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Basically, three methods are available for determining the sales force size such as incremental method, sales potential method, and workload method. This third method can be defined in the following ways:
Definition (1):
The workload method is an approach to determining sales force size based on the workload required and the time available for selling. This method uses the following formula to determine the sales force size:
NS = (NC × FC × LC) ÷ TA
Where
NS = number of salespeople
NC = number of customers
FC = average frequency of customer calls per customer
LC = average length of customer calls
TA = time an average salesperson has available for selling per year
Definition (2):
The workload method is also called the buildup method. Under this method, the whole workload i.e. the total number of hours needed to serve the whole market is calculated. It is divided by the time available for selling per salesperson for forecasting the sales force size. This is a common method in use because it is simple and easy to recognize and understand the effort needed for serving different types of customers.
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Basically, three methods are available for determining the sales force size such as incremental method, sales potential method, and workload method. This third method can be defined in the following ways:
Definition (1):
The workload method is an approach to determining sales force size based on the workload required and the time available for selling. This method uses the following formula to determine the sales force size:
NS = (NC × FC × LC) ÷ TA
Where
NS = number of salespeople
NC = number of customers
FC = average frequency of customer calls per customer
LC = average length of customer calls
TA = time an average salesperson has available for selling per year
Definition (2):
The workload method is also called the buildup method. Under this method, the whole workload i.e. the total number of hours needed to serve the whole market is calculated. It is divided by the time available for selling per salesperson for forecasting the sales force size. This is a common method in use because it is simple and easy to recognize and understand the effort needed for serving different types of customers.
How many salespeople do you need and how do you work that out? I looked at all of the funnel plans that we have in the database and I found that on average the companies in our database are growing at just short of 50%. However, the size of their sales force is growing at just on 80%. What on earth is going on and how should you calculate the size of your sales force and how it needs to change over time? Let’s take a look at that in this blog.
Use the objectives section to determine how many deals you need to achieve your target revenue.
Let’s start by understanding the context of this particular plan I’m going to show you. We start with the Objectives. How many deals are you trying to close? In this case, we’ve got 300 deals over 3 years amounting to €300,000. Obviously we can break it down by more granular progressions over time: years, quarters, months, but let’s stick with the basics. This is a plan to develop €300,000 over 3 years from 300 deals. Deal size is obviously €1,000.
Use the channel section to calculate your sales force utilisation.
Let’s take a look at the Channel. The issue that we’re talking about today is sales force size. The question is: how many salespeople do we need? What most companies do is look at their projected revenue and hire against this figure. That’s one way to look at it. However, that doesn’t take into account how much of the revenue is going to come in automatically and, it doesn’t take into account how busy the salespeople need to be. Let me show you how to do that.
In Funnel Plan, we can calculate the sales utilization, and based on that utilization work out how many salespeople we need. In this example, I’ve got 2 salespeople in the beginning. By the time we get to Quarter 4 I’m up to 3. In year 2 I’m up to 4, and in year 3 I’m up to 7. I’m assuming that they’re going to have 5 productive client meetings every week, so that’s one a day, on average. Don’t forget that I have to allow for the fact that some weeks are going to be good, some weeks are going to be bad, and some weeks they’re going to be on holidays. This is the average across the year.
So, how do I work out how many salespeople I need? Not by taking a look at the revenue but by taking a look at the velocity of my team. Let me show you where that came from.
Funnel velocity will break down all stages in the buyers’ journey across the 3 years.
This is the Funnel Plan for this particular plan that I was having a look at earlier. We need to look at the Velocity. Now, we’re going to get our €300,000 from 306 deals. Why 306 deals and not the 300 we set in our objectives? Because some deals will come in at the back-end of that period and not quite count towards revenue, so we need to allow for time.
These 306 deals are going to come from 1,566 names.
If I’m going to start with 1,566 names, I’m going to position with them 8,822 times over the three years. That is, I’m going to position with them multiple times each, over the period. I’m going get fairly normal progressions through the funnel and after that down to 306 closed deals. Once I know all of this, and I know how many meetings it’s going to take to achieve each of those progressions, and I know how many salespeople I have; then I can work out how busy they’ll be. I want to look at Velocity to show you where some of those counts are coming from. Keep in mind, we’re trying to close 306 deals.
The velocity section provides insight into the time taken to move through the buyers’ journey.
In my Velocity, I’ve said that it takes 5 meetings from top to bottom, from hello to thank you. Those 5 meetings are going to be allocated at different stages in the journey progression for the buyer.
Channel will calculate how many sales staff we need to have to achieve our objectives.
If I go back to my Channel, it’s going to tell me how many salespeople I need and how busy they need to be every month, quarter and, year. In terms of my hiring or staff allocation, I now have more meaningful information to base these decisions on, instead of revenue, which is often disconnected with what I actually need. This is because revenue comes at the very end of the selling cycle, but I need my salespeople busy very early in the buyers’ journey. You can use Funnel Plan to calculate how many salespeople you need so you won’t under or over allocate resources.
That’s how we calculate sales force in Funnel Plan. By the way, if you don’t have a funnel plan, you can get a free one right here. Obviously there are upgrade options for the paid version later. But try the free one, it’ll do most of what I’ve outlined here without you needing to pay for it (ever).