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September 18, 2019
How to Calculate Sales Headcount to Secure Reps and Make the Number
By: Brian Waters
Many sales leaders like you are deep into annual planning right now. As budgets are determined, can you confidently defend the sales rep headcount you have now? Or perhaps more importantly, can you make a strong case for additional people if you need it?
If you follow the traditional back-of-the-envelope or napkin method to answer these questions you likely:
Unfortunately, this approach lacks the rigor to stand up to scrutiny. For example, suppose the CFO ranks reps by quota attainment and recommends eliminating the underperformers to save money. How do you argue against what seems like a sensible solution?
Furthermore, not all accounts are created equal. Some require more interactions than others, and travel can differ widely based on geography, while others require more prep time.
Spending time upfront during the annual planning process can ensure you have the right number of reps to make your number. In fact, we observed that market-leading companies (16% of firms) do four things well in the annual planning process. The first is using a data-driven approach to set numbers correctly.
Interested in the other three? Download our latest research report, Making Your Number in 2020 to learn more.
What is the solution? A two-prong approach will provide a range of required reps with more rigor than the back-of-the-envelope calculation.
Before we dive in, download our Headcount Modeling Tool which will help:
As stated above, the simple calculation does not account for variables that influence how much time a rep spends selling. Factors to consider are:
Here are the inputs you need:
From there, the tool will help you understand the annual hours to cover all accounts, the selling capacity needed, and the total number of required reps.
In this calculation, you are seeking to match sales rep capacity with market demand. If you don’t have enough reps, that leaves the window open to your competition to take those prospects as their own.
Have you segmented your accounts? If not, read more about How to Go After the Accounts That Will Spend the Most.
First, identify the number of opportunities by relevant segment fit your ideal customer profile. Next, estimate how many calls are needed per account and the average time per call, which likely differs by segment. From there, calculate the necessary selling hours to derive the number of reps needed.
If you haven’t done this before, you might find the results surprising. The potential can differ significantly by rep territory – and is root cause we often see of unequal quota attainment.
By employing this approach, you will be armed with data to ensure you have the reps you need and not be caught flat-footed mid-year.
Get started and download our Headcount Modeling Tool which will help you:
Once completed, you will be prepared and inspire confidence in your CEO (and help keep the CFO out of your office). If you need a sounding board from a revenue growth expert, we’re here to help. Click here to contact us and schedule a commitment-free consultation.
Brian is a marketing and customer experience leader who has grown revenue, profit and satisfaction as a practitioner and consultant.
Prior to joining SBI, he built the new B2B marketing function at Hilton that generated over $30 million in revenue in one year.
Earlier in his career he held multiple roles at The Walt Disney Company including leading experience planning for a portfolio of attraction, resort, retail and dining concepts to yield higher per-guest spending and satisfaction. In addition, Brian led brand and revenue marketing programs that increased attendance and hotel room-nights.
Areas of particular expertise and focus include marketing strategy, campaign planning, lead generation and management, branding, content planning, segmentation, digital planning, product marketing, account based marketing and organizational design.
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