Careful, It’s Easy to Leave Money on the Table
Too small of a sales force can create an environment where there are not enough feet on the street to properly serve your customers effectively and your company will miss opportunities. In this situation, the existing lean sales force may simply be blowing away their goals by going after low hanging fruit while missing opportunities for new growth.
It is safe to say that coming out of the downturn, you’re probably not encumbered by a sales force that is too large. More than likely you trimmed too much, but how do you know and when do you start adding heads?
There are sales force sizing models to calculate the ideal size of a sales force, and it’s recommended to perform the analysis across multiple models and then evaluate the results from the multiple views the models provide. Recently, the three main models used ,by world class sales forces, to determine sizing were posted on this blog:
- Activity – How many reps are needed to perform the necessary selling activities against the prospect/customer universe the company wants to pursue?
- Pipeline – How many reps are needed to manage a sales pipeline sufficient to achieve the annual sales targets?
- Financial – What is the return each channel/division of the sales force produces at different revenue levels?
Keep Sizing Top of Mind – Make it Part of your Strategic Discussions
The best place to start is to gather the appropriate data and convene a sales leadership meeting to discuss sales force sizing. The following are criteria to begin discussing with your sales management team:
Discussion Points – Sales Force Sizing, a Strategic dialogue to start early in 2011
- If most of your sales reps are hitting their monthly quota, then consider how many of their deals are new logos and new opportunities? What does the mix look like compared to the historical data?
- Has performance of the overall sales force magically increased across the board? Why?
- Over the past two years, which territories, verticals, etc. were combined together under a smaller team? Consider the market potential of these areas and discuss your comfort level of the current sales rep coverage.
- Ask your team to find ethical ways to validate the size of competing sales forces in your industry, and dialogue with other similar size and type companies in other industries to understand the size of their sales force. What is the size of your competitor sales forces and what are their results?
- Determine whether customer complaints and churn have increased. This can be a symptom of not enough attention being paid to existing accounts from too small of a sales force.
- What is happening to your share of market or share of wallet over recent years? Is it trending the direction you want?
- How have trends in marketing leads changed recently? Is the sales force keeping up with marketing follow-up SLAs?
- What is the break even point for a sales person? How long does the ramp take? How has this changed over time? Can you make the business case to add heads?
These are a few questions and data points to evaluate if you have symptoms that point to sales force sizing issues.
Stay on the front-end of this discussion and be proactive in your plans to add sales personnel. This is one of the biggest opportunities you’ll find for your company as the economy ticks back up — Don’t leave money on the table!