---
title: "Sales Capacity Plan"
type: doc
evidence_type: method
category: "Growth Modeling"
publisher: "LeanScale"
date_modified: 2023-09-19
word_count: 566
topics: ["forecasting", "sales-compensation"]
canonical_url: https://knowledge.leanscale.team/docs/growth-modeling-sales-capacity-plan/
source: "LeanScale Knowledge Hub — https://knowledge.leanscale.team"
license: "Free to quote and cite with attribution to LeanScale."
---

# Sales Capacity Plan

**Evidence type:** method (what we prescribe)

A sales capacity plan converts a revenue target into headcount. It runs in six steps: set quotas and expected attainment, apply ramp time and attrition, design territories, calculate the capacity needed to hit plan, derive the pipeline required to feed it, and build the commission plan that pays for it.

### Step 1: Setting Quotas and Attainment

The initial phase of sales capacity planning involves establishing quotas and attainment goals for the sales team. Quotas represent the sales objectives each representative is tasked with reaching, while attainment reflects the percentage of quota actually accomplished.

In setting these benchmarks, we must consider past performance, market factors, and our company's overarching revenue objectives. It's crucial to be pragmatic; unrealistic targets can result in exhaustion and high turnover.

### Step 2: Incorporating Ramp Time and Recruitment

Ramp time is the duration it takes for a new sales representative to reach full productivity. This encompasses training on the company's offerings and the process of establishing a robust pipeline of promising leads.

When we plan for sales capacity, we're careful to account for this ramp time, ensuring our new team members are integrated and ready to contribute without delay. This way, we're better equipped to meet our targets without any gaps in coverage.

### Step 3: Designing Territories

The next step is to design sales territories that maximize the efficiency of the sales team. This involves dividing the market into manageable geographic areas and assigning each area to a specific sales representative.

We carefully consider population density, the clustering of industries, and the whereabouts of our key customers. Our aim is to create territories that are not only balanced in workload but also in potential revenue.

### Step 4: Calculating Capacity Needed for Goal Achievement

With quotas, ramp time, recruitment, and sales territories in place, we can now calculate the capacity needed to achieve our goals. This means figuring out how many sales representatives we need to hire to meet our revenue goals.

To calculate capacity, you will need to factor in the following:

* The average sales quota per representative
* The ramp time for new hires
* The expected attrition rate
* The number of sales representatives currently on the team

### Step 5: Determining Pipeline Needed to Achieve Quotas

Beyond just the capacity for goal achievement, we must also consider the pipeline required to meet quotas. This entails estimating the number of qualified leads the sales team needs to generate in order to close sufficient deals and reach their targets.

To determine pipeline, you will need to factor in the following:

* The average sales cycle length
* The win rate for closed deals
* The number of qualified leads generated per sales representative

### Step 6: Developing a [Commission Plan](/strategic-walkthroughs/sales-commission-plans/) and Incentives

The final piece of the puzzle is to craft a commission plan and incentives that will inspire the sales team to reach for the stars. This can encompass base salaries, commissions, bonuses, and other creative incentives.

When developing a commission plan, it is important to consider the following:

* The company's overall compensation philosophy
* The sales team's performance goals
* The budget for sales compensation

By following these steps, startups can develop a sales capacity plan that will help them achieve their revenue goals.

## Canonical

https://knowledge.leanscale.team/docs/growth-modeling-sales-capacity-plan/