You’ve been given a number to achieve for your sales team and now you’re scratching your head on how you can exceed it, or even just achieve it for that matter.
It’s easy to have the knee-jerk reaction to add more feet on the streets, but consider these factors and apply them to your reasoning so that you can come up with the right-sized sales force.
1. WHAT DOES A SALESPERSON COST?
You calculate onboarding time and resources, travel costs, training, benefits, and compensation to come up with what the quota needs to be for each rep to justify their employment.
It’s simple math.
# of reps X cost per rep = cost of sale
You can find industry benchmarks online that suggest the average cost of a salesperson should be anywhere from 10-15% of total revenue they produce.
New territories starting from scratch or any type of start-up situation will require greater patience and a much higher expense to revenue expectation. Breaking new ground requires a longer payback.
2. WHAT ARE YOUR REVENUE PROJECTIONS?
You can take some of the guesswork out of this answer by defining your sweet spot customer. What are the industry, number of employees, revenue, specific business dynamics that make certain companies ideal prospects?
Once you’re got that part nailed down, it’s time to find them. How many of those companies are there? Where are they? What do they currently spend on your type of solutions?
Now, you’re starting to see the potential of your market share.
It’s important to factor in ramp up time and practical share as well — be conservative. We find that too many market assumptions are based on capturing far more than is realistic.
3. WHAT ARE YOUR REPS SAYING & YOUR COMPETITORS DOING?
These indicators may seem soft but they could help you validate your ultimate decision. Listen to your reps and watch their activity.
If they’re struggling to find time to prospect or they can’t keep up with leads, it might be time to hire. If your competitors are adding, you might want to follow suit.
To find out what your competitors are doing, consider searching company names on LinkedIn to discover how many salespeople have accounts and monitor hiring sites like Indeed to see if your competitors are advertising for positions.
Sometimes the most direct route is the most efficient one. Ask your competitors directly. Are they hiring? How many reps do they have? Revenue number?
Maybe someone on your sales team who knows a rep from a competing firm might be willing to ask.
If your reps don’t have enough leads to chase and they’re spending time on low-value deals, unqualified prospects, and mundane tasks (paperwork, issues customer service can and should handle), your sales team might be bloated.
4. WHAT IS YOUR SALES MODEL?
Segmenting your customers and detailing their needs helps you calculate what it takes to serve them.
How much time do reps typically spend with customers? How often do your customers want to hear from your reps? How many calls and appointments can they make in a week, in a month?
Do a quick calculation.
# of customers X how often they want to hear from you = # of calls
Knowing how many calls your reps can feasibly do in a week or in a month will get you closer to grasping how large your sales team needs to be.
# of calls divided by the # of calls/each salesperson =
# of calls each rep needs to make
5. WHAT’S YOUR QUOTA PERCENTAGE?
As you well know, not all sellers make quota.
The Miller Heiman Group and CSO Insights research study says 53 percent of salespeople made their quotas according to the “2017 World-Class Sales Practices Study.”
Taking a quick calculation of the percentage of reps who attained quota in your organization will help you estimate how many of your reps will most likely succeed at meeting or exceeding quota.
If you don’t have historical data, you can always start by using the national average of 53 percent.
In 2017, Selling Power reviewed the largest sales forces in America with Cisco Systems employing 14,000 U.S. reps, Oracle having 11,445, and Pfizer having 7,600 salespeople. Here's the link to the full list of companies by industry.
Consider the size of sales organizations at other companies in your industry as well as these five guidelines to land on the right number of salespeople you need to meet your revenue target and profitability goals.
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