Sales Capacity Planning: 5 Things You Can Probably Do Better
Sales • 12 April 2021

Sales Capacity Planning: 5 Things You Can Probably Do Better

Fact: Sales leaders are insatiable and are always looking for more. More sales, higher targets, bigger market share.
Also fact: They often fail to properly plan for growth.

What are we talking about here?

The biggest determinant of a company’s success is its ability to add productive sales capacity.
It is the crux of any sales manager’s job to quantify individual sales performance, develop sales goals, and increase that capacity through enablement, incentives, and new resources such as tools or new hires. And it is vital for a sales leader to understand all the factors that contribute to productivity, to prepare for the year ahead.
And yet.
Call it the human factor, the pandemic factor, the life factor, the reality is, things don’t usually go as planned.
Today more than ever, building a flexible sales capacity model that can adapt to changing factors is a major competitive advantage in the long run.

5 things you can probably do better.

Account for all costs.
Making money costs money.
The cost side of the equation is often underestimated, and dealt with in the aftermath, as sales ops try to figure out what went wrong. Costs go way beyond salaries, commissions, and incentives. For instance, have you ever thought about the true cost of sales turnover? Always remember to factor in those less obvious costs: attrition, training, material, …

Acknowledge the learning curve.
I have 5 reps and they can each generate $10k per month
So, my capacity this year will be 5*$10k*12 months = $600k
Done! Who needs planning when you can do basic maths, right?
Capacity planning often falls short because it doesn’t account for the time it takes your teams to ramp up, build their pipeline and narrative in the field. New hires will not be fully productive from the first day. Chances are, they will spend the first week trying to find their way around the office, and the following weeks learning to use your systems and processes. Estimate that ramp-up period and embed it into your model.
Looking to reduce this ramp-up time? Here are a few tips.

So… when is the last time you’ve reorganized your sales team? Be honest.
If you find yourself saying “but we’ve always done it this way,” it’s probably time to change. Just because you have always had a certain number of sales reps in a region doesn’t mean it is the right number.
Markets and sales activity are constantly changing. Perhaps your sales teams are having trouble keeping up with their accounts and you are missing out on new leads. Or perhaps the activity in a territory has significantly slowed down. Be proactive when it comes to reorganizing and optimizing your resources.

Increasing sales capacity is too often interpreted as increasing sales goal and cracking the whip to drive the teams’ performance. While that sometimes gets the job done, it mostly burns out your resources and breaks your team’s spirit… Remember the cost of attrition?
With the right data in front of you, you can strike the perfect balance between gained sales efficiencies and new headcount needs.

Be more flexible.
If there are two things we’ve learned this year, they are (1) do not panic and (2) adapt. Successful planning is about learning when and how to respond to unpredictable market conditions.
Sales capacity planning should be an ongoing process. In a high-growth environment, this needs to be front and center.
Every. Single. Day. You should be adjusting your model with new insights and data, in order to best plan for both the short term and the long term.
Create a model that includes multiple scenarios. It is just so much easier make sudden changes when you have properly prepared for them.

All in all

There is a lot more to sales capacity planning than meets the eye, especially when your business is growing fast and you are constantly taking in new information from new markets and working to secure your best customers.
All too often, sales teams struggle with capacity planning simply because they are not well equipped. They use stand-alone systems where the data is static, difficult to manipulate, and impossible to automate. This makes for approximate forecasts, poor planning, and, frankly, terrible headaches for everyone involved.
Investing in new data systems that collaborate and update automatically across your business will help you monitor, analyze, and adapt to whatever complexities lie ahead.

Pigment provides a best-in-class platform that empowers sales leaders to build effective and flexible sales capacity models with their teams. Our best practice models come with the key requirements discussed above and more, so that you can spend time tailoring your company’s data, not building or accounting for basic model considerations.
Give it a try. This may well be the best decision you’ve made in a while. 

PS. How to Calculate How Many Deals a Sales Rep Has to Close Per Month. And Their Quota.