SalesHow Capacity Planning Can Help You Effectively Budget and Forecast for Your Inside Sales Team

December 8, 2021by Rebekah Gellert
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It’s that time of year again. Annual planning and budgeting season is upon us.

As a sales leader, it’s your responsibility to balance two major tasks throughout the year: keeping your team hitting quota and ensuring the productivity output of your sales reps – and this is no easy feat.

Capacity planning’s importance cannot be understated. It simply makes the entire process of budgeting and forecasting growth targets far more visualized and attainable, setting the pace and reducing uncertainty for the year ahead.

This latest article will offer a 101 guide on the effects capacity planning can have on your inside sales team, breaking down the key considerations you need to take when forecasting and budgeting for 2022.

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What is Capacity Planning?

Capacity planning isn’t simply an annual workload review; it’s the bridge between the current state of sales performance and where you want to be in a year’s time.

It’s a process that quantifies the current resources, capabilities, and output of the sales team, in comparison to upcoming revenue growth targets and sales goals – allowing sales leaders to form an actionable plan between the two.

Capacity planning reviews headcount, skillsets, and historical sales performance results to forecast annual revenue growth. It then identifies whether your organization has the resources to meet that target.

Not only will effective capacity planning build confidence and transparency amongst your sales team, it also offers value in a number of key productivity areas:

Reduces Bottlenecking

Capacity planning maximizes productivity performance, making a clog in your workflow, or bottleneck, far less likely.

Eliminates Wasted Time

Effective capacity planning arms sales teams with the knowledge of where resources and time are best spent, allowing you to prioritize specific accounts and slashing time waste.

Creates Responsibility

Capacity planning puts the right people in the right place at the right time. A robust planning process encourages working independence by offering clarity, transparency and accountability across the board.

Data-Backed Forecasting

Human-Led, Data-Fed

Like everything inside sales, there’s no room for guesswork when it comes to capacity planning. Rooting your forecasting in gut-feeling just isn’t sustainable. In fact, it’s likely to leave you scrambling to meet top-line targets with unsuited, untrained, or burnt-out sales reps.

The key is to set top-line targets that are both ambitious AND attainable, to keep your sales team motivated and performing across the year. This is where effective sales capacity planning offers the upper-hand.

In today’s fast-moving sales landscape, inside sales operations can’t afford to make decisions based on instinct. Almost everything needs to be rooted in evidence and cold-hard fact.  Diving into data insights is the only realistic way to set actionable KPIs and forecast reasonable growth, while also understanding what your team needs to execute and succeed.

We’re not talking about generic, industry-wide data either. We mean clean, rich, and specific data that provides insightful context for your strategy planning. Just because you’ve read online that the typical lead-conversion rate should be 10%, for example, that isn’t enough detail to build your capacity planning around. There are factors to consider here: team size, rep experience, market share, client specification.

The bottom line is, to effectively forecast for the year ahead you need to accurately pinpoint analytics around ramp, productivity, attainment and closed won/lost for your own sales organization. Only then will you have the confidence that you’re assigning capacity in the most effective areas, or scaling your team to see a return on investment.

Pro-Tip: Organize your CRM

Ensuring you have an organized CRM with a strong baseline of historical data will add the extra context and edge to apply this data in meaningful ways. With this added layer of context, you’ll get a realistic, accurate understanding of what your team can already achieve, and form a more insightful view of the investment needed to build on this.

Headcount Review & Budgeting for your Workforce

Capacity planning at its most basic level is finding and assigning the right people to the right project, to ensure productivity and output is maximized in priority areas. It’s not stretching teams beyond their potential to meet new targets or allocating resources to ‘smooth-out’ workloads.

Your sales team shouldn’t be victims of circumstance when it comes to capacity planning. Allocating work beyond a rep’s capability or skill set is the exact opposite of productive planning. They’re not there to plug a gap.

Although, if there are evident gaps in your capacity planning and forecasting, it may be a sign to undertake a headcount review.

The beauty of annual capacity planning is that it gives sales leaders an opportunity to evaluate their teams’ strengths, and look at trends in growth to forecast resource demand based on expected workload increase, new targets or low-performing KPIs.

The fundamental advantage here is that it ties directly to a sales headcount review. By mapping out revenue growth according to the number of reps in your team, you’ll be able to draw comparisons between what is currently being achieved, and what is needed to meet the demands of the new year.

As headcount is usually the most significant outgoing expenditure for businesses across the globe, this approach builds an understanding of where budget is best placed across your organization.

In doing so, you’ll also set a strong foundation for recruitment processes across the year, setting milestones and backing up hiring decisions with concrete data to ensure a valued return on investment.

how to monitor the performance of your sales messaging

Let’s Recap

Reflection is a powerful thing. Forecasting and budgeting for the year without consideration for the previous year’s data is essentially a shot in the dark.

Incorporating effective capacity planning results in realistic, achievable goals for your sales team that are rooted in actionable KPIs, rather than blind guesswork. This influences everything from rep morale and productivity to the amount of opportunities and leads you convert.

Strong capacity planning will also help you to understand how to budget effectively to scale your sales team throughout the year. It’ll allow you to view under-performing areas in your team and visualize where the budget is best placed across your organization.

TLDR: Competent capacity planning is invaluable to any sales team. It ensures your budgeting and forecasting is tactical, well-informed and based on cold-hard fact.

Rebekah Gellert Inside Out
Originally from Norway, Rebekah’s was raised in the Tampa Bay area. From her first job at 16, she found success with Sales and Marketing exclusively. Although it didn’t go in the direction of music videos and commercials as her childhood dreams had hoped, her experience in the financial industry and real estate enabled her to establish her own company and travel. With focus on digital and social media marketing, advertising, brand awareness, content, and brand design, her motto is “don’t present a problem without offering a solution.” She follows the idealogy of “proactive, not reactive”, and enjoys analytical processes, working under pressure, and finding order in chaos. Following the sale of her company, Rebekah currently holds the position of Head of Marketing and Sales Enablement and resides in Downtown St. Petersburg.

Rebekah Gellert

Originally from Norway, Rebekah's was raised in the Tampa Bay area. From her first job at 16, she found success with Sales and Marketing exclusively. Although it didn’t go in the direction of music videos and commercials as her childhood dreams had hoped, her experience in the financial industry and real estate enabled her to establish her own company and travel. With focus on digital and social media marketing, advertising, brand awareness, content, and brand design, her motto is “don’t present a problem without offering a solution.” She follows the idealogy of “proactive, not reactive”, and enjoys analytical processes, working under pressure, and finding order in chaos. Following the sale of her company, Rebekah currently holds the position of Head of Marketing and Sales Enablement and resides in Downtown St. Petersburg.

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Rebekah Gellert Inside Out
Originally from Norway, Rebekah’s was raised in the Tampa Bay area. From her first job at 16, she found success with Sales and Marketing exclusively. Although it didn’t go in the direction of music videos and commercials as her childhood dreams had hoped, her experience in the financial industry and real estate enabled her to establish her own company and travel. With focus on digital and social media marketing, advertising, brand awareness, content, and brand design, her motto is “don’t present a problem without offering a solution.” She follows the idealogy of “proactive, not reactive”, and enjoys analytical processes, working under pressure, and finding order in chaos. Following the sale of her company, Rebekah currently holds the position of Head of Marketing and Sales Enablement and resides in Downtown St. Petersburg.