There are two ways a Head of Sales can grow revenue. You can increase the number of sellers, hoping to get additional production from the new heads. Or, increase the production of the existing sellers on a per head basis.

Many of you are looking at the revenue plan and worried that you are already behind. Why? You are wondering if you have enough headcount to make your revenue number. So, what do you do about it?

 

There are two ways a Head of Sales can grow revenue. You can increase the number of sellers, hoping to get additional production from the new heads. Or, increase the production of the existing sellers on a per head basis. CEO’s and the board prefer the latter because its accretive to EBITDA and it scales. For the purposes of this blog we will focus on increasing the productivity per head. 

 

So, how do you increase productivity on a per head basis? The answer is, “it depends.” That’s not a copout answer, it really does depend. Its depends because the solution could be a combination of many different things. And those solutions depend on the market conditions within your industry and the situation within your organization. The straightforward way of thinking about this is this:  if you are going to increase productivity per head, your sales reps either need to do more deals or do bigger deals. That’s what you, as the sales leader need to be solving for.  

 

Having been asked this question hundreds of times I have found the answer often resides in coverage. More specifically, market and account coverage. And selling via direct and indirect channels. By no means is this the silver bullet. But its often the answer to the productivity problem because market and account coverage is not optimized within many organizations. 

 

What do I mean by coverage? It’s the ability to cover the markets and accounts with the most potential. Its done via optimized sales channels, again through internal and external channels. That’s the formal definition. In laymen’s terms, it means putting the people in the right position to be successful. Seems straightforward, but you would be surprised how often companies are not optimized here. 

 

So how do you optimize? You play a numbers game. It’s the best way to be objective and data driven in your approach to making the number. 

 

Its starts by determining your ratio of lifetime value to customer acquisition cost (LTV: CAC). Here is a link to download our LTV:CAC tool. This is the best capital efficiency metric to understand how you are deploying your resource capital. This is an objective view into which markets, segments, verticals, etc. provide the greatest return on your sales team. Example:  You may choose to serve a certain market with high volume and low LTV very efficiently via a self-service channel or via an external channel. Compare that to your Key/Strategic Accounts, where you have a significant amount of revenue and potential. These accounts you would want to invest in and serve with senior direct resources that are more costly. 

 

The next step would be to conduct a market segmentation exercise. This is the process of identifying the markets (verticals, geos, segments, etc.) that have the most potential. The best analogy I ever heard was ‘putting the boat over the fish.’ 

 

You would then move onto account segmentation. This is done by developing an “Ideal Customer Profile” and calculating the potential for your product/services at the account level. 

 

Once you have the quantitative foundation, you can start to determine the most effective selling channels to go-to-market. Remember, sales channels can be internal channels such as Inside Sales or Key Account Management. The channels can also be external via a VAR/Partners or a White Label strategy. 

 

All the above is how you determine coverage. It’s the combination of market and account segmentation coupled with an understanding of the best-selling channels. When companies effectively conduct this exercise they drastically increase their likelihood of making the number by increasing the productivity per head. 

 

If you want to increase the likelihood of making your number this year, you must start with the foundation. Click on this link to download our LTV:CAC tool. This will give you the foundation to understand how to improve your coverage and channels. 

 

Do you have the right sales strategies to support your revenue growth goals? Here is an interactive tool that will help you understand if you have a chance at success. Take the Revenue Growth Diagnostic test and rate your Sales Strategy against SBI’s emerging best practices to find out if:

 

• Your revenue goal is realistic
• You will earn your bonus
• You are set-up for success in 2018

 

Sales Revenue Growth

ABOUT THE AUTHOR

Eric Estrella

Helps clients grow by creating innovative go-to-market strategies.

Eric specializes in helping clients solve some of the most prevalent go-to-market problems in today’s complex selling world. He is an expert in many industries including software, telecommunications, ecommerce, manufacturing and technology. He helps them align strategies and develop go-to-market programs to lower the cost of customer acquisition and increase customer lifetime value.

 

Recently he developed corporate, product, marketing and sales strategies for an emerging telecommunications solution provider that resulted in a quadrupling of revenue and EBITA in two-year span.

 

Eric’s background in strategy, sales operations and enablement allows him to provide thought-leadership in emerging best practices in sales and marketing.

Read full bio >