Let's talk sales ramp - When it comes to planning, everyone is missing the obvious, and it means that they are getting their revenue projections wrong.
Let me explain:
You've got a 6-month sales cycle.
From the moment a lead becomes an opportunity to closed-won, half a year passes.
Your capacity model might treat ramp like this (assuming 100% from mo.7 onwards):
The problem is in this example, on average the statistical average that it takes for a opportunity to convert into revenue is a 6 months - Assuming revenue in month 2 would require a herculean effort, or the rep starting the business 4 months earlier or being handed an existing pipeline.
Sure there's going to be some degree of distribution curve (like below) that might lead to shorter and longer cycles, however your average (in this example) is still 6 months.
If you're a high growth business, the likelyhood is that reps aren't going to be picking up an open an active pipeline, and may even be hired into new and untested territories (making all of this even worse).
If you are to look at the distribution of data within your average sales cycle, you'll naturally find that the deals will carry some degree of distribution around the average. Some will fall early, some with fall late.
It's it's almost impossible for a new sales rep to close a deal just a couple of months into being in the business, and unlikely to happen before the 6 month mark hits - throw in a month of onboarding before they are receiving or generating opportunities, and you're looking at 7 months, for deals to arrive.
Sure, you might hand off some already in-flight deals to a new rep, but let's be real - when someone jumps ship, those opportunities usually land with your more seasoned pros.
So, when someone tells you they're expecting 25% revenue attainment in month two, they're essentially betting on a 25% chance that this fresh-faced rep can close deals 500% faster than your company average.
Those odds are beyond crazy.
But wait, there's more.
Remember this golden rule:
The volume of revenue generated is directly proportional to the number of leads a rep handles.
Got it?
Good.
Because here's the real deal about ramping: it's not about a rep's ability to generate revenue. It's about their growing capacity to handle leads effectively.
Here's how it really works:
Sale rep ramping is all about their increasing effectiveness in their role and their expanding capacity to effectively conduct sales tasks (like generating or handling opportunities.)
This means you need to flip your approach to modeling a new rep's output on its head, and at the very least, your model should account for the fact that any leads in month one likely won't convert until they've gone through a full sales cycle.
Don't forget; their efficiency will likely impact their overall deal conversion rates and sizes, as well as their ability to manage a sales cycle at the same pace compared to company averages until they're fully ramped.
This applies to both AE and SDR roles, whether they're inbound or outbound, so how do you model this as part of capacity planning?
The reality is that it requires a completely different way of understanding and modelling capacity, and how your business utilises it.
That's a whole different ballgame, and that's why we built Clevenue.
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