This blog post continues with part two of a three-part transcript of our webinar “Preventing Revenue Plan Failure” featuring panelists Erik Swenson, VP of RevOps at HubSpot, Revcast’s Chief RevOps Officer and Strategist, Jeff Serlin, whose former revenue team leadership roles included Pendo, Marketo, and Intercom, and moderated by entrepreneur and venture studio CEO, Eric Boduch.

In part one, the panelists focused on the risks they’ve experienced first hand in erroneous or absent revenue plan assumptions and process issues that presented execution and cost challenges later. You can also view the full 50-minute video of the session on our YouTube channel.

In this part two segment, the discussion drilled down into some of the critical revenue plan inputs – the “fundamental assumptions” as they described – and how to best gather the needed data insights and identify the best scenarios for efficiency and agility. Ramp time modeling was a hot focus area, one that they agreed is often overlooked, inconsistently defined, and/or generalized at an ultimate negative cost to the go-to-market organization. They even admitted to some of their own past mis-steps and highlighted a recent Revcast customer success due to improved ramp insights.

Let’s read what they had to say…

Eric Boduch, Moderator 

So let's keep jumping into fundamental assumptions. Specifically, let's talk about ramp. What are the key assumptions? Jeff, let's start with you. Can you talk to us about ramp and ramp assumptions that impact the likelihood of your plan success, and what are the key things you need to think about there?

Jeff Serlin, Revcast

Yeah, it's one of the key things. And I mentioned an example earlier. You know, there's opportunity there, not just risk. If you don't have an honest I'll use the word representation of what the real ramp is, you are going to get yourself in a deficit of real – and by real, I mean quality as opposed to what's in a spreadsheet – street capacity and quota capacity on the street. In other words, the reps that are ramping and even after they're done with their ramp, are still not going to deliver the amount that you need them to deliver in order to get to your number, even though the spreadsheet says it does. 

So you know, we mentioned earlier that you have to understand the drivers of these assumptions and go through the analysis. And there's really two things, well three things that are important when you're thinking about ramp: 

1. What is the length of the ramp? Is it three months, or is it six months? And one month one way or the other way can make a difference in terms of getting that capacity on there. Because it impacts when you have to work backwards and hire and have that butt in seat, wwhich also impacts, as we mentioned a couple times, what recruiting has to do and what others have to do in order to make that happen. So the length of time is important, and it varies by segment. It varies by where you are in a company. It varies by how well of a profile you define for the reps that you're hiring. You know, if you make better hires that are aligned to what skills they need for the segment or the role, they're going to ramp faster. And obviously your investment in enablement, if you're not investing in onboarding and enablement, you're not really going to improve this. 

2. The shape of the ramp is just as important. You know, a ramp could be 0, 0, 25, 50, 75, 100 or it could be 25, 25, 75, 75, and 100 – same amount of time but how you get there is different. And all this doesn’t have as big of an end on timing, still knowing this and being overly aggressive is also going to put you in a deficit, or give you a wrong sense of how well you're building up that quality and that real capacity to deliver deals. So you have to look at both of these. You have to constantly look at both of these. 

3. The third thing I'll mention is, what does fully ramped mean? Right, does it mean the amount of time it takes for a rep to get to their quota? Well, it probably doesn't, because you're putting in assumptions in terms of average attainment. So if your average attainment in your plan is 80% - your attainment factor - is it the length of time it takes that rep to get to 80% of their quota? Well, what if your sales team is only delivering at 70% attainment to quota. Should your expectation of a fully ramped rep be the amount of time it takes them to get to where your existing “fully ramped reps” are? Probably, that last one is where it should be, or somewhere in the middle of the second to last one. So if you set that fully ramped target incorrectly as full quota or attainment, or don't consider where your current reps are performing, you're also going to be off on this assumption and add risk to your plan and increase the likelihood of you being off, especially if you're doing a lot of hiring.

So all of these things matter. You should consider all of them as you're implementing your ramp. And as you said before, you use the word agility Erik, your ramps can shift and change over the course of the year. 

And set aside what you do in a comp plan, because a comp plan is a little bit of financial engineering. If the real-world ramp is 10 months, you don't necessarily want to give them 10 months of a ramp quota, but at least in your planning and your forecasting, you should have an understanding that it's not the six months we have in the plan, that it's the 10 months, and you should constantly monitor that. And it's okay to give reps that are hired in the second half of year a shorter ramp if your ramps are improving, and you implement it, new tactics you know, in order to do that so that also should be a variable or a flexible point when you're thinking about the agility of how to get to your number over the course of the year.

‍Eric Boduch, Moderator 

Erik, can you give us some ideas on best practices for modeling ramp?

Erik Swenson, HubSpot

I guess what I'd say, maybe just to jump in is, I think this is the most misunderstood and miscommunicated metric, you know, across different orgs. And you know, I've had real example conversations with our CEO that she's talked to another company and their reps are ramping twice as fast as we are under a completely different definition of what ramp is. And so I think there's a lot of just noise in the industry here on how one company measures ramp versus another company here, and there's a lot that goes into that. 

Maybe just a couple other points that are pertainable to experiences that Jeff did mention like: Are you giving your new hired reps a book of customers to start? Or are they going into a brand new territory and starting cold with no inbound demand, and they’ve got to go create all of their own pipeline from scratch? Like that rep is going to have a much longer ramp time than somebody else who's coming into a warm territory. Particularly in small and growing companies. that dynamic is so critical to understand and to be fair, right? 

I think you also need to be very mindful of the cost to the business of having somebody hire in an external rep, start, go through that ramp process, 7-8-9 months into their time at the company. If they're not confident that they can hit quota, they're going to leave around month 12. And that is the most expensive hire that you can make as a company, an unsuccessful rep who didn't make it to that 12 month mark, right? 

So I think there's, there's something to be said with, you know, setting your external hires up for success and making sure that they're believers in the company, they're believers that they can be successful and hit quota here. And that's hard for maybe your CFO, or maybe someone else in your org, cross functionally, giving you a hard time about jamming this group with quota. It is infinitely more expensive to have that person leave the company at month 10 to 12 than it otherwise would have been to get them successful and invest in those enablement functions early on. We're not really making money on –  the company's not making money on these reps until they hit maturity. Right? That's the reality of this stuff. So I think keeping that in mind is super critical. 

And you know, if you were looking to me for some best practices, I just got to raise my hand and say that I've messed this up numerous, numerous times at numerous companies. I've given pitches to private equity investors based on our ramp that I'm looking back years later, like, what was I doing? This was wrong! And it's a really, really hard thing to get right, I guess. 

What I would say to the audience here is, you know, balancing the efforts of your recruiting team to get somebody in seat, with getting - with bringing enablement resources in, how are you investing there, getting these external hires to be successful by month 12. What does it take? And if you're having a high degree of failure, a high percentage of failure at month six, seven, you gotta root-cause that and understand that. From a planning perspective, you have to also be honest with yourselves and be honest with your leaders. You know, as you go and hire people, that means more dollars in your plan, it means more quota in the plan. But all of that is delaying pain and delaying the inevitable if these reps are not going to be successful.

So maybe I just scared everybody here, Eric!

Eric Boduch, Moderator 

I hope you didn't scare everybody. I think they knew what they signed up for. You know, Jeff, you have a quick example from work you did at Revcast. Can you tell us the story? 

Jeff Serlin, Revcast

Yeah but before I go in there, I just want to reinforce something that Erik said. And you know, it's probably a third time we're mentioning it: Just because you designate your ramp time to be four months or six months, or something else, your measurement of reps getting closer and closer to their quota should never end. 

As Erik said, they often don't get to that steady-state performance, consistent performance, until their tenure at 12 months, 18 months. And figuring out how they get there, and if you're how to compress that time, even if it's technically outside of that time that you plan, your compensating for ramp is incredibly, incredibly important. And capturing as Erik mentioned all of the factors involved, not just enablement but, you know pipeline, territory, manager and all those things too. So sorry, Eric for knocking you off. 

Eric Boduch, Moderator 

Yeah, no problem. I think I pulled up a visual here that I had handy too, just it is important what you were just talking about. Can you visualize what you ramp up to, like, by segment, by team? Are you getting those insights? Are you getting that information? Because then you can use that to adjust. It might be a manager that needs more training because his group in commercial, you know is ramping a lot slower than, you know, his peers. I think what you said makes a lot of sense.

Jeff Serlin, Revcast

But yeah, absolutely. And you can see, okay, well, we'll go back to the chart after this. I wanted to share this example. It's actually an example of an opportunity not risk, and I think it's important, because we often talk about risk and the downside. To share this, we were working with a customer that did not do a good job of tracking ramp or keeping all the data in a single place, or even understanding it. So part of it was helping to educate them on how to think about this. 

And what we discovered is that their actual ramp to get to the performance of where their other reps, existing reps, were, was a couple months shorter than what they had planned for. What this meant is they did two things. One is they hired earlier than they should have. Number two is that they gave them a longer ramped quota than they should have, and this results in increased costs. You're on payroll for a little bit longer than you need to be, and you're also getting higher rates on whatever you close in that ramp period than you should be as well. 

So with this knowledge, what they did is not just adjust the dates of hire and adjust the comp plans, but they understood how much cost it was saving, and it was saving about the equivalent of one and a half equivalent sales reps in terms of cost. They had a strategic objective to move up market and start building an enterprise segment. They were not able to do that for some financial considerations until much later in the year, but because they realized this early, you know, right when they were in their planning process, they freed up their cash, and they were able to hire an enterprise rep a lot earlier in the year and actually add growth to the number.

This is a great example that if you understand your performance better, formulate your assumptions, that you can actually not only improve the bottom line, your efficiencies, but you can also grow the top line if you do this early and soon enough. And I think this is a great example of spending the time to do all of this when you're in your planning and in the beginning of the year to understand where you are. And this is a great win. And they were able to do that cost neutral. So not only are they able to save costs, but they were able to grow the revenue and do it in a way that actually increased efficiency.

Part Two Summary

We hope you found these insights to be very eye-opening as you approach current plan oversight and future planning. Ramp data, modeling, and ongoing monitoring is greatly simplified by bringing it all into your overall GTM revenue plan within the Revcast platform. You can read the final transcript segment here in part three, which focuses on active KPI monitoring of your sales capacity (hiring, attrition, quota on the street, attainment) against pipeline and demand generation.

We invite you to schedule a demo to see the solution in action.

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