“We overestimate what we can accomplish in 1 year and underestimate what we can accomplish in 10 years.” Bill Gates
Often as sales leaders and revenue professionals we fall into the same thinking trap as we work to achieve our annual sales goals. We overestimate what we can accomplish in a month or a quarter and underestimate what we can do over a year or two. We expect sales results quickly but don’t allow for the time it can take to ramp up lead generation and hiring to really blow out our sales and growth goals.
In January Founders and CEO’s regularly reach out to me because last years sales growth fell short or they missed their sales goals. After reviewing their sales cycles, lead generation and sales team headcount the most common conclusion is that we can turn their situation around in a quarter or two but the full impact on sales growth won’t be experienced until the following year.
The Founders and CEO’s who contact me in January 2022 will be shocked that the impact of the changes they make in February won’t be fully realized in their sales growth numbers until 2023 which is why September is the month to start planning and executing for next years sales growth.
Sales and revenue growth is a game of plant and harvest, sow and reap.
Founders and CEO’s who don’t plan for next years sales growth and don’t act in September can find themselves already behind the power curve in January. How can leaders give themselves and their team the best possible shot at making and exceeding next years sales numbers? What are the priorities to plan for and execute on for revenue growth in 2022? Here are the three keys to growing revenue and sales in 2022.
Key #1 – Know Your Numbers
Step 1 – Your Sales & Revenue Goal
To quote Stephen Covey “Begin with the end in mind.”
Answer the following questions:
What is your annual sales goal for next year?
Break down your annual sales goals into sales types and customers. For example, if your target clients are wineries, then you might have two types of customers, owner-operated and corporate owned. You probably also have 2-3 offerings for each customer type priced low/medium/high.
Action Items – Determine your annual sales goal and assign a portion of your annual sales to each customer type.
Step 2 – Your Sales Process
Your sales process and your customer’s decision process determines your sales cycle. The time it takes a customer to work thorough your sales cycle is the gating factor to how quickly deals can close and how many deals a salesperson can handle each month or quarter.
How many days is your average sales cycle?
How many new leads need to enter your sales funnel or sales process for you to generate a won deal or new customer?
How many deals on can a salesperson advance through the sales process at any given time without dropping deals (which costs the company LOST revenue)?
Action Items – Create a chart of customer type and product for each customer type (from Step 1) and either pull from your data or estimate the following-
-Average Days of the Sales Cycle
-# of Leads Needed to Win a Deal/New Customer
-# of Deals a Salesperson Can Manage and Not Drop the Ball at Any Given Time
Set the chart aside, you’ll need it in a moment.
Step 3 – Your Sales Recruiting and Onboarding Process
The total time it takes to recruit and onboard a new salesperson is the gating factor for how quickly you can scale up capacity to close new deals.
How long does it take to recruit a new salesperson?
How long does it take to onboard a new member of the sales team from their 1st day to their 1st quarter of full sales production?
Action Item – Write these answers to these two questions down and add them together.
If you were to start recruiting of an open sales team position on October 1st, how long until this new recruit is sourced, interviewed, an offer is extended & accepted, they start, build skills, product knowledge and pipeline and have their first quarter of full quota achievement?
Starting October 1st, if it takes you 60 days to recruit and 90 days to fully ramp skills and pipeline of a new hire then this salesperson doesn’t make a full quota contribution for 9 months.
If your search starts October 1st, best-case scenario they start December 1st, they have their first full month of quota attainment in March which is the last month of Q1.
Your new salesperson hasn’t made a full quarter contribution toward your annual sales and revenue goals and until the end of Q2 next year.
The key takeaway is to recruit salespeople as early and as often as possible.
Key #2 – Identify Where You Are Now
How many people are currently on your sales team?
How ahead/behind are you to achieve this years sales number?
How many members of your sales team will leave in the next 18 months?
How much will the current sales team members increase their sales next year over this year?
Step 4 – Action Item – Write these numbers down.
Key #3 – Create a Sales Resource Plan: How Many People and Prospects Do You Need By When To Make Your Sales Goals?
The fundamental principles of scaling sales are simple. Assuming your sales process is reasonably efficient, growing sales boils down to answering the following question;
How many new opportunities do we need and salespeople to work them, and by when, to make our sales number next year?
Step 5 – Create Your Sales Plan
Open a spreadsheet and create your plan.
Let’s step through an example of what that could look like.
What’s true today-
Let’s assume you’re a SaaS company and your sales team is on track to book $5m ARR this year and you want to double it to $10m next year.
You have 5 salespeople who produced on average $1m ARR each.
Average sales cycle time is 90 days.
Average time to hire and onboard a new salesperson to full quota is 6 months.
Next years annual new sales goal = $10m ARR.
You’ll need to replace 2 members of your team next year due to attrition, promotion, or performance issues.
You can reasonably expect current salespeople to achieve 25% higher quotas next year over this year.
The goal is to achieve $10m ARR in new sales.
The current team will produce $5m ((5 current salespeople – 1 lost to attrition=4 salespeople retained)x($1m+$.25m increase)=$5m).
In this best-case scenario you’re at break-even to this years revenue. Now you need to determine where the new $5m is going to come from.
Round 1 – Assuming that you’re starting on October 1st, two new salespeople start December 1st, delivering $833k each ($83k x 10 months full production) for a total of $1.6m.
Round 2 – November 1st you start the search process again for 2 more new team members who will start January 1st, delivering $750k each (3 quarters X $250k) each for a total of $1.5m.
Round 3 – December 1st you begin recruiting 2 more salespeople starting February 1st delivering $664k each next year ($83k x 8 months) for a total of $1.3m
Round 4 – January 1st you recruit 2 more final salespeople that start March 1st and deliver $1.1m for the year ($83k x 7 months).
Next Years Sales Contribution Projection
Current Team – $5m
Hiring Round 1 – $1.6m
Hiring Round 2 – $1.5m
Hiring Round 3 – $1.3m
Hiring Round 4 – $1.1m
Total – $10.5m
According to this schedule you have to hire 8 people to make your annual number and you only have a $500k margin to absorb any issues like a bad hire or missed quarter.
It’s important to build in adequate margin to accommodate the issues that will slow sales. In this example quotas may need to be raised or additional rounds or hiring can be added as needed.
Key Take Aways and Action Items
Plan ahead when you’re growing sales.
Think about what needs to happen this month and this quarter for your team to make their numbers 3-4 quarters from now.
If you expect to make your sales numbers but don’t account for the time of sales cycles, hiring and on-boarding you may find yourself behind the sales power curve and falling short of your sales goals.
What do you think?
Please leave your thoughts and comments below or reach out to me here