How many salespeople do you actually need?
Leaders in sales management grapple with this question often. Salespeople can be expensive, and the number you really need depends entirely on your company sales targets, style of sales team and individual quotas.
The short answer is that each individual salesperson’s quota should add up to more than your company quota (because you won’t close every deal). But the actual process of calculating how many sellers you need isn’t that simple. That’s why we outlined the steps for you below.
How sales management can calculate sales capacity
1. Collect sales metrics
Start with three crucial data points:
- What is your company quota this year?
- What’s the distribution of sales roles?
- What are the individual sales quotas?
Let’s say your sales organization needs $100 million in bookings this year. When determining quotas, include a 20-50 percent cushion for an added layer of assurance that you’ll bring in the needed revenue. For this exercise, we’ll use 30 percent.
$100 million + ($100 million x 0.3) = $130 million
You likely have multiple different sales roles across your team. Here’s a common breakdown for how much of each role makes up your entire team:
- SMB: 20%
- Mid-Market: 50%
- Enterprise: 30%
Specialized sales roles also means specific quotas, which would likely resemble these:
- SMB quota: $500,000
- Mid-Market quota: $1,000,000
- Enterprise quota: $2,000,000
These are the metrics we’ll use to determine exactly how many of each type of rep you need.
2. Divide sales quotas
Grab a calculator. Figure out how much of your bookings needs to come from each of your sales roles.
In our example, SMB reps make up 20 percent of the team. So, you’ll need them to contribute to 20 percent of your $130 million.
$130 million x 0.2 percent = $26 million from SMB team
Run through the same calculation with the mid-market and enterprise teams, who make up 50 and 30 percent of your team, respectively.
$130 million x 0.5 percent = $65 million from mid-market team
$130 million x 0.3 percent = $39 million from enterprise team
Now you know how much of your bookings needs to come from each team.
3. Calculate sales capacity
The last step is to divide the quota you need from each team by an individual rep’s quota. This tells you now many people you need to collectively produce the team quota.
Divide the team quota by the size of one sales rep’s quota:
$26 million (SMB team quota) / $500,000 (individual quota) = 52 SMB reps
$65 million (mid-market team quota) / $1 million (individual quota) = 65 mid-market reps
$39 million (enterprise team quota) / $2 million (individual quota) = 20 enterprise reps
In our example of a company with a $100 million quota ($130 million with our added cushion), the sales management team would need a total of 137 reps.
Use this exercise to determine exactly how many reps your sales management team needs to achieve quota. In addition, consider investing in sales management software that could help you achieve higher productivity from your existing reps.