowing quarter over quarter with a logical reason? Either put a plan in place to try and address it or make an allowance for that. The goal is to have a mentality of adaptability.