Inbound Marketing + Sales Blog

December 10, 2015

Inbound Sales Planning Mistakes that Will Make or Break 2016

Written by: Matthew Buckley  |  Share:

Matthew Buckley

inbound-sales-planning.jpg

It's hard to believe, but it is already the end of the year. You're likely well underway in planning how you'll meet your company's goals in 2016. If you haven't yet, then hopefully it's on the checklist for the next week or two! For sales, this means setting monthly bookings goals (not billings or revenue, read more on these often misunderstood terms here) as well as monthly rep quotas and compensation plans. For marketing, this means forecasting marketing's contribution to the pipeline, along with the number of opportunities that will need to be sourced and bookings generated.

Building out sales models to forecast the next 12 months is no easy task, and you'll likely need to make some assumptions along the way. With that in mind, here are four critical levers that are often overlooked at the expense of understanding exactly what it will take to, a year from now, be looking back on just how successful you've been at hitting your goals.

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Don't make these inbound sales planning mistakes

Quota attainment

No matter how great your sales team is, everyone is human. Even your all-star reps probably aren't going to hit their quotas every single month. Because of this, we must introduce this variable to our sales planning models if we're going to staff and forecast correctly. The only question is, what is a realistic quota-attainment benchmark?

The Bridge Group has studied the performance of inside sales teams and found that in fact only 67 percent of reps hit their quotas on a monthly basis!

inbound-sales-rep-quota.png

Image Source: Bridge Group

By introducing this variable into the sales planning model you can then multiply each monthly target by the 67 percent. This means that a fully ramped sales rep with a $50,000-per-month target will in fact only book $33,500.

Quota ramp

It's unrealistic to expect new sales reps, no matter their level of previous experience, to be fully productive right off the bat. They'll need time to come up to speed on your specific product/solution and sales process. So again, if you don't introduce a variable to account for this slower increase in productivity, you'll be setting the business and your reps up for failure.

Turning again to data from the Bridge Group, it shows that ramp times can last anywhere from three to seven months, depending on contract size (measured here as annual recurring revenue).

ramp-time-by-arr.png

Image Source: Bridge Group

With this in mind, revisit historical data and create a roadmap where reps will have time to reach full productivity and adjust your bookings expectations accordingly. Here's an example of what that might look like for an inside sales rep (ISR in the chart below) with a ramp time of five months until full productivity:

new-hire-ramp-assumptions.png

With these two assumptions accounted for, you should be able to set realistic bookings goals, while accurately defining the resources and number of FTEs the sales team will need and hedge risk.

Employee attrition

The final variable that should be introduced into your sales team's performance is employee attrition. The Bridge Group shows us that average rep tenure is 2.5 years, though this is something you should be also tracking for your own business.

average-rep-tenure.png

Image Source: Bridge Group

The easiest way to account for this would be to apply a blanket expected attrition rate to the sales team. However, research from Sajeev Popat, of InsightSquared as shown that attrition rates vary drastically between ramping and fully ramped sales reps. This means that instead of a blanket rate, you'll receive a more accurate picture of attrition by breaking out those two categories, like this:

ramped-v-ramping-rep-attrition.pngImage Source: Sajeev Popat

Now you can add this number back into your bookings goals to help create a more accurate monthly bookings plan and hiring roadmap.

Marketing's contribution to the pipeline and revenue

Armed with a better understanding of just how many opportunities and pipeline coverage you'll need, it's time to turn your attention to where these opportunities will be sourced. What percentage can marketing contribute? What percentage will be sourced by outbound sales, customer referrals, or other additional revenue streams?

SiriusDecisions advises clients to think about marketing contribution based on your go-to-market strategy. To do this, the company uses three tiers:

  • Tier 1: Enterprise
  • Tier 2: Commercial
  • Tier 3: SMB

Each tier then influences not only the marketing budget, but also the leads sourced by marketing and leads influenced by marketing.

The Bridge Group has also broken down the percentage of the pipeline that marketing should be able to source, broken down by annual contract value, as seen below:

pipeline-sourced-by-marketing.png

Image Source: Bridge Group

These metrics should enable you to work from a projected month-over-month growth rate and create demand waterfall model to judge marketing's trajectory towards this goal. They will also demonstrate what additional investment may be needed. For example, by forecasting constant conversion rates through the funnel, a 5- to 10-percent month-over-month growth in traffic, and an assumed $10,000 in ACV, it could look something like this:

marketing-plan-forecast.png

Plan your growth for 2016

These exercises will allow you to forecast your sales and marketing growth much more accurately, defining hiring and capacity, rep management, quota attainment, marketing goals and budget. If you're looking for additional resources, I highly recommend looking at this Sales Team Planning Template from InsightSquared, the Bridge Group's Inside Sales Report, and our Guide to Inbound Sales.

inbound-sales-guide

Topics: Inbound Sales, Business2Community, Sales Conversion

Matthew Buckley

About The Author

Matthew Buckley is a former New Breeder

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