It’s no secret many companies have had to cut back in recent months. So whether through program cuts or regular sales churn, sales orgs will have to account for loss of headcount when mapping their plans for next year. And odds are, even with unfavorable market conditions and fewer staff, revenue goals will not be lower than in past years. That leaves sales teams grappling with a sales capacity gap and productivity concerns.
This is where enablement really comes into play. Sales enablement (or as more recently redefined, revenue enablement) is what helps sales teams hit their goals by increasing their capacity while improving their productivity and effectiveness.
Here we will explain how exactly you, as sales or enablement leadership, can use sales enablement data to calculate the sales capacity gap left by losses, close it, and make the reps you have retained more productive and effective in the coming year.
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What is the sales capacity gap?
Sales capacity is a measure of how many productive sellers you actually have. The sales capacity gap occurs when you don’t have enough productive sellers to meet set sales goals.
You can influence capacity by changing the number of sellers that you have, by changing the amount of time that it takes to ramp up a new seller, by increasing the effectiveness of existing sellers, or by reducing the amount of turnover that you have in the team.
How to measure and create a plan to increase sales capacity
To show how to measure sales capacity in relation to company and team goals, let’s look at an example of a company called Acme.
Acme is having a great year. They’re on pace to hit $50 million of new bookings this year with 50 sellers on the team by going from the company strategy down to company goals and then down to team goals.
The CEO has said that he wants the sales team to make $75 million in new sales next year. To do this, the company has budgeted to have the team grow to 75 sellers. So let’s imagine that we’re running the sales enablement team at Acme and we’re going to figure out how we are going to get to this goal that we’ve set out of $75 million of new sales next year.
The first step is to think about capacity. We’ve got 50 sellers right now and we’re going to grow to 75 sellers next year. But because of reps moving up to new positions, as well as turning over and out of the company, in all likelihood if we have 50 sellers now we’re only going to have about 40 remaining at the beginning of next year. So at the beginning of next year, if we can hire properly, we’re going to have 40 existing sellers, and then 35 brand new ones that don’t yet know how to sell our products.
So what’s the capacity of the team next year? Well, you can calculate it by multiplying the number of sellers that you have by the average percentage of the year that they’re ramped up for.
So your capacity next year is not going to be 40 existing reps plus 35 brand new reps equals 75 reps. And the reason for that is because the 35 new reps don’t yet know how to sell your products. So those 35 new reps are going to have to ramp up to productivity over the course of the year.
To figure out what the capacity is, we’re going to need to find out what the effective ramp is for those new reps.
If sellers ramp up in a roughly linear fashion, then you can think of it like this:
This chart shows the number of months that a seller has been on the team that’s going vertically from one month through to 12 months on the job. It shows different scenarios for how many months it may take to ramp a new seller.
Following the example above, if it takes one month to ramp up a new seller, then in their first month they’re going to have zero productivity. Then in all of the other months, they’re going to have 100% productivity. So they’re effective for 11 out of the 12 months of the year, which means they’re productive for 92% of the year.
Likewise, in the middle of the chart is a scenario where it takes a seller six months to get up to speed. In the first month, they’re 0% effective. In the second month, they’re one-sixth, productive, then two-sixths, and so forth, until they’re fully ramped in month number seven. Adding all of those percentages up, you get eight and a half months of productivity from that new seller out of a total of 12 months, which is 71% productivity for that seller.
You can express that calculation in this formula:
You can use this formula to plug in different variables to get your effective ramp and figure out what your capacity is in order to plan out your next year.
Going back to the Acme example, we’re going to start the year with 40 ramped sellers and 35 new ones. If it takes a new seller six months to get ramped up, what’s our effective capacity going to be?
It’s easy to calculate what the capacity is for the ramped sellers because you have 40 of them productive for 100% of the year. Then the calculation from the prior slide tells you that the 35 new sellers will be 71% effective for the year given their six month linear ramp. Multiply those 35 sellers by their 71% productivity and you’ll see that they contribute 24.9 sellers worth of productivity. Then you add the 40 and the 24.9 together and you’ll see that the total capacity of the sales team is 64.9 sellers.
We now know that our effective capacity is 64.9 full time sellers. This year we’re going to do $50 million in bookings with 50 sellers, which is a productivity per seller of a million dollars per year.
Some simple math tells us that our $1 million per seller times the 64.9 sellers is only $64.9 million in bookings. And that means that we’re going to fall $10.1 million short of our target if we operate on the current course and speed, which is a 13.5% sales capacity gap that we need to make up.
Sales capacity programs to close the gap
This sort of problem is why sales enablement exists and is growing so rapidly — sales enablement is what is going to help Acme makeup that 13.5% gap to target.
Let’s take a look at how.
We have two ways that we can direct our readiness programs to close that gap to get to our goal.
One is to increase our capacity. The other is we can improve each seller’s productivity by boosting metrics that help them to hit their quota. These are things like close rate, ASP, and opportunity generation.
Let’s start with increasing capacity.
As enablement leaders, the biggest driver of capacity that you can influence is the ramp time of new sellers. You can reduce the amount of time that it takes to get a new seller ramped up and productive by implementing a formal onboarding program with a readiness platform.
From our experience working with hundreds of sales enablement leaders in enterprises, we can tell you that many Brainshark customers see onboarding times improved by over 30% by implementing formal onboarding with the Brainshark platform (now part of the Bigtincan intelligent enablement suite).
To think through our plan for next year, let’s try to see what the impact on our capacity is if we accelerate our ramp time for new sellers from six months to four months.
We’ll start by looking at the six-month ramp time that gave us a capacity of 24.9 sellers from our new staff that we’re bringing on at the beginning of the year. Now if we improve the ramp time to four months and run it through our formula, you can see that each seller is productive for 79% of the year, and with 35 new sellers that gives us an effective capacity of 27.7 sellers. So for the year, we take the 40 reps that are already in place and add our new number of 27.7 sellers. That brings our capacity for the year to 67.7 thanks to the improved ramp times from our formal onboarding program that we’re running through our readiness platform.
Returning to our target for the year, we know each ramped seller produces a million dollars of sales. Multiply that by 67.7 effective reps for a total of $67.7 million in bookings and compare that against our $75 million target. Now we have a $7.3 million shortfall, which decreases our shortfall from 13.5% down to 9.7% because we implemented our new onboarding programs that are going to ramp our reps much faster and make them productive for a larger percentage of the year.
Now we just need to turn our attention to closing that smaller 9.7% gap. We can do that by making each seller that much more productive. Productivity for account executives ultimately comes down to a couple of sales metrics that you can influence and these are:
- Win rates
- Average sales price
- Number of opportunities that are being generated
You can calculate a seller’s expected bookings by multiplying the number of opportunities that they’re creating by their close rate and then multiplying that by their average deal size.
If we want to improve our efficiency by 9.7%, we could boost all three of these metrics by a small amount of 3.3% each, or we can increase one of these metrics by the full 9.7%.
This is where you’ll need to create the right plan for your team by assessing the individuals and the teams that you’re responsible for to find out where your programs can have the biggest impact. Readiness platforms like Brainshark can be really helpful in situations like this by analyzing your Salesforce data automatically in a Scorecard format so that you can quickly understand the relative performance of your different sellers and teams.
See how Bigtincan products integrate with Salesforce to automate sales data and track performance.
This example of a Scorecard from Brainshark looks at our primary metrics of opportunities created, ASP, and close rate for each seller, and then color codes each seller into a bottom, middle, or top bucket for that metric. You can look at the overall totals and the averages to see if any of these seem like they’re out of line for your industry. You can also look at each individual seller and devise a specific plan for each seller.
For instance, sellers that are in the red on ASP probably would benefit the most from an intensive program that helps them have value conversations that drive larger deals. And that’s what can get their ASP up more in line with folks that are producing at the top of that list in the green category.
For larger teams, rather than inspect the data by seller, you may want to look at each of your teams compared against each other. The following example looks at the Northeast, the West Coast, Central, and South teams, all benchmarked against each other.
Some teams, like the South, might be able to lift all of their metrics across the board. They might not lift by that much, but just a 3.3% increase across each of the three key metrics will get us to that 9.7% boost that we need. Other teams like the West Coast team might benefit the most from intensive programs that are oriented toward one particular metric, like improving close rate.
Compiling all of the data shows a 13.5% gap to make up. But we’ve seen that we can make it up by influencing capacity and productivity by:
- Decreasing onboarding time from six months to four months
- Making each seller 9.7% more effective
To get the desired results, you need to connect the goals and data to more specific programs like a formal onboarding program.
You can start a formal onboarding program by:
- Creating a curriculum in a sales readiness or revenue enablement platform that has a course covering each of the different requirements a new seller needs to perform well in their role
- Uuse guest authors from your other departments like product marketing, marketing, or product in order to provide specialized knowledge in these curricula without wasting the time of coordinating everyone’s schedule around that subject matter expert’s availability.
- Use certifications to confirm that each seller has really mastered a topic before they move on to the next one.
Follow The blueprint for better sales onboarding to build a thorough onboarding plan and continue sales training—also known as everboarding— after reps graduate from the onboarding period.
Coaching and practice
The second way to quickly ramp up new sellers is coaching and practice.
This involves using a video coaching application that includes conversation intelligence to let new hires really practice their skills in a safe environment, rather than practicing their sales pitch on real prospects and customers before they’re actually ready.
This gives new sellers the time and opportunity that they need to practice their pitch and get it in solid shape. Using automated machine scoring allows new hires to get many more practice at bats in the batting cage than they ever would kind of in the real game, effectively accelerating their time to productivity (or time to competency) quite a bit.
The last piece of our onboarding program is going to be milestone tracking. Identify goals for how quickly the new seller should hit certain key events like setting their first meeting or creating their first opportunity. Using a scorecard that updates automatically is a great way to keep new sellers on track, compare the performance of the new hire cohort, and course correct if someone is falling behind.
Use The business case and playbook for data-driven sales coaching to build a business case, playbook, and implementation plan for a data-driven sales coaching program at your company.
How to measure sales productivity and effectiveness
On the effectiveness side of the equation, the high level goal that our programs need to support is to boost productivity by 9.7%.
You can measure sales effectiveness by looking at how good the sellers are at achieving their bookings and hitting their quota.
For account executives, the primary drivers are going to be their close rate, average sales price (ASP), and opportunity generation. While there are many other sales effectiveness metrics that you might look at, those are the most common, especially for your account executives.
Let’s take a look at specific programs that increase sales effectiveness.
Sales effectiveness programs: skills to metrics mapping
The first and most important step is to map skills and knowledge to the metrics that they can actually influence. These will be a little bit different for different companies, so you definitely want to put some thought into how skills map over to the metrics that your sellers are going to need to improve.
We’ll look at three key skills that influence sales effectiveness metrics:
- Objection handling
- Getting to power
- Value negotiation
To create more opportunities, sellers need skills and knowledge around positioning your products and handling objections. For deal size, you need to train sellers to get to the right person in the organization to be able to close larger deals and to negotiate value.
For our example company, Acme, we’re going to start with a program on objection handling to boost opportunity generation.
That program can be informed by who’s creating successful objection handling content within the Bigtincan platforms, like Brainshark, or having strong conversations with customers about what they might be worried about.
We’ll use our road to readiness platform to create a curriculum that describes how sellers can more effectively overcome common objections and we’ll add coaching activities where reps need to respond to a scenario where they’re presented with an objection.
We’re also going to generate some peer learning by sharing the best responses captured by our meeting or conversation intelligence tool.
Leveraging internal expertise and knowledge to train the rest of the team will make reps of all skill levels a lot more productive.
Getting to power
The next program is going to be oriented around getting to power inside of the organization in order to drive bigger deals.
This requires recruiting some guest authors to help build out our curriculum, as they can provide insight from the perspective of the actual persona that you want to sell into.
Additionally, we can incorporate recorded calls from Engagement Hub and other meeting platforms into the curriculum so that sellers can watch examples of calls where a peer had great success asking for an introduction to the key person inside of the organization that they need to sell into.
The next program to boost efficiency is value negotiation. To close that 9.7% gap, you need to cut discounting across the board, which means every rep needs to be able to sell the full value of your products.
This is a great opportunity to tap into external content to augment the curriculum.
Some readiness platforms like Brainshark allow you to actually incorporate live sessions into your curriculum where sellers can sign up for specific sessions that are either held in-person or over a web conferencing tool that can deliver the training live. This presents an opportunity for the sales team to ask questions, roleplay some scenarios, and interact directly in real-time with the person giving the training.
To ensure your programs are working, you want to make sure that you have a way to monitor the progress in these KPIs over time.
Ideally, you would have the data updating automatically on a daily basis in a Scorecard type of format. That allows you to see the performance of each of your sellers and teams and allows you to adjust your training for individuals or overall. You can then course correct if you’re not getting the results that you need to hit the goals that you set out for the team.
Just like that, we’ve got our team goal that supports the business goal and the strategy. We know what we’ll need to do to improve enough in order to actually get there by increasing our capacity and our effectiveness. We’ve also planned out the specific individual programs that are going to support each of these sub goals.
This should give us a path to getting to the place that we need to go into in terms of capacity and performance improvement.
Steps to follow
- Start with high-level goals
- Analyze to see where gaps are
- Break goals into manageable areas
- Specify sub-goals by category
- Map your programs to support goals
Keep in mind there’s some nuance in this from company to company. So you’re going to need to tailor it to your business and your team’s specifics. But hopefully this has provided at least a helpful framework for thinking about how you’re going to hit your goals for next year.
If you’d like a personal walkthrough of Brainshark or any other part of the Bigtincan platform, contact our team.