You can’t talk annual planning without breaking down Sales Capacity. That’s why I wrote this guide, complete with template for download.

Topics we’ll hit:

  • What is sales capacity, and how do you model it?

  • Understanding quota relative to pay

  • Ramping reps up to speed

  • New vs existing deal volume

  • The mechanics of over assignment

  • The impact of seasonality

  • The pod and surrounding resources

  • Common mistakes with capacity planning

  • Final sanity checks

What is sales capacity:

  • Productive Capacity: Think of this as the size of your company’s engine, or revenue potential.

    • When you start the year, you may only have a 16 gallon tank, which can take you up to 250 miles.

    • But if you keep hiring throughout the year, you can add additional capacity.

    • And the people you have on board get better and better gas mileage as they mature in their roles, build pipeline, and get to know the product they’re selling.

    • You want to tune your engine’s “productive capacity” to be able to hit certain mile markers along the way - otherwise known as your quota plan.

  • Bottoms Up: A sales capacity model is a bottoms up build of your company’s revenue potential, using each unique account executive that brings in new deals as a building block.

    • Based on their specific segment (e.g., SMB, Midmarket, Enterprise) a rep should have an annualized quota target they are expected to hit when they are fully up to speed, or ramped

    • You add reps to the mix throughout the year to come up with an “effective” bottoms up quota capacity.

      • For example, you may have 14 bodies in seats, but only 11.5 “effective” reps at that point in time.

Below is a downloadable template of the model above to modify on your own:

A reminder from our Editor in Chief, Walter

(You will also get a link to download the book I wrote on Annual Planning. It’s like 60 pages of tactical insights).

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