‍“How should I manage headcount throughout the year in order to maximize my chance of hitting revenue targets?” 

This is a fundamental question that should always be top of mind for revenue leaders but especially so when creating a sales plan for the year. Here at Revcast, we see a lot of annual sales plans, and we see how companies set out to answer this fundamental question. 

The answer is not always so simple, and it’s made more difficult by the fact that most revenue leaders are equipped with nothing more than a home-built spreadsheet as a tool to help them. It should come as no surprise then that it’s quite easy to make mistakes when working through the process of developing your plan – plus the ongoing oversight of it over time. Those mistakes can play a sizable role in whether you’re successful in hitting your revenue numbers or not.

In hopes of sparing you from running into some of those mistakes, here’s a list, in no particular order, of the five most common gaps and inadvertent omissions we see when reviewing revenue plans and models for “people capacity”.... 

1. Timing is Everything

Determining the right quota coverage is a key part of the planning process and it involves both the overall number of sellers as well as the point in time when the sellers are added or subtracted. The timing in particular is critical to understand because you can end up with enough annual coverage but not enough coverage over a certain month or even quarter. Plans ideally should plot this by month.

The above are screenshots from a Revcast budget which shows a scenario where the annual deployed quota is in a healthy range BUT there are shortages from April-July (note the dotted horizontal lines for each month’s target). As a leader, it’s crucial to have this level of understanding as you’re creating a plan, so that you can determine what the level of impact this may mean to your business. 

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2. No One’s Leaving!

Attrition is going to happen, so modeling no attrition – or unrealistically low attrition -- is not a recipe for planning success. 

When attrition occurs that means you’ll need to backfill with a new seller. Even if that seller isn’t totally new to the company, you usually have some amount of ramp time. Modeling for attrition upfront helps you understand the potential impact and the right amount of buffer hiring to place in your plan.

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3. Ramping Up

Speaking of ramps, you’ll need to apply that to the plan. Most plans we see don’t totally omit ramps, but it’s not uncommon to see it given too little thought.

Tell-tale signs that your ramp planning may be over-simplified in its assumptions including any of:

• Using a single ramp model across multiple segments: some segments may in reality ramp faster, but your plan isn't reflecting that.
• An absence of ramps for internal promotions or team movements: even existing employees will need some amount of ramp to settle into a new role.
• The same ramp models that have been used for multiple years with no adjustments: you're not tracking actual ramps in order to adjust those time periods and address other issues if ramps are taking longer (or saving money if they're shorter).

Ramps are an interesting component in the plan because you need to get them just right - too short or too long is a net-negative. You should continually assess actual ramp performance vs. plan to refine these models over time.

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4. Promotions Aren’t Modeled

As your overall org grows, more career advancement opportunities arise and it’s natural that there will be movement within the sales org vs. just hiring from the outside. Many of these movements need to be considered in the context of the effect on quota coverage.

For instance, when you promote an existing quota-carrying team member into a non-quota carrying role (i.e. management) or you transfer a team member from one type of quota to another (i.e. BDR to AE), your quota coverage is altered.

As you’re building a plan for the year, create a snapshot of what you believe the team will look like at the beginning of each quarter and plot the internal moves appropriately by month.

The above image shows how Revcast visualizes the impact of employee promotions within a team. The system captures the planned promotion of a team member ("Brian Kelly") from employee sales AE to a sales manager, and thus the individual quota contribution is removed from the plan starting in August. 

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5. Leaving, But Returning

Not only is modeling dangerous to your revenue success when it doesn’t assume some level of attrition or some internal employee movement, it's also a risk when modeling does not assume leaves of absence (LOAs). LOAs take quota off the street for some period of time, and a responsible plan includes modeling for the scenario. Leaves may also vary significantly by geography, given country-based policies. And when an LOA comes up unexpectedly, it's ideal to evaluate its impact on your plan so that you can make recommendations on how to best adjust.

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In Summary

Any one of these revenue planning oversights can be enough to drive a miss for a quarter and/or the fiscal year. That’s why it’s important to be aware of these common mistakes and to avoid them in your planning or even as you potentially need to conduct re-planning. 

That said, you can’t possibly plan for everything, so you also need a system to actively track progress versus plan over time and alert you to key deviations. At a bare minimum, that means you need to get out of spreadsheets, and at Revcast we can help make that happen so you can address many of the challenges faced by revenue and revops leaders.

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We’d love to talk to you so click here to schedule your demo today. 

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