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Successful Sales Planning
The document outlines best practices for successful sales planning, emphasizing the importance of target setting, capacity planning, territory architecture, and compensation planning. It highlights the significance of understanding funnel structure and revenue targets, developing realistic assumptions, and engaging all teams for alignment. Key tips include maintaining a conservative approach to assumptions, planning ahead, and ensuring clarity in roles and processes.
Successful Sales Planning
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- 2. “Always plan ahead.It wasn’t raining when Noah built the ark.” ~Richard Cushing
- 3. AGENDA 0. Agenda &Rev/Biz Ops 1. Target Setting (Company) Bottom-up What you need to do 2. Capacity Planning (Sales) Top-down What you can do 3. Territory Architecture (Team) How you can do it 4. Compensation Plans (Individual) Who can do it
- 4. Centralizes the operationalfunctions of all groups across an org such as Product Management, Marketing, Sales, and Customer Experience. Rev/Biz Operations • Create an Insights Driven Organization • Align processes and data across the entire customer journey • Build a scalable Business Operating System Goals REVENUE & BUSINESS OPERATIONS INSIGHTS TOOLS OPERATIONS ENABLEMENT
- 5. PRO TIP: Be conservativewith ALL your assumptions • Don’t lie to yourself! • Avoid having to make excuses later • Helps justify what your really need
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- 7. TARGET SETTINGIS CRITICAL TO SUCCESSFUL PLANNING All other components are dependent on it Determine targets for the full funnel (not just a revenue target) It’s a big lift Top-down (what you can do) vs bottom-up (what you need to do) Use bottom-up: start with company revenue targets and work back Determine targets in phases: Target Setting Step 1: Understand Funnel Structure & Revenue Targets • Company Targets (Board) + Channel/Team Targets (CEO/COO/CRO) Step 2: Develop Funnel Targets • Funnel Targets (each team working together)
- 8. Step 1: Understandfunnel Structure & Revenue TargetsFunnel Structure (SiriusDecisions Demand Waterfall)
- 9. •50% Marketing •25% BDR •25%Sales •20% Inbound •80% Partner •20% Inbound •40% Marketing •40% Sales Source •$1M SMB Sales •$4M Enterprise Business Sales •$1M NA Partners •$1.5M International Partners •$0.5M Customer Success •$2M Customer Sales Teams •$5M New Business •$2.5M Partners •$2.5M Customer Expansion Channels •$10M New ARR Company Step 1: Understand funnel Structure & Revenue TargetsRevenue Targets
- 10. Gather historicalperformance metrics for each channel in the funnel Average deal size Conversion rates Velocity (days in stage) Set assumptions based on historical performance Be conservative with performance improvements until they are proven Calculate targets at each stage of the funnel Start with revenue targets and work back for each channel Goal: determine what needs to be generated when and by who Step 2: Develop Funnel Targets
- 11. Channels (leadflow paths) get complicated Each team may receive inputs from multiple sources and push output to multiple destinations = multiple funnels In some cases lead flow may bleed between funnels This complexity needs to be distilled into targets for each team All of this needs to be distilled into targets for each team… Step 2: Develop Funnel Targets Inbound Enterprise Direct Outbound Enterprise Direct Inbound SMB Direct Outbound SMB Direct Customer Upsells Customer Expansion NA Inbound Partner International Inbound Partner Outbound Partner
- 12. Step 2: DevelopFunnel Targets Enterprise Sales Sample Sample Targets Assumptions Average deal size: $100k Conversion rates: SAL to SQL: 80% SGL to SQL: 50% SQL to Won: 20% Velocity (days in stage) SAL to SQL: 90 days SGL to SQL: 90 days SQL to Won: 90 days 75% SAL + 25% SQLs TARGETS Q1 Q2 Q3 Q4 SAL / SGL 47 SQLs / 25 SQLs 70 SALs / 38 SQLs TBD TBD SQL 50 50 75 TBD Won $0.5M (5) $1M (10) $1M (10) $1.5 (15) TARGETS Q1 Q2 Q3 Q4 SAL / SGL 47 SQLs / 25 SQLs 70 SALs / 38 SQLs TBD TBD SQL 50 50 75 TBD Won $0.5M (5) $1M (10) $1M (10) $1.5 (15)
- 13. Step 2: DevelopFunnel Targets The Importance of Velocity
- 14. DO NOTIGNORE VELOCITY A lead generated today may not become revenue until next year Revenue this year was a lead generated last year…or wasn’t! Planning early is critical to staying ahead Implement a rolling planning Plan ahead by 125% of a full lead-to-revenue cycle Step 2: Develop Funnel Targets The Importance of Velocity Inquiry AQL TAL TAL/TGL SAL/SGL SQL Won Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec
- 15. EVERYONE needsto be involved in planning All targets need to be aligned and approved Nothing divides marketing and sales like conflicting targets! Funnel & Target Manager Assign an formal target manager Revenue/Business Ops, Marketing/Sales Ops, Finance Determine where targets are published and shared Develop review and approval process for target changes Target Setting Tips
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- 17. Capacity Planning:Ensuring your BDR and Sales teams have adequate production capacity to meet targets Capacity is not a sum of quota 10 reps x $100k Quota does not equal $1M capacity Do this early so you can hire, onboard, and ramp Don’t underestimate how long this really takes Compare capacity & targets regularly to highlight issues and adjust Capacity Planning 1.Set assumptions for production 1.Calculate capacity requirements 1.Develop hiring schedule
- 18. Based onREAL historical data, set the following assumptions: Production capacity/Quota: Number of deals a rep can realistically win Average Deal Size for each team/segment Rep Turnover How many reps you expect to turn over (25% is not unrealistic - don’t let your first few loyal reps fool you into a sense of security) Ramp Time for new reps How long it takes reps to attain quota Early reps will ramp faster than later reps Consider your investment in Sales Enablement Capacity Planning Step 1: Set Assumptions for Production
- 19. Based onthe assumptions from Step 1, calculate how many reps you need to hit target and when you need them ramped Build in a lower quota attainment rate (e.g. 60%) to account for under performers Calculation Summary Rep Quota = Number of Expected Deals x Average Deal Size - Ramp Rep Capacity = Quota x Quota Attainment Rate Total Capacity = Rep Capacity x Number of Reps x Rep Retention Rate Example 10 Deals x $10k ADS = $100k $100k Quota x 60% Attainment = $60k $60k Capacity x 10 Reps x 75% Retention = $450k (not $1M) Capacity Planning Step 2: Calculate Capacity Requirements
- 20. Schedule hiringto fill the delta between your current roster and your required roster Plan for attrition in January (involuntary) Repeats the capacity planning process for all teams including BDRs to insure sufficient leads to sales Capacity Planning Step 3: Develop Hiring Schedule
- 21. Be conservative:Do Not Include Improvements in Your Model Until you can prove an improvement is working, do not model it There are many things that will prevent improvements from becoming a reality If you plan for it and it fail, you put your whole year at risk Better to under-promise and over-deliver Capacity Planning Tips
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- 23. One ofmany methods for building territories Tips: Different territory models fit different company stages Tightly defined territories work in mature, predictable markets Early markets require more flexibility so don’t over segment Territory Planning Segment Based Territories 1.Calculate addressable markets Gather account data Divide into Territories Assign and roll out
- 24. 1. Review allSIC (or NAICS): Categorize them into target segments, incubator segments, no-fly Weight each SIC by the % of addressable employees 2. Gather account data Acquire data on all accounts in your target and incubator segments Calculate an ‘Addressable Employee’ number for each account Addressable Employees = Total Employees x SIC Weight 3. Addressable Market Summary Sum accounts in each segment to determine # companies and employees Compile historical data on each segment: Average Deal Size, Win Rate, # Customers/References Territory Planning Segment Based Territories
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- 26. 4. Calculate numberof reps required in each segment Determine criteria for “fair” territories (potential revenue) and divide equally 5. Cut each segment into territories by whatever makes sense: Subsegment (allows for highly targeted messaging) Geographical grouping (if travel is required) Company size (growth vs enterprise) 6. Do market penetration for a sanity test 7. Assign reps based on best fit (e.g. location, industry experience, etc.) Territory Planning Segment Based Territories
- 27. 8. Document Territories& Launch Create documentation including: Description of each territory and it’s stats Rules of Engagement Hold over rules during transition of territories Review with reps 1:1, allow time to change if necessary Load all account data into CRM and assign as needed Territory Planning Segment Based Territories
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- 30. Develop plansfor everyone: Reps, BDR’s, Sales Engineers, etc. Tips Keep it fair, simple and tie performance to comp Get feedback from sample of reps and make adjustments if needed Great article from Sales Hacker: Sales Compensation Blueprint Compensation Plans 1.Identify Strategic Goals 1.Set OTE & Salary Mix 1.Define plan 1.Plan Governance
- 31. 1. Identify strategicgoals: Disrupt a market? Land grab? Maximize revenue and efficiency? Drive clean deals? Who needs a plan? reps, BDRs, sales engineers, ops, etc. 2. Set OTE & base vs variable mix Base on your goals and market conditions Salary pays for following process and keeping clean data Compensation Plans
- 32. 3. Define yourplan by linking levers to targets Revenue (one-time vs recurring vs services) Commission Rate (contract length, terms, product, pilots) Accelerators (over quota, hitting consecutive quarters) Timing of payment (contract signing, revenue collection, launch) Customer Retention (penalties for churn) Team bonus Split between reps Deal value vs quota relief Cap or Big Deal Clause Comp during on boarding/ramp (draw, activity based variable) Termination of employment Compensation Plans
- 33. 4. Define agovernance process Who makes the call if issues arise What visibility do reps have to performance in cycle Compensation Plans
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- 35. PLANNING SUMMARY TERRITORY ARCHITECTURE Calculate addressable market Cut fair territories Discuss details then roll out TARGET SETTING Understand funnel & revenue Set targets using funnel workback CAPACITY PLANNING Set assumptions for production Calculate capacity requirements Develop hiring schedule COMPENSATION PLANS Identify strategic goals Set OTE + Base/Variable mix Defint plan and governance TODAY 2019
- 36. TIPS Be conservative Plan early& don’t ignore velocity Assign a manager of targets & develop approval process Review performance & refresh targets Choose territory & comp models appropriate to your stage Keep comp plans fair & simple Get feedback on territory and comp plans before roll out Involve all teams in funnel planning to generate alignment
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