How to Make and Use a Proper Sales Productivity Model

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Driver cells

1Q20 2Q20 3Q20 4Q20

QCRs by Tenure
First/hired quarter 4 5 6 7
Second quarter 3 4 5 6
Third quarter 2 3 4 5
Fourth quarter 1 2 3 4
Steady state 10 11 12 14
Attriting reps - 1 1 1
Ending reps 20 24 29 35

Ramped Rep Equivalents

First/hired quarter - - - -
Second quarter 0.75 1.00 1.25 1.50
Third quarter 1.00 1.50 2.00 2.50
Fourth quarter 0.75 1.50 2.25 3.00
Steady state 10.00 11.00 12.00 14.00
Total 12.50 15.00 17.50 21.00

Productivity Capacity 3,125 3,750 4,375 5,250

Judgment (300) (200) (200) 250
Plan 2,825 3,550 4,175 5,500

Linearity Analysis
By quarter 18% 22% 26% 34%
By half 40% 60%
Growth Analysis
Sequential -12% 26% 18% 32%
YoY 88% 61% 55% 72%

Quota capacity to assign 3,750 4,500 5,250 6,300

Pipeline Goals
Newbiz ARR quota 2,625 3,150 3,675 4,410
Day 1 pipeline needed 7,875 9,450 11,025 13,230
Day 1 pipeline from marketing 5,906 7,088 8,269 9,923
Day 1 pipeline from alliances 1,181 1,418 1,654 1,985
Day 1 pipeline from outbound SDRS 788 945 1,103 1,323
Prior Year Actuals 1Q19 2Q19 3Q19 4Q19
1,500 2,200 2,700 3,200
 Ramp
2020 Assumption Other Assumptions

0% Annual turnover 19% Sales headcount turnover

25% Steady-state productivity, annual 1,000 ARR/year for a ramped red; this is prod
50% Quota over-assignment 20% Street level % over productivity capacity
75%
100%

A better model would go 4-8 quarters more out into the future so S&M planning purposes

Also known as fully ramped reps

16,500 Some people further build-in a linearity assumtpion which I don't like because [1] it makes thin
(450) This row allows to adjust the model output in taking the final step in setting plan
16,050

These row rows help you to analyze impact of what-if adjustments on the plan
100% In terms of linearity / backloading
100%
And in terms of growth

67%

19,800 You assign, at a street level, more quota capacity than productivity

13,860 % of New ARR from upsell 30% On the assumption marketing is only re
Newbiz target pipeline coverage 3.0
% of pipeline from marketing 75%
% of pipeline from alliances 15%
% of pipeline from outbound SDRs 10%
 2019
9,600
dcount turnover
for a ramped red; this is productivity, not quota
el % over productivity capacity

o S&M planning purposes

t like because [1] it makes things more complicated and [2] it's non-intuitive to arrive at a vector. In reality, is your capacity changing or are
p in setting plan

ts on the plan

sumption marketing is only responsible for newbiz (new ARR from new customer) pipeline and not upsell pipeline
, is your capacity changing or are you just better at realizing value from it.
How to Make and Use a Proper Sales Productivity Model, Zero Judgment Version
(In which productivity capacity = plan)

Kellblog is licensed under a Creative Commons Attribution Non-Commerical 4.0 License

Driver cells

1Q20 2Q20 3Q20 4Q20

QCRs by Tenure
First/hired quarter 4 5 6 7
Second quarter 3 4 5 6
Third quarter 2 3 4 5
Fourth quarter 1 2 3 4
Steady state 10 11 12 14
Attriting reps - 1 1 1
Ending reps 20 24 29 35

Ramped Rep Equivalents

First/hired quarter - - - -
Second quarter 0.75 1.00 1.25 1.50
Third quarter 1.00 1.50 2.00 2.50
Fourth quarter 0.75 1.50 2.25 3.00
Steady state 10.00 11.00 12.00 14.00
Total 12.50 15.00 17.50 21.00

Productivity Capacity 3,125 3,750 4,375 5,250

Judgment - - - -
Plan 3,125 3,750 4,375 5,250

Linearity Analysis
By quarter 19% 23% 27% 32%
By half 42% 58%
Growth Analysis
Sequential -2% 20% 17% 20%
YoY 108% 70% 62% 64%

Quota capacity to assign 3,750 4,500 5,250 6,300

Pipeline Goals
Newbiz ARR quota 2,625 3,150 3,675 4,410
Day 1 pipeline needed 7,875 9,450 11,025 13,230
Day 1 pipeline from marketing 5,906 7,088 8,269 9,923
Day 1 pipeline from alliances 1,181 1,418 1,654 1,985
Day 1 pipeline from outbound SDRS 788 945 1,103 1,323
Prior Year Actuals 1Q19 2Q19 3Q19 4Q19
1,500 2,200 2,700 3,200
 Ramp
2020 Assumption Other Assumptions

0% Annual turnover 19% Sales headcount turnover

25% Steady-state productivity, annual 1,000 ARR/year for a ramped red; this is prod
50% Quota over-assignment 20% Street level % over productivity capacity
75%
100%

A better model would go 4-8 quarters more out into the future so S&M planning purposes

Also known as fully ramped reps

16,500 Some people further build-in a linearity assumtpion which I don't like because [1] it makes thin
- This row allows to adjust the model output in taking the final step in setting plan
16,500

These row rows help you to analyze impact of what-if adjustments on the plan
100% In terms of linearity / backloading
100%
And in terms of growth

72%

19,800 You assign, at a street level, more quota capacity than productivity

13,860 % of New ARR from upsell 30% On the assumption marketing is only re
Newbiz target pipeline coverage 3.0
% of pipeline from marketing 75%
% of pipeline from alliances 15%
% of pipeline from outbound SDRs 10%
 2019
9,600
dcount turnover
for a ramped red; this is productivity, not quota
el % over productivity capacity

o S&M planning purposes

t like because [1] it makes things more complicated and [2] it's non-intuitive to arrive at a vector. In reality, is your capacity changing or are
p in setting plan

ts on the plan

sumption marketing is only responsible for newbiz (new ARR from new customer) pipeline and not upsell pipeline
, is your capacity changing or are you just better at realizing value from it.
How to Make and Use a Proper Sales Productivity Model, Start-of-Quarter Model Runs

Kellblog is licensed under a Creative Commons Attribution Non-Commerical 4.0 License

1Q20 2Q20
Actual Plan/Model % Actual

New ARR 2,000 3,125 64% 2,200

New ARR capacity, start of quarter 3,125 64%

Rep Aging
0% First/hired quarter 3 4 4
25% Second quarter - 3 3
50% Third quarter - 2 -
75% Fourth quarter 1 1 -
100% Steady state 8 10 9
Ending reps 12 20 60% 16
RREs 8.75 12.50 70% 9.75
 2Q20 3Q20 4Q20
Plan/Model % Actual Plan/Model % Actual Plan/Model %

3,750 59% 2,950 4,375 67% 3,950 5,250 75%

2,188 101% 2,875 103% 3,625 109%

5 5 6 5 7
4 4 5 5 6
3 3 4 4 5
2 - 3 3 4
11 9 12 9 14
25 64% 21 30 70% 26 36 72%
15.00 65% 11.50 17.50 66% 14.50 21.00 69%
How to Make and Use a Proper Sales Productivity Model, Tracking as a Key Metric

Kellblog is licensed under a Creative Commons Attribution Non-Commerical 4.0 License

1Q19 2Q19 3Q19 4Q19 1Q20

New ARR Performance
New ARR 1,500 2,200 2,700 3,200 2,000
New ARR plan 1,475 2,125 2,850 3,100 3,125
New ARR as % of plan 102% 104% 95% 103% 64%
YoY growth 25% 26% 13% 33% 33%
Sales Staffing
Ending QCRs 8 9 9 10 12
Ending QCR plan 8 8 10 10 20
Ending QCRs as % of plan 100% 113% 90% 100% 60%
Sales Ramping
Ending RREs 6.50 7.20 8.50 9.00 8.75
Ending RREs plan 6.75 7.50 9.00 9.50 12.50
Ending RREs as % of plan 96% 96% 94% 95% 70%
Performance Relative to Capacity Model
New ARR capacity, SoQ 3,125
New ARR / SoQ capacity 64%

New sales VP hired in November; drives out huge number of salespeople, misses 1Q and gets fired
Central RVP appointed acting VP of Sales on 4/1 -- is he doing a good job?

Note: while I tried to foot numbers as best I could, since I didn't fully build out 2019, I made some numbers up that
The key point here is not he numbers themselves but presenting them as set of key metrics to evaluate sales perform
 2Q20 3Q20 4Q20

2,200 2,950 3,950

3,750 4,375 5,250
59% 67% 75%
0% 9% 23%

16 21 26
25 30 36
64% 70% 72%

9.75 11.50 14.50

15.00 17.50 21.00
65% 66% 69%

2,188 2,875 3,625

101% 103% 109%

de some numbers up that may not foot into the model

cs to evaluate sales performance