Tuesday, September 30, 2008


When setting revenue goals for the year a company should always prepare a top-down and a bottoms-up look at the revenue projections; and then work to gain alignment. When preparing the bottoms-up revenue number one should look at the revenue per sales individual and then make a list of what factors may accelerate or decelerate that number. Sales training, product training, more marketing spend, new product introductions, shape of the economy, ability to compete, changes in pricing, big changes in partners, new competition—one can go on forever on items that have an impact on a salesperson’s performance. The final determination that needs to be made from looking at all of these factors is to decide if your sales reps are going to sell more, the same or less than last year.

If you determine they are going to sell more, and history gives some supporting evidence of that, then what is the multiplier. Is it 110%? If you have 20 sales reps, and they averaged 1 million each last year, and the revenue forecast for next year is 40 million, the odds are that you will not hit your number.

What are you going to change? Are you going to double your sales force? That may work, but many times when you are growing your sales team the law of diminishing returns kicks in. When you get to this point it is really important to understand your sales force and how they compete. It is also important to understand why you win deals, and of course why you lose deals. I find that most of the time, it is easier to achieve a boost in sales by looking at why you lose deals (if you have the ability to change the circumstances).

I have seen so many sales managers when put on the spot by management, over an underperforming sales team, do not understand the dynamics themselves. If the sales manager does not understand the internal dynamics then any solution that they come up with is just an educated guess.

So the short answer is. The way to plan on how to size your sales force to produce the anticipated revenue number is to understand your sales force and what are the key leverage points you need to work with to meet your company’s sales objective.

The most important background piece on this is to make sure the rest of the management team understands and agrees to the commitment that THEY need to make to take the company from point A to point B. A sales team can fail because of lack of commitment from the entire management team. It all comes down to a sales team needs a plan, the larger the team the more details and resources need to be spelled out. A good sales team needs lots of support, leadership and management to function at its very best.

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