Sales ramp-up time is a crucial metric.
When you understand it, you can make more informed forecasting, hiring and even firing decisions. Unfortunately, many sales leaders aren’t tracking this.
The most simple definition of sales ramp-up time is the length time it takes a salesperson to reach full productivity after hiring. Although it’s a simple concept, there is no single, ubiquitous formula for calculating sales ramp-up time.
By routinely tracking and paying attention to this, you’re also able to better predict your monthly, quarterly and annual sales. If you need to hit a number by the end of the year (and be within budget), knowing your ramp-up period is essential.
Here are three examples of how to calculate this period of time, as well as the pros and cons of each.
3 Ways to Calculate Sales Ramp-up Time
Method 1: The Sales Cycle Method[Source: The Sales Readiness Group]
Ramp-up = Length of Sales Cycle + 90 Days
Pros: This formula is very simple and easily calculated. If you know your average sales cycle, you’re golden.
Cons: Depending on your business, product or service, 90 days may be a reasonable or ridiculous number. Since 90 days is somewhat arbitrary, it may not reflect the training period of your business and may skew your results.
Method 2: Quota Attainment
Ramp-up = Length of Time to Reach 100% Quota
Pros: Another easy concept to grasp. This “formula” allows you to calculate ramp-up for salespeople who don’t directly sell a product or who don’t have an average sales cycle (think appointment setters or business development reps).
Cons: There are a few flaws in this design. Often, a new sales rep will take over existing opportunities. With a little bit of luck, they will prematurely hit the 100% quota once and then not hit it again for months. On the flip side, you may have reps that only ever hit 95% quota, where they are strong performers, but never officially “ramped up.” Finally, it is pretty time-consuming to track properly if it’s not automated within your CRM.
Method 3: Training & Tenure[Source: Salesbyte (with a couple of my own tweaks)]
Ramp-up = Training Period + Length of Sales Cycle + Experience
First, a few definitions: Training Period is the amount of time given in a training program and experience refers to a baseline adjusted for sales background. The more experienced the sales rep, the shorter the time period added for experience. For example, you might add two weeks if your hire has previous experience in this territory. Alternatively, you may choose a more forgiving two months if they’re new to the game.
Pros: This formula has the potential to be much more accurate than the first two. This method creates a ramp-up time adjusted for experience, one of the most telling performance factors.
Cons: Not all companies have a defined training program and determining the experience variable requires some experimentation at first.
The Future of Sales Ramp-up? Predictive Productivity
If these methods are news to you or seem overwhelming, there is good news. More and more tools are beginning to crop up to simplify the process.
Some sales hiring tools even offer the ability to profile your existing team to better estimate your experience variable. With this data, you can classify your current sales team into profile buckets by sales experience and psychological profiles.
Sales ramp-up periods are not one-size-fits-all for companies. By profiling your team, you can find a formula that fits your company specifically. This process can lead to notable changes in your forecasting and hiring strategy. For early adopters, this advantage may not be mainstream enough for your competitors, bringing top talent to your company alone.
Are you using one of the methods above? Or one of your own? Let me know!
Bonus: For all the SaaS lovers out there, software master, David Skok, has a great blog post explaining the value of knowing your ramp up time for SaaS economics.