There are two scenarios when sales headcount planning usually comes into the picture. First, is a quota increase. You’re in your annual planning process for next year, and you receive your number. And it’s gone up. In the second scenario, as we approach the second half of the year you realize you’re short of your year-to-date goal. You need to make up ground to have a chance at making your number. What’s a sales leader to do?
Let’s start with the first scenario. You’ve been given a bigger number next year. Is more headcount the answer? First, ask a critical question. Do you have a sales plan in place? This is your opportunity to define how you’ll make your number relative to your competition. Yet, only 39% of sales leaders have a formal sales strategy. But if you’re a sales leader reading this, going a 100 miles an hour, why bother stopping to put together a plan vs. hiring a bunch more heads to cover the gap for next year?
Because if you’re a sales leader without a sales strategy, you’re in what we call Chaos on SBI’s Revenue Growth Maturity Model. No functional strategies exist. It means making your number is unpredictable. Performance is random and success seems to be happening without much knowledge as to why.
If you’re in Chaos, you have almost no chance of adding the right heads. Because, again, nothing is predictable. You’ll be throwing headcount to solve something that isn’t clearly defined. In contrast, if you have a clear sales strategy you know what people to add, where to add them, and against what markets or accounts. If you don’t have this foundation, you are operating blindly.
So, start with a documented sales strategy. It must clearly articulate how the sales leader will allocate people, money and time in order to hit the revenue growth objective. Then, and only then, can you begin to make investment decisions.
What about the second scenario? If you are 20% or so behind your year-to-date number, is adding more headcount your answer? This is not an easy problem to solve. In solving the first scenario, we spoke a lot about strategy. In this case, shift the focus to tactics. Strategy is defined as doing the right things. Tactics is doing things right. Your goal should be to execute a brilliant plan brilliantly. You want to be doing things both efficiently and effectively.
If you have hit this level of efficiency, but you’re still behind your number, then adding heads will likely help you get caught up. Because you have the right strategy, and you’re executing against it well already. You can ramp up the new reps and make them productive quickly in order to catch up.
But only 9% of companies are operating at that high of a level. What about the other organizations? Will adding more sales reps solve the problem? What if you are executing well, but have a poor plan? Should you add more reps? In this case, adding heads will actually make it worse, and accelerate your miss. If you’re a sales leader in this situation, you must realize the issue is more than just headcount to cover the shortfall.
Ultimately, sales leaders should challenge themselves to make sure you’re both doing the right things, and doing them correctly. If you need help, download our roadmap, How to Make Your Number in 2017. It is our secret sauce to making your number in predictable, hassle-free way.