Have you ever wondered what a sales ramp is?
Here's how it works.
As a sales leader, your number one priority is to garner the most sales in the shortest possible time, but that is only feasible with a functional team of sales reps working towards your business goals.
With a team of seasoned sales reps, your company's sales efficiency metrics are bound to move up the charts, and you could easily hit the peak of your sales cycle, where up to 20 percent of your leads convert.
Such momentum is great for business, so it's only natural to want to maintain it. But what happens when a sales rep leaves?
Losing a sales rep destabilizes the momentum of a sales cycle. It's a nightmare every company can't help but encounter at some point. And the only reasonable solution is to bring a new salesperson on board.
Hiring a new sales rep is easy, but onboarding can be challenging.
Sales ramp-up time, also known as the sales ramp-up period, refers to the duration it takes for a sales team to attain its average productivity quota after a new hire. In other words, sales ramp-up time is the metric of a new employee's initial product training to the first impactful work input.
When you hire a new sales rep, it takes time and money to get them up to speed on the mechanism of a sales department. Then it takes even more resources for them to reach their predecessor's quota.
While it's expected for a new hire to ease into the job within a time stretch, the focus here is how that process affects your company's production in correlation to the resources invested in the sales rep.
Logically, longer sales ramp-up periods would mean less productivity for the sales team. Again, such losses are inevitable, but with the correct calculations, sales leaders can develop ways to harness resources and improve the sales ramp without risking burnout among team members.
First, you'd have to calculate your company's ramp-up rate, and then you can use the results to develop a faster ramp-up plan. However, remember that a speed-oriented ramp-up plan could overload your new sales rep, stretch them thin and make them incompetent, ultimately leading to less productivity.
So the trick here is to find a balance between reduced ramp-up rates and the sales rep's capacity. There is a template for that, but first, let's explore how you can calculate your sales ramp-up rate.
There are three principal methods used in calculating sales ramp-up time. These techniques explore the relationship between the ramp-up period (training phase), the sales quota, the sales rep's experience, and the sales cycle.
It's important to note that several factors, such as the company's growth rate, revenue goals, size, and management systems, influence the ramping-up process. Nonetheless, the following formulas are sales oriented and are mainly practical within a sales industry.
As explained earlier, the sales cycle comprises all stages of acquiring and converting a lead into a customer. For experienced reps, the process could take weeks or months,
However long it takes, the logic here is to calculate your ramp rates using the average time the company's experienced sellers take to convert a lead and then add a buffer time of 90 days to cover the new seller's training and acclimation period.
So if a typical lead takes four to eight months to convert, you should expect your ramp-up time to take at least seven months. (4 months plus 90 days.)
Well, practical training requires real-life situations. Of course, your new hire could acquaint themselves with the company's standard operating system within the first 90 days of employment. Still, they'd need to live through the experience of converting a lead to become certified sellers.
Ninety days is the standard training period for all new sales reps. However, new sellers with previous experience in the sales industry might require less training and convert quicker than rookie sellers.
What if it takes less than 90 days to complete an entire training program?
Irrespective of the training time, you should use the standard measurement formula. For instance, If it takes less than 90 days, perhaps four weeks, to train a new rep and another four months for that rep to make a sale, the ramp-up rate equals 20 weeks (4 months + 4 weeks).
Companies with varying sales cycle duration use the quota attainment method. With this system, there is no average conversion time among sales reps as they're driven by the commissions allotted to a quota.
If a seller reaches total productivity by attaining the allocated quota, they get a full commission. So 100% quota attainment equals 100% commission.
How does this help calculate a company's ramp-up time?
New hires are given a quota to attain after the initial product training. Since their earnings depend on their conversion ratings, they ramp up as soon as possible.
As expected, not all new sales reps start on equal footing. For arithmetic purposes, a ramp-up average is derived from previous ramp-up rates and added to the company's standard training period.
In this case, if you use the 90 days standard, the calculation formula for ramp-up time would equal 90 days plus the average quota attainment time.
This technique is the most efficient ramp-up rate calculation. It explores every conceivable outcome throughout the onboarding process and sales training programs .
The formula is structured as a customized training period based on the level of experience in addition to the average sales cycle duration.
For example, If there is a new hire with prior experience, the company could put them through 4 weeks of training and have them work through an average sales cycle of four months. The ramp-up time would be five months (4 months + 4 weeks).
On the other hand, the training program for a new hire with no prior sales experience could last 90 days. In addition to the sales cycle duration of four months, the result would be a ramp-up rate of seven months (90 days + four months).
The trick with this method is to develop a functional structure that aligns the various levels of prior experience attained by new hires with a balanced training length.
As stated earlier, increasing your ramp-up rates is complicated, and that's because it's easy to go off balance and overload your sales team.
Here are two ways to reduce ramp-up time without breaking your sales team's capacity.
Think of the buddy system as mandating a beneficial relationship between old and new employees. Studies have proven that new workers display higher productivity when paired with seasoned workers.
The buddy system helps create a mentor-mentee relationship between new hires and their experienced counterparts. It not only allows new sales reps to learn from experts, but it also helps them cultivate a positive attitude toward work.
With the buddy system, you'd help your new hires learn practical skills and ramp up in no time. However, there is one pitfall to look out for when pairing your new hires;
Lone wolves!
Sometimes, the top performers in a sales department are not precisely good team players. And while their quota is excellent for business, their demeanor could be better.
Only pair your new hires when you've helped your lone wolves develop people skills. That way, you will avoid getting counterproductive results.
If you're looking to reduce ramp-up time in the most efficient way possible, use data-driven indicators. They are very similar to KPIs and are easy to collect.
Documenting your sales reps' activities will help you identify their strengths and weaknesses. With such data, coaches can streamline training programs to fit individual deficiencies. Effective sales coaching can really boost your top line.
Data-driven indicators help coaches avoid generic teaching and develop proactive training strategies. This technique applies to old and new sales reps. With the correct data, you can save time and evenly distribute training amongst your workers, especially when using the buddy system.
For instance, a new hire who could be more efficient at analyzing data would benefit more when paired with a sales rep with excellent data analysis skills. You can collect valuable data by monitoring your workers' skills through embedded surveys within their work programs.
The data-driven indicator technique also allows sales leaders to improve their managerial skills and develop strategies for resolving internal issues that may hinder the team's sales performance.
It's one thing to train a qualified candidate, and it's another thing to coach a candidate with deep inclinations toward selling. A sales management training program would be more impactful on the latter. Why?
Because they're not just qualified but also like and enjoy the sales process.
When hiring, ensure your preferred candidate has a suitable personality for trading. Test their ability to persuade people and exercise courtesy without losing their confidence. Also, look out for how intentional they are about learning.
A new hire with the qualities above would likely have a shorter ramp-up time and a more significant impact on the sales team.
