You’ve just hired a new salesperson. Brilliant attitude, great communication skills, competitive, adaptive and boy, do they know how to sell! You’ve started calculating their contribution to your revenue goals. You can just see them knock those numbers off the charts *Kool & The Gang’s ‘Celebration’ playing in the background*. But, hold up for a second.
Do you (really) think your new-found prodigy rep is going to start hitting the bull’s eye from day 1? I hardly think so.
Your rep might be experienced, knows their way around making a sale and a badass closer too. But, skills aside, every single joinee needs to be acquainted with what your company is selling and who you are selling to. For that, you need to take a step back, put the celebrations on hold and give your new hire some ramp up time.
Now, What is This Ramp Up Time?
I thought you’d never ask.
Sales ramp up time is the amount of time a new sales rep takes before they can start carrying the full quota a seasoned rep carries today in your team. This number doesn’t mean they are hitting that quota every month. It is the planned quota as part of their OTE that you are able to deploy on them. This ramp up time includes an initial product training, sales coaching, and other components of on-boarding that might be a part of your new-hire process.
Trust me, even seasoned sales reps with many feathers on their cap need time to learn new sales processes and various aspects of the product they are selling such as the key buyer, pain points and methodologies to adopt. A lot of companies completely ignore the sales ramping process, give their new hires herculean targets to achieve and end up not only being disappointed by poor quota attainment but also incredibly demotivating their reps.
Why is Ramp Up Time important?
Two reasons come to mind:
- Keep the managers’ expectations within reason as the reps increment to full productivity.
- Help reps reach their full potential.
Understanding sales ramp up time is crucial for your sales planning and productivity. If it is going to take 12 months for your sales rep to talk to buyers, you have terribly underutilized an important asset to your sales plans. You will be draining the cash flow as they won’t be closing any deals or contributing to your revenue targets. And, if you want your reps to ramp in the first month, let me tell you this: it’s not going to happen! You pressuring your reps to hit their targets in 60 days is an indication of your expectations being unrealistic and potentially detrimental to your sales productivity and revenue growth.
Your ultimate goal for your ramp up time is to decrease it as much as possible, so you can get the most out of your team but at the same time be realistic enough to give your reps the most valuable asset there is for them to ramp: time.
How to Calculate Ramp Up Time?
If there was one straight answer, I would happily give it to you. But, like most things in sales, there isn’t one. So, I am going to run you through a bunch of options and ask you to pick one that suits your business and revenue goals the most (sorry!).
Ramp up time depends on a multitude of criteria like the complexity of the market, your sales process, your product and the availability of the right support and resources during the rep’s initial months.
To put a number on the ramp up time, you can consider one of these common methods:
By length of your sales cycle
Sales Ramp Up Time = Length of Sales Cycle + 90 Days
If you are selling a SaaS product with longer sales cycles, your reps won’t have as many opportunities to understand the ropes of selling in your domain. For instance, if a deal takes somewhere between 3-6 months to close, it is only fair to give a new rep at least 3 months to ramp up to full productivity. Allow your reps a ramp period that matches the length of your sales cycle plus an extra 90-days (6 months ramp up time) for them to start closing deals.
By the time required to achieve quota
Sales Ramp Up Time = Length of Time to Reach 100% Quota
This method is the most common and works great for companies that do not have an average sales cycle. The sales ramp up time would be calculated as the average time reps take to meet 100% of their quota. By this practise, we acknowledge the fact that not all reps start equal. Some receive existing accounts and hit their quotas easily while some might outdo themselves in terms of their quota percentage but still not hit their 100%. To make up for this difference, you can add a draw against commissions to their sales compensation plan. Calculate the percentage of expected commissions post training for the draws amount.
By the experience level of reps
Sales Ramp Up Time = Training Period + Length of Sales Cycle + Experience
The math here is pretty straightforward. Take into account the average training period of new reps along with the length of the sales cycle. To this number, add some more time based on the rep’s level of experience in sales during their previous employment. For example, add one month to a rep with prior sales experience and three months to a rep with zero experience.
The Bridge Group found in their 2017 SaaS report that 41% of companies report an average ramp time of 5+ months. However, standard practice points to 3 months being the most cushy duration for the reps to learn about the company, product and start building a pipeline. They should be confident enough to be put in front of buyers by the 4th month.
How Do Incentives Work During Ramp Up Time?
When a rep is ramping, it is highly unlikely for a new hire to hit their targets. So, you set up draws to ensure that they can get paid their incentive despite not doing their targets. This scenario also applies if your reps move across teams, regions or even change roles.
Draws during the ramp period vary from company to company. Most companies offer 80% guaranteed incentive pay on the first month, 50% on the second and so on. The importance of draws is to retain rep morale during the ramping period. So, be sure to put some plan around it.
I get it okay? You want your reps to train insane and hop onto the game instantly. But, be wary of unrealistically speeding up the process. Along with giving your reps enough time, you should also have a stellar onboarding and training process that focuses strongly on knowledge acquisition and skill development. Get your reps on the field as soon as possible through partially-developed deals where they are included at key areas to understand the sales process. According to Gartner, ‘Effective sales coaching can increase top-line revenue up to 20 percent.’
But, most importantly, understand who you're hiring and customize your training process to meet their needs. Having clarity on how sales ramping time impacts your onboarding can help you develop stronger programs to keep your cash flow at a comfortable level as well as power your reps to conquer the market and bring home more deals.
What’s that I hear now? Is that the Celebration song? Well, about time, don’t you think?
For more sales articles from me and my Yoda-level wise team, head to our blog and check out our LinkedIn page, we’re super chatty on there!
Acknowledgements: Thanks to Aravindh Natesan for the designs.