Same Old Song and Dance

Early-stage B2B revenue leaders often don’t know how many sales reps they need to hit their goals.  Most are either pressured to hire more reps when things are growing and/or when they receive funding, or advised against hiring new reps because it might be too soon and there are other hiring priorities.  These mixed messages make it hard to know what’s right.  So, should you hire a Seven Nation Army or no one at all?

Everyone from the Queen of England to the Hounds of Hell knows that both overhiring and underhiring have consequences.  Bring on too many reps too quickly and you might face uneven performance and issues of not having enough opportunities for them to work.  Too few reps and you risk leaving growth on the table from not having enough reps out there working the straw. 

And if that ain’t what you want to hear, I’m gonna serve it to you: you need to decide how many to hire sooner rather than later.

A Change Would Go You Good

Want to keep from talkin’ to yourself at night about how many reps to hire?  Use the following steps to frame the discussion:

1. Determine how many deals you need and how long they take to close:

1. Deals. Break down your sales new business goal into how many deals you need based on ACV.  Remember to split out by product / solution if you have more than one and they have drastically different values. 
2. Sales Cycle. How long does it take to close a deal, on average?  Same advice for product.
3. Stress Test #1. Combine the two as a first stress test.  Based on the number of deals needed and the average sales cycle length, how many reps does it seem reasonable to hire to close that number of deals in that amount of time?

2. Determine how much pipeline you need:

1. Close Rate. What’s your close rate percentage for deals? Divide the number of deals you need by this percentage and this is how many deals you need in your pipeline to hit your number. 
2. Total Dollar Value. Multiply by the ACV to get the total dollar value of the pipeline target.
3. Stress Test #2. Does the total addressable market (TAM) for your target market segment(s) support that much pipeline?
4. Stress Test #3. Check your current pipeline. How much do you have relative to what you need?

3. Decide if you have the capacity to support growth:

1. Stress Test #4. Think about capacity in three areas: 1. Leads: based on how much pipeline you need, and how much you currently have, how are you going to source enough leads to keep your reps fed with new potential opportunities? (see starting a sales dev team and sales rep prospecting). 2. Client Success: if you close as many deals as you calculated above, will your CS team be able to keep the increased number of clients happy (on top of current clients)?  3. Sales Enablement: how are you going to create a consistent onboarding experience for your new reps? Tip: a single “no” to any of the questions in Stress Test #4 will likely require further investment of funds and/or personnel, process, and resource changes. Make sure you’re prepared to put in the commitment to give your new sales reps the best possible chance of success.