Don’t Be Surprised by Your Sales Budgets
Some people like surprises, some people don’t. Sales budgets, on the other hand, never like them. Annual planning leaves you wide open to unexpected changes in your sales team throughout the year. As discussed in previous articles, the issues with annual planning drain company resources and prevent growth. Hiring in January of 2018 to meet a 2018 revenue goal is inefficient and ineffective. Instead, hiring a constantly evolving sales team ensures sustained company growth. Multi-year planning helps bridge the gap between budgets and unforeseen changes in your team. It maintains a continuous sales cycle that accounts for changes such as sales turnover and the subsequent ramp time that comes along with it.
Double or Nothing: Sales Turnover
Everyone thinks their company is great to work for. It may be. That doesn’t change the fact that employee turnover is at an all-time high. Thus, it shouldn’t be a surprise to you when your experienced and highly trained salespeople move on; however, it is a surprise to your sales budget. Annual planning only accounts for current resources, and allocations are made based upon annual revenue goals. When a sales resource leaves in the middle of the year, an annual plan doesn’t account for it. You then must hire more untrained salespeople to meet the original quota of one trained salesperson. As a result, expenses rise due to new hires while the original revenue goal stays in place, lowering profits; or, without hiring new salespeople, the revenue goal will not be met for the year. Instead of getting two for the price of one, you’re paying double for the original goal.
The Time is Right: Ramps
Turnover is one part of budget costs, but ramp is another. Time is everything, and that holds true for training. It takes time to train all those new salespeople you hired. They don’t come onto the job day one with the perfect sales pitch.
New sales hires typically take 12 to 18 months to reach optimal effectiveness.
During this time, they are depleting your budget without reaching sales goals of the original quotas. Ramp time accounts for approximately five percent in annual revenue losses. For a revenue goal of ten million, that’s half a million in losses. Time is money, and you’re losing it when you rely on annual planning to create the ideal sales team.
No Surprises Here: Multi-Year Planning
Avoid the surprise of sales turnover and ramp time. Multi-year planning removes the risk from your sales budget. Strategically positioning your sales team for future success is never a bad thing. By planning a bit ahead, you lessen the chance of losing revenue to turnover and ramp time. Don’t go at it alone. Here at ORM Technologies, we provide optimized sales metrics that provide all the tools necessary create your multi-year strategy. If you have any questions or would like to know how we can enhance your sales planning process, please let us know at firstname.lastname@example.org.