Are you going to hit your 2015 sales goal? If not, do you know why? As you finish planning your 2016 sales goals, here are six common mistakes you can easily avoid with a good plan for your sales organization.
1. Setting quotas too high
It’s great to aim high, but if you build your hiring plan and sales goals around unrealistic quotas (and quota attainment percentages), you put yourself at risk of not hiring enough reps. And by the time you realize this, it might be too late to catch up. Lots of sales planning advice is based on high-ACV enterprise sales where quotas are often $1M or higher. But if your ACV is lower or you are in the early stages of figuring out your sales process, realistic quotas will likely be significantly lower. SaaS-focused VCs Jason Lemkin and Tomasz Tunguz do a great job explaining the numbers behind quotas in the $3k-20k ACV range.
- Jason Lemkin: More realistically, you’ll see $450k-$500k quotas at the “low end” of inside sales like this
- Tomasz Tunguz: The typical account executive at this company owns a $500k ARR quota
2. Not accounting for how long it takes to hire
One of the most common mistakes is underestimating how long it will take to hire people. Once you have your hiring calendar figured out, make sure you start the process well enough in advance so you can get staffed up in time. Otherwise you’ll be playing catchup all year. The importance of this is echoed by many SaaS experts.
- David Skok covers this problem in depth, but sums it up simply: recruiting A-players is hard
- Tomasz Tunguz: Account executives must be hired and they must be trained. This takes time, perhaps 3-4 months
- Christoph Janz touches on the same point in scaling sales management: start looking for a VP of Sales by the time they’re at around $1.5-2M in ARR so that by the time they’re at around $2-3M, they’ve recruited a VP of Sales
3. Assuming all hires are fully productive
In a growing startup, your sales team will always be a mix of people ranging from brand new hires to experienced veterans. And it’s going to take time before they all become fully productive. Make sure you take this into account in your planning so you’re always hiring in time to have enough fully productive team members when you need them. And invest in your on-boarding and training programs – getting employees fully ramped up faster will have a material impact on your ability to make your goals.
- David Skok: Do proper on-boarding to ramp those new sales hires
- Tomasz Tunguz: Account executives must be hired and they must be trained. This takes time, perhaps 3-4 months for very efficient sales teams.
4. Not planning for attrition
This one is very simple, but often overlooked. Some sales employees don’t work out and need to be let go. And some employees will leave for different opportunities. Don’t forget about this when developing your hiring plan for each role. On the flip side, don’t accept high attrition rates as a given. Jason Lemkin shares some great thoughts on that topic.
- David Skok: Allow for a certain number of failed sales hires
- Jason Lemkin: Try to build a Zero Voluntary Attrition Sales team.
5. Not adequately staffing up non-quota roles
Sales is a team sport. SDRs (or BDRs or LDRs) are needed to generate and qualify leads. Sales Engineers are often needed for demos. Sales management is needed to guide the team and priorities. Customer success/support is needed to keep customers happy and churn rates down. It’s very common to see sales plans focused on hiring the right number of quota-carrying sales reps/account execs, but neglect the supporting roles. Which can lead to a bottleneck in the process, unhappy customers, unhappy sales teams, and missed plans. Make sure you understand all the resource dependencies in your organization and plan for them as well.
- David Skok: Ensure that there are enough resources to on-board and support the new customers
- Jason Lemkin: Yes, I know this is a lot more than you’d thought.
- Tomasz Tunguz: discover the fundamental unit of SaaS growth
6. Not generating enough leads
It doesn’t matter if you have the best SDR team qualifying leads and the best reps closing deals if you’re not generating enough leads to fill the top of the funnel. Otherwise your team will be spending time prospecting that could be better spent moving deals through the funnel. And make sure you monitor and adjust this over time. As you increase the scale of lead generation efforts, your lead quality may not stay at the same levels. This means you may need more leads than initially planned – realizing this as early as possible is key to keeping the sales machine running smoothly.
- David Skok: Ensure there are enough leads to feed those sales people
- Jason Lemkin: build a real marketing / customer acquisition / demand gen budget for next year
How to prepare and build your plan so you don’t make these mistakes
This all comes down to having the right sales capacity at the right time. It doesn’t matter how well you execute if you don’t have enough resources in your sales organization to reach your goals. And good planning is key to understanding which hires you need and when you’ll need them. Here are some excellent resources to help you get started building your plan:
- SaaS Metrics 2.0 – this David Skok post is still the definitive guide on thinking about the economics of a SaaS business
- What Your First 100 Hires Will Look Like – Jason Lemkin gives detailed insights on what a SaaS team of 100 will look like
- The Essential Go To Market Math For Beating Your SaaS Startup’s Growth Targets – great “back of the envelope” style worksheet for quick high-level calculations
- A simple tool to improve your 2016 planning – Christoph Janz provides a simple spreadsheet to help come up with realistic bookings targets
Ready to go deeper and plan your quotas, staffing, and lead gen budgets?
We designed Opstarts Sales Planning to help you build an initial sales plan that takes all of those factors into account and is also easy to modify and keep updated as you learn more about your sales process and metrics. Just follow this 7-step guide to create a fully built out sales plan and maximize your team’s ability to reach their goals.
Have any questions or just want some help building our your plan? Email us at [email protected] – we’d love to hear from you. And follow us on Twitter (@opstarts) for the latest Opstarts updates and lots more SaaS planning content!