Every successful sales leader continuously looks at ways to increase and improve sales capacity in order to take advantage of a market opportunity. The concept of sales capacity planning isn’t new, but the technology to support the idea is—and it’s becoming ever so critical for sales leaders to leverage this.
The emergence of sales capacity planning
Capacity planning is a term that stemmed from the manufacturing industry as companies looked at ways to increase efficiency on production lines. Capacity planning is all about matching production capability with market demand. When it comes to the dynamics of a sales team, it’s all about determining how much each sales rep can sell and breaking down that capability into measurable components. Sales leaders can now analyze how much they can truly sell based on everything from team structure to products to region.
Why sales capacity planning should be a priority
- Measure predictable performance
- Efficiently build a sales organization by properly allocating resources to avoid underspending and overspending.
- Ability to recognize the logical ramp-up of new sales resources and ensure their enablement is being tracked and managed accordingly.
- Align corporate spending with what you plan to deliver.
- Manage the complexities of recurring revenue business models.
Creating an urgency
Sales organization to market alignment typically happen once a year; this old-fashioned approach to the sales game needs an overhaul. Sales capacity planning should be an ongoing process that happens at least quarterly, but in high-growth or recurring revenue organizations, this needs to be front and centre every day.
Companies are struggling with sales planning as they continue to use stand-alone, disconnected systems to hold and monitor their data. Organizations need to adopt data systems that are updating and collaborating automatically. This becomes even more prevalent for companies with a recurring revenue business model. Monitoring and analyzing sales capacity grows in complexity when you add in metrics such as Monthly Recurring Revenue (MRR), Customer Acquisition Cost (CAC), and Customer Lifetime Value (CLV).
Visibility is key
SPM solutions provide an in-depth look at market coverage, performance and associated compensation models to provide a true view of sales capacity.
These solutions provide what-if models that allow sales leaders to identify how changes in compensation structures, territory assignments, incentives, and individual sales goals can effect results.
Obero’s comprehensive functionality allows sales, finance, HR, and IT teams to efficiently collaborate to get more out of their sales resources and build a better sales organization. This transparency will allow sales leaders to pinpoint where the issues are within their company.
For example, if you know that 30% of your sales reps are meeting their targets in one region and 90% are meeting their targets in another region, this might indicate that better training, coaching sessions, or pre sales support is only needed in one particular area. If you’re having consistent problems across your sales force and determine there isn’t enough coverage, maybe adding headcount is your solution.
Whether you’re adding quantity or enabling your sales team, it’s crucial to have the visibility to make the best sales decisions.
Go beyond sales forecasting
Sales forecasting only begins to scratch the surface of sales projections and planning. A sales forecast can examine your pipeline and customer buying stages, but capacity planning will allow you to align your resources and go after the market opportunity in the best possible way. The ability to modify your sales plan based on calculated decisions will give you the upper hand in a transitional marketplace.