The pipeline method of sales force sizing analysis utilizes the sales process as a framework to determine coverage and thus the necessary sales force size in terms of sheer selling hours to hit revenue objectives.
Resource Planning – Proactive Validation through Multiple Tests
Effective resource planning requires evaluating sales force sizing through a series of unique tests that provide valuable insights. When analyzed collectively, trends across the multiple tests provide a complete picture to draw conclusions. The Pipeline test can be combined with the Activities test for a deeper granular an analysis. The following are the main tests to rely upon in your resource planning to determine the optimum sales force size:
- Pipeline Test – Today’s Blog Focus
- Competitive Test
- Activities Test
- Customer Test
- Financial Test
- Morale Test
- Sales Response Test
The Pipeline Test for Resource Planning
The Pipeline test method calculates the number of sales representatives required to generate target revenue. This method assumes a standard level of effort per opportunity providing sales leaders a point of validation on the size of their sales force to hit existing goals. Proactive resource planning for the next year can be gut checked with a series of sales force sizing tests, including the Pipeline test.
Steps to calculate the Pipeline Test:
- Establish target number of accounts
- Establish target number of closed accounts per year
- Identify the average number of selling hours per rep (note: many sales forces find non-selling activities to require up to 40%+ of their reps time resulting in approximately 1,200 selling hours per rep)
- List the major stages of the selling process
- Identify Call and Hour Metrics by stage
- Insert the number of Calls or interactions per stage. This is the number of sales-related communications (phone, e-mail, web meeting, face-to-face) that a salesperson must perform for a given account in a given year to advance to the next stage of the sales cycle.
- Insert the Contribution Hours which is the amount of time (hours) per activity that a salesperson takes to complete a given Call.
- Insert the Workload Hours which is the total amount of time a sales rep will spend in a stage making the required Calls per account.
- Insert Initial Calls which consist of the total amount of calls in a particular sales stage of which a certain percentage advance to the next stage.
- Insert the Call Advance Rate (CAR) or conversion rate between stages and the corresponding number of calls required to reach the goal
- Calculate the Call Carryover by multiplying Initial Calls by the Call Advance Rate percentage.
- Calculate the Hours by multiplying the Call Carryover by the Total Hours (Contribution + Workload hours), and then multiplied by the number of calls required in each phase of the selling process.
- Add the hours by phase to arrive at the total number of hours required.
- Calculate the total number of reps needed by dividing the total number of hours required to make all the calls by the average annual selling hours of your average rep. This provides your total number of reps required to execute the planned number of calls.
The following is an example worksheet of the Pipeline Method for sales force sizing:
For sales leaders the Pipeline test is one of multiple tests in resource planning to validate the size of the sales force required to meet 2012 revenue goals. Lead Generation, motivation efforts, sales training, and process improvements will enhance performance, but the manpower has to be there to successfully bite off another aggressive growth year for your sales team. Invest time in resource planning to validate the sales force sizing is optimized for your 2012 sales plan.