The #1 mistake to avoid when determining sales force size
The #1 mistake to avoid when determining sales force size:
Most sales leaders lack understanding of the true market potential of their territories, defaulting to designing them based on customer density, location or historical sales precedence. And when faced with quota increases, they typically resize their sales force in an ad hoc fashion with little regard for territory potential. This is a huge mistake when determining sales force size.
The goal of sales force sizing is to match selling capacity to market potential. For example, a sales leader should add headcount (measured in selling hours) to capitalize on the revenue potential that exists in the prospect base and existing customers. On the flipside, territory headcount is reduced if the market potential is declining. The key is to assess the territory potential first, then think about sales force size determination. Remember this equation: Sales Force Effectiveness = 50% Talent + 50% Performance Conditions. You can have the best talent available, but if you’re not putting them in the right performance conditions, you will not achieve the desired results.
In the chart below, based on a market potential analysis, a sales leader projects (24) total accounts for a given territory. Having first analyzed the market potential, using the Pipeline Method, the total number of reps required to all on the (24) accounts can be determined. In addition to headcount projections, the sizing model calculates the number of opportunities there should be in each stage of the sales cycle, including how many leads must enter into the pipeline to drive the projected number of accounts. This is incredible insight for the sales leader, but it starts with understanding the market potential.
KEY TAKEAWAY: If you want to size and deploy you sales force correctly, you must start with an analysis of the potential of your territory. Without this crucial first step, determining sales force size is likely to fail.
If you are looking for help determining the real potential of your territories, join us for a webinar December 15th.
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