New and Improved Capacity Planning Model

A few years ago, I wrote this article on capacity planning with an approach that capitalized on regional management buy-in to pave the path to achievement.  Since then I’ve had several requests from Sales leaders to expand and improve the model as most of them are in small start-ups without the availability of a resident Excel master.

The expansion of this model includes a breakout of monthly quotas, instead of just quarterly, and independent ramp parameters by role since, for example,  the new hire ramp for an Account Executive is likely to be longer than for an Inside Sales Rep.

Given the data in this model calculated at a monthly level, even if you only assign quotas on a quarterly basis, this model will produce slightly more accurate quotas as well as provide monthly targets for intra-quarter productivity benchmarking by management.

All of the spreadsheet wizardry aside, the real benefit in this approach is giving your regional sales managers actual control over the allocation of targets for their team members, thus increasing their own buy-in to their quota.

If you are interested in optimizing the effectiveness of your quotas I recommend you read the original article and download the latest model to check it out!  As always, any comments or suggestions to further improve it are welcome!

Cheers!

Bob Bacon

About Bob Bacon

I work with global B2B high tech Sales leaders to help them enable and optimize the effectiveness of their organization Find out more about Bob here: http://bobbacon.net/blog/about/
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2 Responses to New and Improved Capacity Planning Model

  1. Luke Starbuck says:

    Bob this is a fantastic model to work with. Thankyou so much for making it available.

    Wondering if you’ve worked on any bottoms-up sales capacity/rep capacity models that help indicate how many reps you’ll need from a deal flow and pipeline capacity perspective, relative to historical close rate and sales cycle in days?

    • Bob Bacon says:

      Thanks for the kind words Luke!

      I’ve not built the model you’re asking about. I do the requisite math every year but it’s so basic that I haven’t put it into the form of a true model like the capacity plan. If you’re talking about how many reps to generate $X bookings that sounds like a top down model. You can work the math backwards to get reps. For example, if you need to generate $10M in bookings you multiply that by the 100% + X% of over-assignment desired (say 20%) which equals $12M then divide that by the average rep quota, say $1M, equals 12 reps. The capacity model does the same thing only on a trial and error basis by adding reps to the list until you reach the desired target.

      There’s an assumption that an adequate pipeline exists across the proper stages of development for reps to be immediately productive. Backing into the question of what’s “adequate” is where close rates come into play. If your conversion rate between Sales Qualified Opportunity (SQO) and Closed Won is 25% then you need four times your target bookings in your pipeline. While a 25% close rate is more or less common, a pipeline multiplier of 3x instead of 4x is also common. I reconcile those inconsistent values because reps often don’t forecast the true potential value of their pipeline.

      I hope all this is helpful to answering your question without actually providing a model.

      Cheers!

      Bob

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