To build successful sales engines, businesses must carefully align their sales resources with projected revenue growth. If a business deploys too many reps, they’ll overspend on staffing and cut into profit margins; with too few reps, they’ll miss out on valuable revenue opportunities.
Accurate forecasting and planning are integral to profitability, especially for B2B enterprises with large sales forces and multi-step buying processes. Data-driven planning keeps teams aligned in times of economic uncertainty or market volatility, equipping them with insights they need to react to changes in market conditions and B2B purchasing behaviors.
Sales capacity planning helps sales leaders ensure revenue stability through an agile yet highly accurate planning process. In this blog, we’ll explore sales capacity planning and how your business can optimize its sales capacity planning model to maximize revenue growth.
Sales capacity planning uses reverse engineering tactics to estimate the number and type of sales resources your organization needs to meet its revenue goals.
To create a sales capacity plan, begin with your revenue goal — say $10 million over the next six months — then work backward to determine how many account executives, BDRs, SDRs, etc., you need to reach that goal.
A sales capacity plan helps leadership teams understand how to expand or deploy their sales reps to meet revenue goals. When done correctly, capacity planning removes the guesswork from sales planning and gives teams a predictable way to hit their targets time and time again.
Capacity planning enables sales leaders to accurately forecast expected sales performance and ensure they have the resources in place to reach their revenue targets. It also helps ensure the department-level goals they set for reps are based on quantifiable data, not just wishful thinking.
Instead of blindly increasing sales goals and ramping up expectations to improve team performance, your organization can use sales capacity planning to connect the dots between your current sales resources and your top-line goals. You can determine whether or not you have enough capacity to hit revenue targets, then adjust as necessary to set your reps — and your department — up for success.
At its core, sales capacity planning paves the way for informed decision-making and attainable sales strategies. Effective, agile planning helps sales leaders:
Your sales team shouldn’t set or pursue goals without mapping them back to team capacity, especially when company revenue is on the line.
Without a clear understanding of how your team’s capacity aligns with your revenue goals, you might end up over or understaffing certain territories or market segments. You must ensure there’s enough total addressable market in each territory to keep reps on track toward their sales targets. At the same time, you don’t want to deploy too few reps and leave them overwhelmed and unable to follow up with their current opportunities.
What’s more, holding sales reps accountable for unreachable goals often leads to frustration and burnout. Setting lofty sales targets with no considerations for capacity, attrition, and maturity of your current sales force could leave reps feeling helpless — and open deals out on the table.
Your approach to sales capacity planning can fluctuate based on the size of your organization, the structure of your sales team, and the scale of your campaigns, among other factors.
The top-down approach follows a standard hierarchical structure, starting at the very top of an organization and flowing down. Sales leaders are tasked with setting sales objectives that align with capacity estimates and high-level business KPIs, with little affordance for individual reps, abilities, track records, or maturity within the organization.
Department heads are ultimately responsible for reaching the company’s revenue targets. Still, sales teams must develop and execute the specific plays they’ll use to achieve those targets on the front line.
The bottom-up approach starts in the field and is heavily informed by sales reps and their managers. Frontline teams communicate their real-world experiences upward to leadership teams, who then combine those insights with capacity data to set revenue goals that complement the sales team’s unique abilities, proficiencies, and past wins.
A bottom-up approach gives salespeople more influence and autonomy over their goals and the tactics they use to achieve them, which often boosts motivation and keeps everyone focused on the same set of targets.
Capacity planning is all about aligning your front line with your top line, but which end of the spectrum should you start with?
There’s no clear-cut formula for choosing the right approach to sales capacity planning. You might switch between techniques depending on which products you’re selling or the territories you’re targeting at a given point in time.
No matter which method you use, it’s critical that your sales leaders commit to capacity planning on a routine basis and iterate on your processes as you learn more about your sales team and your target customers.
For instance, if you begin with a top-down approach and find that your sales reps can’t successfully meet the goals defined by leadership, consider integrating their feedback and frontline insights into your planning process the next time around.
Sales capacity planning is essential in keeping your go-to-market engine running smoothly and efficiently. When it’s done right, capacity planning empowers sales teams, informs targeting efforts, and drives revenue growth through the right mix of quantitative and qualitative insights.
However, you’ll need to do more than calculate rep-to-prospect ratios to maximize the value of your capacity planning efforts. Here are some best practices to help you establish and implement a profitable sales capacity planning model within your organization’s sales department:
Our MoneyMap tool equips commercial teams with the foundational data they need to inform capacity planning and other sales decisions. Sales leaders can use reliable, trusted data from MoneyMap to set quotas and balance sales capacity across territories or market segments.
MoneyMap is designed to inform your sales team’s go-to-market design and resource allocation while giving reps actionable direction for strategy execution and account prioritization. Along with capacity planning, MoneyMap enables sales teams to:
Ready to unlock the benefits of data-driven sales capacity planning? Request a demo today to see how MoneyMap can help you balance sales team capacity with profitable topline growth.