About this episode
Eddie Reynolds, founder and CEO of Union Square Consulting, joins Rachael Bueckert on The RevOps Corner to challenge the limitations of top-down growth models and explain how to build a realistic, executable plan from the ground up. Eddie has deep sales operations experience from his time at Salesforce and brings that operational rigor to revenue planning for B2B SaaS companies.
The core thesis: Bottoms-up planning reveals what your team can actually achieve, while top-down models are often wishful thinking. Most organizations attempt some form of bottoms-up planning but lack the granularity needed to create truly realistic targets and execution roadmaps. Top-down approaches like triple-triple or double-double-double frameworks set aspirational numbers, but without grounding them in actual team capacity, sales cycle realities, and historic conversion data, they become disconnected from reality.
Eddie reframes the conversation around capacity planning as the backbone of realistic growth forecasting. Rather than assuming your sales team can scale linearly, he walks through concrete examples from his Salesforce tenure, showing how many accounts one rep can cover, how many touches are needed per account, and what pipeline volume that actually generates. The same rigor applies to new business prospecting, inbound lead management, and customer expansion. When you model this granularly and multiply across your team, you either confirm your top-down goal is achievable or identify the specific gaps (more headcount, different territories, process improvements) needed to close them.
The episode covers net revenue retention forecasting, the hidden cost of blended funnels that mask true conversion performance, ramp-time planning for new hires, and how to reverse-engineer close rates and deal sizes through sales methodology and CRM discipline. Eddie emphasizes presenting boards and investors with both the target number and the clear, detailed path to achieving it, built on historical performance and transparent assumptions.
What we cover in this episode
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0:54
Top-Down vs. Bottoms-Up Planning Why aspirational growth frameworks like triple-triple create unrealistic targets versus data-driven bottoms-up models that map to team capacity.
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3:05
Starting with Net Revenue Retention How to forecast customer renewals and expansion revenue granularly, from customer-by-customer risk analysis to pipeline generation projections.
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7:12
Capacity Planning Deep Dive Concrete math on how many accounts a rep can cover, call frequency, deal volume, and how to model this across existing customers and prospects.
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11:33
Blended Funnel Pitfalls Why averaging metrics across enterprise, mid-market, and SMB deals masks real performance; the need to segment by customer segment and intent type.
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18:38
Outbound Prospecting and Activity Math How personalized outreach converts at 7.5% versus spray-and-pray at 0.5%, and how to forecast pipeline from actual activity patterns.
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21:05
Inbound Lead Segmentation Separating demo requests and pricing-page visitors from generic MQLs reveals which leads are worth follow-up and which convert below cold prospecting rates.
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26:30
Sales Ramp and Quota Attainment How to forecast revenue contribution from new hires using realistic quota attainment rates and ramp time, not top-performer benchmarks.
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34:41
Blending Top-Down and Bottoms-Up How to use bottoms-up capacity analysis to test whether top-down goals are achievable and identify specific hiring or process changes needed to bridge the gap.
The lines worth sharing
They may fail to go into enough detail with enough granularity to create a plan and specifically a target number that's achievable and realistic.
Eddie Reynolds · 2:15
We have to have hopes and dreams, big ambitions. But we also have to have a tangible, achievable plan to get there.
Eddie Reynolds · 4:00
You can't just simply say we need all our SDRs to book 10 meetings a month. We have to look at our actual historic performance and work backwards.
Eddie Reynolds · 20:00
If you have a team of 50 salespeople and only five are hitting quota, you have a really serious problem. You shouldn't have to be the top salesperson just to hit quota.
Eddie Reynolds · 27:45
Common questions from this episode
What is the difference between top-down and bottoms-up growth planning?
Top-down planning starts with a revenue target and works backward, often wishfully assuming metrics will align. Bottoms-up planning starts with team capacity, historic conversion rates, and realistic activity levels, then forecasts what revenue is actually achievable. Effective planning combines both.
How do you build a bottoms-up sales capacity plan?
Map each rep's time allocation across existing customers, inbound leads, and outbound prospecting. Calculate accounts coverable per rep, activities per account, conversion rates, sales cycle, and average deal size. Multiply across the team to determine realistic pipeline generation and revenue production.
Why do blended funnels hurt forecast accuracy?
Blending enterprise, mid-market, and SMB metrics masks true performance. Enterprise deals have different sales cycles, close rates, and deal sizes than SMB. Similarly, demo requests convert far higher than generic MQLs. Unblending reveals which leads and segments are actually worth pursuing.
What metrics should you present to a board for next year's growth plan?
Show the target revenue, net revenue retention contribution, new business goal, pipeline target and build timeline, expected close rate and average deal size, and the specific initiatives or hires needed to achieve it, all grounded in historic performance.
How do you forecast revenue accurately when hiring new sales reps?
Don't benchmark to your top performer. Instead, identify what percentage of your team actually hits quota and the average time to ramp. If 65% of reps hit quota after three months, assume only 65% of new hires will contribute at quota in year one.
How can top-down and bottoms-up planning work together?
Start with a top-down aspiration (e.g., grow from $50M to $70M), then use bottoms-up capacity analysis to determine if it's achievable with current headcount. If not, identify the specific staffing or process changes required to bridge the gap.
SEO meta description
Eddie Reynolds on how to create a bottoms-up growth plan that aligns ambitious targets with realistic team capacity, sales cycles, and conversion rates.
Target keywords
bottoms-up planning
sales capacity planning
revenue operations
Eddie Reynolds
net revenue retention
sales forecasting
quota attainment
pipeline management
GTM planning
Union Square Consulting
top-down vs bottoms-up
blended funnel
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Read the full transcript · 39 KB
SPEAKER_00Welcome to RevOps Corner, where we talk about how B2B SaaS companies scale through revenue operations by interviewing amazing guests and sharing what we see in the trenches every day here at Union Square Consulting. Welcome to another episode of the RevOps Corner. Today,
SPEAKER_01we're switching things up a bit. I'm Rachel Buchert, the Marketing Manager here at USC,
RACHAEL BUECKERTand I'm here with our founder and CEO, Eddie Reynolds, who's going to be on the other side of the interview this time. Hey, Rachel. Hey, how's it going? It's going well. I just realized we've
SPEAKER_06worked together for over a year, and I've never heard you say your last name before. I think I've been mispronouncing it this whole time. That's true. I don't think I've ever heard you say my
RACHAEL BUECKERTlast name either. I think I have. That's so funny. Crazy, this remote world we're living in. I'm not
SPEAKER_06going to reveal myself now. Fair enough, fair enough. Well, today, we're going to be discussing how to
RACHAEL BUECKERTcreate a bottoms-up plan, which is a real data-driven plan that teams can actually execute using the resources that they have. This is opposed to a top-down plan where stakeholders or revenue leadership start with the revenue target and then make decisions based on their assumptions of how they can hit that target. So, Eddie, why don't you start us off by explaining why top-down growth models, like the triple-triple, double-double-double framework, why they tend to be counterproductive for some companies? Yeah, so, I mean, I'll preface this by saying I don't think I'm going to share
EDDIE REYNOLDSanything that is, like, groundbreaking and new for the audience at a high level. I think what will be valuable is understanding the details, how the sausage is made here. I think that most revenue leaders and organizations understand that a top-down model has its limitations, and a lot of them will try to do some form of bottoms-up, but they may fail to go into enough detail with enough granularity to create a plan and specifically a target number that's achievable and realistic. They may fail to push back on their CEO, or the CEO may fail to push back on the investors and the board with realistic numbers that they can hit and a plan to actually hit that. And the top-down model, there's very few companies that would not do a top-down model. You talk about the triple-triple, double-double, that's a little bit more early stage than the companies that we work with. But the idea is, is that we have this big revenue number that we need to hit. And we're trying to take that top-line number and engineer our plan and our metrics to that number. And that's great, but that's wishful thinking, right? Now, it's okay for us to start there. It's okay for us to say, we want to grow from $50 million to $70 million next year. Hey, I'd like to be a billionaire next year, but I run a professional services company, and I don't think that's too realistic. We have to think about how do we actually get to that $70 million? Where is that additional $20 million going to come from? How much of the $50 million that we have today, let's say this is December 31st, how much of that $50 million can we expect to retain from our existing customers 12 months from today?
SPEAKER_01And right, so what specific benefits have you seen from switching to a bottoms-up approach, particularly in terms of aligning business goals with realistic strategies?
EDDIE REYNOLDSWell, I don't know that we necessarily switch to a bottoms-up approach as much as we're combining the top-down and the bottoms-up, right? So top-down tends to be a very optimistic, hopeful, wishful type of planning, and that's great. Bottoms-up is a lot more realistic, maybe pessimistic way of
EDDIE REYNOLDSlooking at things. And we have to have hopes and dreams. We have to have big ambitions. Investors are backing our companies, well, not my company, but the companies that we work with because they expect enormous growth, right? We have to deliver on that. But we also have to have a tangible, achievable plan to get there. Exactly. So where should we start with bottoms-up planning?
EDDIE REYNOLDSSo I think we should start bottoms-up planning by figuring out how much revenue we can expect to
EDDIE REYNOLDShave from our existing customers so that we can then back into the number that we need to get out of new customers to hit our target, right? So the first place to start with is retention. What has our gross retention been to date? What has that been in terms of the percentage of customers? What has that been in terms of the percentage of dollars? When we look at our existing customers, if we have an extremely large number of customers, then we can use some math and statistics to figure this out more easily. If we have an extremely small number of customers, we might want to forecast this customer by customer. Depending on the size of the data set, we might want to do both, right? Here at Union Square Consulting, because we do have a small number of customers, we literally forecast our renewals on a customer by customer basis, based on everything that we know, based on all the risk signals. We can go really granular here and we can look at usage data, we can look at measuring customer health, at risk signals, et cetera, and arrive at a number where we say, we think that we can have this much revenue from our existing customers from what they've contracted with us at the end of next year. Now this gives us an opportunity to say, all right, how much expansion revenue can we get out of these customers? Well, from a customer by customer basis, from a percentage of revenue, et cetera, how much expansion have we identified in the past? How much pipeline have we've been able to build in the past as a percentage of customers? How much or what percentage of pipeline have we been able to close? What's our average deal size, et cetera? We forecast that out just like we would forecast out new business. And we think with the existing set of customers today, how much opportunity do we have to find expansion revenue? We land on our net revenue retention or our number. But before I even go into that, we have to think about like brass tacks, right? How are we going to identify these expansion opportunities? What number of opportunities do we need to identify to hit that number? What is the close rate that we need? What is the sales cycle? When do we need to identify these expansion opportunities? What's the average sales price? And who is actually going to close these opportunities? How many reps do we have, whether they be account executives or account managers or CSMs that are actually going to close those deals? And do they have the capacity to go do that? Or are we expecting that because we doubled revenue last year, we're going to double expansion again with the same number of reps? Is that a realistic assumption? So I've given you a long answer to where we start and I've given you a lot of detail on how we look at net revenue retention and how we forecast that out. But it really comes down to getting down to the most granular level of like, how many calls do we need to make into our existing customers? When I worked at Salesforce, I spent the majority of my time trying to expand existing customers. And that meant that I spent, you know, the majority of every hour of every day calling down on anywhere from 60 to 140 existing accounts that I had in my install base, and that taking up almost all of my time.
SPEAKER_01And so what methods or tools do you suggest for forecasting this out?
EDDIE REYNOLDSSo as I said, we're going to start at the most granular level. We can start with, after we identify
EDDIE REYNOLDSour ideal customer profile and our buyer personas, thinking about who we're selling to, who we should have sold to, what customers make up our best customers. We then think about a capacity plan and a territory plan, right? So let's think about this like a step-by-step process. And I'll give you a tangible example. So I'm at Salesforce and I'm covering 60, 80, 100, 120, 140 accounts. I mean, I was there for three years and my territory has changed a lot. So it really depends on the time. So then you think about what are the stakeholders in the organization that I might want to target? I could talk to the VP of sales, of course, CRO, CMO, CFO, COO, CEO, Salesforce admin, trying to think about what else. That's about eight different people. So then I think, all right, typical existing customer. We have Salesforce in that customer. We might have a relationship with the VP of sales. We might not. And that's about it. How do we expand that? Now, this depends on which customer. So we're getting like way deep into the weeds on how we actually go and do expansion sales. But basically, if you think about trying to cover eight different contacts and you say, well, I'm going to call them 10 times before I give up. I'm not suggesting that in an expansion sale, we call them 10 times in two weeks, but maybe we call them 10 times over the course of a few months. All right. So now this one single account, I've got eight contacts, 10 attempts. That's 80 calls. If I make 20 calls a day, that one account covers four days of my year, right? Doing simple math. Let's extrapolate that out. There's something like 233 working days in a year. Let's just round up to 240. So 240 divided by four or sorry, divided by what was that? Yeah. By four is 60 if I'm doing the math, right? So that lands me at my 60 accounts. You can see how I could spend all day, every day, trying to or at 20 activities a day, working 60 accounts across eight contacts, 10 activities each. Which is crazy if you think about it, because that is the real numbers that I was working with. And you have to think if I'm making 20 calls a day, I'm calling every single customer every three days, which sounds insane. And so you think about how many different individuals in those organizations you're trying to cover. So we do a capacity plan and we arrive on a number and we say, okay, well, our sales rep is going to make 20 calls a day, 20 personalized calls, so to speak. So there's the math. That's how many accounts one can cover in a given period of time. Then we think, all right, within those calls, how many opportunities can we generate? Or in an account list of 60 companies, how many opportunities can we expect to generate? What's the average deal size? What's the average close rate, et cetera? And we can set a target quota. In my case at Salesforce, my quota was a million. And so they had very carefully done all of that math on the back end to identify how big of a book of business would we have to give somebody in order for them to expand that by a million dollars in expansion revenue. I'm not talking about renewals. Now, I also covered new business, so I'm kind of oversimplifying this here. But we come up with a capacity plan and we figure out, here's the number of accounts that a rep can handle for existing. And this is exactly step-by-step what they need to do in order to generate that expansion pipeline and then close it. We then expand that across the entire sales team and we can figure out, okay, do we or do we not have enough accounts or too many accounts per rep? And do we have enough reps to go and call all these people, uncover these expansion opportunities, work those opportunities, and then close a reasonable percentage of them for a reasonable dollar amount in a reasonable period of time within our sales cycle? And we've now mapped out what expansion looks like. With renewals, we can look at our historic rates or we can forecast that out deal by deal. And we now have arrived at our net revenue retention number, leaving us to figure out
SPEAKER_16what we can hit with new business and how we're going to be able to hit that.
RACHAEL BUECKERTAnd capacity planning goes beyond customer success into every other part of the business as well. So for outbound, doing proper capacity planning and territory planning is like a huge part of your bottoms-up plan as well. What are some of the biggest pitfalls that companies fall into when they're trying to capacity plan for their outbound? Well, I think you just hit the nail on the head. We are working with a
EDDIE REYNOLDSprospective client right now where, just as I described, their account executives are covering
EDDIE REYNOLDSinbound leads, outbound prospecting, and existing accounts. So we have to do a capacity plan that factors for all three, right? So how many accounts can one of those folks cover in a year? How many
EDDIE REYNOLDSprospect accounts can they cover? How many leads are they getting, right? And so we have to put all of this information together and we have to say, well, first of all, what's the priority? Like if they have
EDDIE REYNOLDSmore people to call than they have time, who do you want them calling first? But ideally, if you say, okay, well, we have this many customers, so they can spend X amount of their time calling into these existing accounts, we have X number of prospects that can spend this much time calling into prospective accounts. And then we have this many leads to divvy up across the team, or we're forecasting out this many leads, then we can figure out that time. And we're essentially doing three separate exercises and putting them all together. And we're saying, okay, great. We now have, you know, let's say an account executive that's responsible for generating pipeline and closing pipeline. They've got two hours a day to prospect. So effectively, not that you would do this in one given day, probably switch days, but you have, what is that? 120 minutes divided by three, you have 40 minutes a day to, you know, work inbound leads. You have 40 minutes a day to prospect. You have 40 minutes a day to expand existing accounts. That may be an oversimplification. We might forecast out the number of leads that we're going to be able to feed each rep. And we might say, okay, well, you know, each day, that's going to be only a half an hour, or, you know, over the course of a week, a month, X amount of time. And then we say, okay, like, if we think about the step by step process to work an inbound lead and convert that into pipeline, then this is how long that's going to take. The same thing for prospecting, the same thing for existing accounts. Then we think about how many deals does our AE have to have in their pipeline at any one point in time in order to hit their target number, right? How much do they need in expansion? How much do they need a new business to hit each of those numbers? We think about things like sales cycle. So let's say that we have a 60 day sales cycle. Well, that means that if our fiscal year ends on December 31st, then by the end of October, we need to build all of the pipeline that we're going to close. So we now have to think how much pipeline do we have today for all of that? How much pipeline do we need to build between today and October 31st of next year, in order to have a certain close rate, a certain average deal size, and then close a certain amount of business by 1231. And we have to break that down by all these different divisions, right? Like our expansion pipeline or our expansion deals might be a very different size than new business. We have a seed and grow strategy, for example. It's not uncommon that we're going to close a small deal and then on the back end, double or triple or quadruple the size of that customer six, 12 months later.
RACHAEL BUECKERTSo how should businesses realistically be able to assess whether their teams can handle an increased pipeline of customers and deals? Are there metrics that we should be looking at?
EDDIE REYNOLDSWell, I mean, there are metrics, but I don't think it's as simple as looking at metrics. Like I said, I think I feel like I keep coming back to this capacity plan as an answer to your questions, and that we need to understand the brass tacks, right? So let's take a certain number of inbound
EDDIE REYNOLDSleads. Let's say that we've looked at our marketing funnel, and this is also a bottoms up approach, and we say, okay, we've got a thousand leads that we're going to generate next year. Let's call it 10,000 leads to use a bigger number. All right, we're going to route these into our SDRs. They're going to qualify these leads, and then they're going to pass those over to our account executives to work. All right, we've got X number of account executives. Okay, now we think, okay, each account executive is going to get, I don't know, let's call it 10 new leads per month. Okay, we expect that 90% of those leads are going to convert into a qualified sales opportunity because our SDRs have done a fantastic job and they know what to look for. That was my experience at Salesforce. About 90% were converting into qualified pipeline because the team was really well trained. Okay, so now we've got nine leads or nine qualified opportunities per month. I never had anything like this at Salesforce. That would have been a dream, but let's say that we did or that I did. Now I've got these nine new inbound leads that I'm working as qualified sales opportunities. How long does it take to work that? There's usually a number where you can figure out, and for me, for whatever reason, it's been about like 10 to 15, a number of opportunities that you can handle as a sales rep at any one point in time before you start to get overwhelmed and do any number of things from no longer prospecting to letting deals slip, failing to follow up, skipping steps, doing poor presentations, poor discovery calls, etc. It varies widely depending on the product you're selling, the customer you're selling to, etc. For me, most of the time in my career, I've been selling something fairly strategic like Salesforce or revenue operations, consulting services, and trying to chase more than 10 or 15 people down at once becomes pretty overwhelming. So then we think, all right, well, of those nine leads per month, what's our sales cycle and how quickly will those nine leads or nine qualified opportunities turn into 15 opportunities at the same point in time or more? You can see that just on inbound alone, I can hit that 15 number really quickly depending on how long it takes me to close those deals out, and now I don't have any capacity to do any prospecting into new customers or into existing accounts. And so if you're saying, well, I also want you, in addition to handling those inbound leads, in my case at Salesforce, I might have been lucky to get one or two of those a month. So then I had a lot of opportunity to prospect into our existing install base. And then by doing that, just as the math I shared with you, I didn't have a lot of time to do cold prospecting in that job to call prospects. Now, if you were to back that out and say, okay, well, instead of getting 60 existing accounts, I'm going to give you 30. Well, then that would have given me about half of my time back every day to go and call down on a list of
SPEAKER_16cold prospects.
RACHAEL BUECKERTAnd so from a bottoms up planning perspective, it's like once we know the capacity of our outbound salespeople, we can say, okay, this is a realistic goal that we can have for the future. And if we want to increase the goal and increase growth for next year, here are, you know, our bottlenecks and capacity that now we have to work on expanding. So we either need more salespeople or we need more pipeline generation and stuff like that. Exactly. And so you think about this, like down to the call level, right? So when you're doing outbound prospecting, you can look at the total number of activities that you log, or the total number of accounts that you cover and the percentage of them that are converted, right? And so this is one of the traps that many organizations fall into.
EDDIE REYNOLDSWe push activity. And I've seen statistics where, you know, you'll go after 1000 accounts and only convert 0.5% of them. So what is that? That's five accounts from doing this sort of spray and pray approach of like going into outreach or sales loft and pressing send all, leaving voicemails, generic messaging, etc. Whereas if you do personalized messaging, I've seen those same stats in the same place showing 7.5% of those 1000 accounts are converting. Now that's not 7.5% of activities. That's 7.5% of the accounts where you've reached out multiple times and done personalized outreach. So again, we can extrapolate that and we can say, okay, how long does it take to cover 1000 accounts with personalized outreach? Let's say that we're only going after one contact and we do 10, 10 activities per account per contact. So now 1000 becomes 10,000 activities. Let's say that we're talking about an SDR here that has all day to do this. So let's call it 40 personalized activities a day. So whatever 10,000 divided by 40 is, it would be 2.5, 25, 250 days if I'm doing the math in my head, right? So okay, it takes that long to cover that many accounts. Well, now we can figure out here's how much pipeline we think we can generate from that outbound activity. And that's what I mean by a bottoms up approach. We can't just simply say, we can't just simply say, well, we need all of our SDRs to book 10 meetings a month and create nine qualified opportunities. We have to look at our actual historic performance. We have to look at how many calls we made last quarter and how many qualified opportunities we generated, what the average sales cycle was for those opportunities, what the average sales price was, what the close rate was, how much revenue was generated. And then we can forecast out how much revenue we can produce through that activity next year and how much pipeline our account executives will have to manage.
RACHAEL BUECKERTAwesome. And I imagine it translates pretty easily over to inbound as well. Or is there any big difference when we're doing this for inbound? No, not at all. I mean, in fact, I would say it's exactly the same thing. The difference is that the metrics may be radically different, right? One of the things that I'm really big on is separating out declared intent leads from non-declared intent leads, meaning how many leads are we getting where people are raising their hand and they're requesting a meeting or a demo with sales?
EDDIE REYNOLDSThose should convert at an extremely high percentage. If we forecast out how many of those leads we think we can get next year, we can have a better idea of what kind of pipeline we can expect. If we then further unblend the funnel and look at the rest of the leads, the high lead score, the MQL, so to speak, not that a demo request is not an MQL, but the other types of MQLs, we look at those and we say, okay, we need to make a lot more calls in order to convert those leads into meetings and into qualified pipeline. So if we blend those together, we get this really murky number. And when we look at the non-declared intent leads, the non-demo requests, things like white paper downloads and webinar registrations, we oftentimes find that the conversion rate is even lower than cold outbound prospecting. This is why sales doesn't want to follow up with leads. Like salespeople are not stupid. Marketing is feeding them leads and they're saying, I don't want to call these people because they would rather make cold calls to companies that are at least in their ICP and people that are in their buyer personas, rather than calling this random person in a different industry in a different title that downloaded a white paper. So if we go and take this bottoms up approach in exactly the same way and we slice and dice our data in different ways that we can start to see, well, how many of these quote unquote MQLs that we're generating are actually going to convert into pipeline if we call each of them 10 times? What if we break this down into different segments? So I did a podcast with Channing Ferrer who used to run sales operations at HubSpot and he talked about how they bucketed their leads into three different buckets. They had the demo requests. They had people that hit the pricing page three times and then they had everyone else. And what they found when they looked at these conversion metrics is that the demo requests and the people hitting the pricing page were worth calling and the other leads were not even worth contacting because they were better off just making cold calls because there's so many people going to HubSpot's website, downloading white paper, filling out a form. And it's literally their business model. And so it's unsurprising that these leads are not converting. When we take this bottoms up approach and we look at it step by step, we can get a much better forecast in terms of what pipeline we can generate from the existing or the expected leads that we're generating.
RACHAEL BUECKERTAnd this is the issue with the blended funnel, right? We've talked about this before in our Revenue Factory newsletter and podcast.
EDDIE REYNOLDSThe thing is, is that the unblended funnel applies across the entire revenue engine. It's not just about unblending declared intent leads and other types of leads. It's unblending everything because you're going to see a different close rate between enterprise, mid-market and S&B.
EDDIE REYNOLDSYou're going to have a different sales cycle. Sales cycle is even easier to visualize. Imagine an enterprise deal that takes nine months, 12 months, 18 months to close and then an S&B deal that closes in 15 days or 30 days, right?
EDDIE REYNOLDSAnd then you take your entire pipeline and you average it out and you say, our average sales cycle is only 35 days. And then you apply that sales cycle to every single deal and then you are literally saying, well, we think we can close that whale of a deal in 35 days. You're not thinking about it that way, but you're saying we have $50 million in pipeline. And since we're able to close our average deal in 30 days or whatever the number is, if we build that pipeline by November 30th, we should be good. Well, no, you're not. Because if you create that whale enterprise deal on November 15th, you have no chance in hell of closing that by the end of the year.
SPEAKER_01So let's talk about growing the sales team. What are some of the common mistakes that sales leaders make when planning revenue goals with new team members?
EDDIE REYNOLDSWell, so, I mean, the obvious one is failing to look at ramp time, right? So I would say failing to look at ramp time and also failing to look at the right rep as a benchmark.
EDDIE REYNOLDSWe don't want to look at our top performing rep. We don't want to look at our average rep. What we want to look at is sort of like that middle ground rep that's performing but isn't, you know, our top performer rainmaker. And we want to ask ourselves, what percentage of reps can actually get there and how long does it take them to get there, right? Ideally, that would be quota attainment, right? In my mind, if you have like a team of 50 salespeople and you've only got five people hitting quota, you have a really serious problem. Like you shouldn't have to be the top salesperson in the company in order to just hit quota. So we think about people that like are hitting quota or hitting a number that should be quota. And we think about how long does it take our reps to ramp to quota and what percentage of them will, right? And then we need to set our targets around that. If let's say that we have quota attainment of, I'm going to give a big number here. Let's say 65%. I know that that's much higher than average, but I personally think that like we should give salespeople the opportunity to actually hit quota with a more realistic chance. I think it's better for morale. 65% of our reps are hitting quota. Great. Okay, so we hired 10 new reps. That means six or seven of them are more likely to hit quota. Let's say it takes three months on average. So then we need to like map out our numbers. We say, okay, quota is a million dollars. So we're going to have six and a half, seven reps at quota. Let's call that $7 million because at least one of them is going to be over. And then we have the three left and one of them is going to churn in 90 days, maybe two of them, etc. And now we're able to like forecast out. We've got 10 reps with a million dollar quota each and they're not going to hit $10 million. Instead, they're going to hit 7 million plus like a couple of them are going to bring in an extra like few hundred thousand dollars. The others are going to bring in, you know, whatever. And we're at an $8 million number. Now we have a realistic target based on the idea that six or seven of our reps are going to ramp to quota. One or two are going to be gone from the business in, you know, 90 days. And then one or two, whatever the math is there, are going to stick around, but they're going to take much longer to get to quota.
SPEAKER_01So what strategies can businesses use to improve their close rates, ASP and sales cycle over time, especially for those new and less tenured reps ramping up?
EDDIE REYNOLDSSo we look at the revenue efficiency pyramid. One of the very first things that we look at in the sales process is or in the pipeline management process is do we have a sales methodology and a sales process documented, agreed upon across the team and implemented into the CRM?
EDDIE REYNOLDSAnd then are we doing proper pipeline review? So this is what I experienced as a sales rep at Salesforce going from new and like barely hitting quota to being a top ten performer in the company in my final year. You walk in the door and you're like, I have no idea how to sell in this environment. And you open up the CRM and you immediately see here is the instruction manual. The deal is in a stage three. These are the things I need to do. These are the questions I need to ask. This is the information I need to record. This is how this feeds into reports. You then have management constantly reminding you of these things. Hey, why is this in a stage three? What's going on with this? I looked at this and I see that your decision maker is so-and-so and their next steps are this. The mutual close plan is that. And you're getting this real-time feedback on the sales methodology and the sales process right inside the CRM and also outside of the CRM but based on the CRM data. For me, that was an extremely powerful tool. It's standardizing and operationalizing the sales process as opposed to what we see in more old-school sales organizations where this is all in people's heads. It's in once-a-year training sessions. It's in physical documents that no one ever looks at. And then you don't see it coming into action. And so what I saw at Salesforce is you're constantly reminded of how to run a deal cycle at any given stage in any given deal on a daily basis. So that helps you ramp up much, much faster. Management is reviewing the pipeline, as I mentioned, and providing this feedback. And then you are, by definition, more likely to close more deals because you're following the process that has already been reverse-engineered to identify issues that cause you to lose deals earlier and quicker. That, combined with reporting and benchmarking against other reps, you get a chance to see not only, like, what could I be doing better as a rep, but what are other reps doing as well? How do I compare across the team and where can I go to find ways to improve? That, for me, is a really, really big thing in terms of improving close rates, shortening sales cycles, improving deal sizes. But it's got to be custom to the organization. I mean, this is actually quite common, but one of the examples I'll share is that at Salesforce, we literally tracked in the CRM how often people were calling to power versus calling anyone else. And surprise, surprise, our top-performing reps were almost always calling to power. They were logging less call activity. They were generating fewer opportunities. They had fewer meetings than anyone else. From an activity-level perspective, they were the bottom performers, but they were the ones crushing quota. Why? Because they were working these big, strategic deals by going in and engaging with C-level executives to expand the relationship across the entire account and opening and closing huge deals. This, for my team at Salesforce, is what made the difference between top performers and bottom performers. Because this was codified in the system, you could literally see this in real time with something as simple as who these people were calling in the organization. So these kind of things, like reverse engineering the sales process and baking it into the CRM and the reporting, I think can make a really huge difference in ramping up reps faster and seeing tangible improvement across the organization in things like close rates, sales cycles, and average sales price.
RACHAEL BUECKERTRight. Right. And if anyone listening to this needs help implementing that in their own systems, you can give us a shout. That's exactly what we do.
SPEAKER_52Awesome. Thanks for the plug, Rachel.
RACHAEL BUECKERTAnytime. So now to bring it all together, in your opinion, what are some of the most crucial metrics or estimates that we want to present to the board for next year's growth plans?
EDDIE REYNOLDSWhat do we want to present to the board? Well, I think it's obvious we want to present what number we're trying to hit and whether or not we're on track to that number, right? So if you think about investors, whether they be VC investors, private equity investors, or even the public markets, they're judging us based on our ability to meet or exceed plan. So that's one reason why it's so important to get accurate numbers and to be able to base those numbers on this bottoms-up model and not just on wishful top-down planning. We want to show them, okay, our number, we'll keep using this example, we want to go from $50 to $70 million. We need to get this much of it from net revenue retention, this much of it from new business. We need to build this much pipeline by this date. We want to be able to go to the board and show our investors this is how we're trending towards that number. These are the things we're doing. We need to generate this much pipeline. We need to have this many meetings. We need to generate this many leads through marketing. We expect these conversion rates, these close rates, these average deal sizes, et cetera, et cetera. And we go to the board and we present this, ideally with our historic numbers to say, we are expecting to close 35% of the pipeline we generate this year because we closed 35% of it last year. Or maybe we closed 30% or 32%, and here are the things that we've done to improve close rates. We've seen them trending in this direction. Now, different boards are going to have different expectations in terms of levels of granularity, but most of them are looking for this high-level understanding of just simply what's our target and how are we trending towards our target.
RACHAEL BUECKERTAnd I know there can be almost infinite ways to slice and dice historical data and figure out different forecasts and things. So how do you balance the need for a thorough analysis with practicality of time constraints and planning?
EDDIE REYNOLDSYou just have to do the best you can with the resources that you have, right? So, I mean, if you think about like an organization like Salesforce, when I was there, they had $5 to $10 billion in revenue from start to finish. When I left, you have a massive organization that can do this type of number crunching. Then we go and we work with a company that's got $50 million in revenue, and like they might have a couple people that can spend a little bit of their time on this. It's limited, right? And I think investors understand this as well. But you have to have a firm grip on the most important numbers. So if you think about this from a high level, like I said, I talked about what's our target, what's our net revenue retention, what's our new business goal? What's the close rate that we can expect? How much pipeline do we need to generate and when do we need to generate it by? What is that pipeline in terms of number of deals and the average value of each deal? And then where is that stuff coming from? This is, it's not easy to get this stuff right, but you don't need an army of people to get this right either. And it's absolutely critical if you're serious about setting realistic goals and achieving them.
RACHAEL BUECKERTAnd lastly, in your opinion, is there a way that top-down and bottoms-up planning can be blended together to suit both the needs of stakeholders and the reality of what can be accomplished?
SPEAKER_11Yeah, absolutely. I mean, so if you think about it, like let's take our top-down number and we say, all right, we want to grow from $50 million to $70 million.
EDDIE REYNOLDSAnd in order to do that, we need, let's just call it $20 million in new business because our net revenue retention will be 100% dollar for dollar. Okay, great. We take a look at this and we say with our current sales team, we can only get to $15 million in revenue because it takes this much time to go and generate, chase down, and close these new business opportunities. Well, great. Well, then we need to hire more salespeople. We might also want to look at territories and how many accounts we have in our addressable market, how many companies we can go after. If those new sales reps actually have enough companies to call on that fit our ICP or they have enough inbound leads, et cetera, we can use that bottoms-up plan to figure out if the top-down plan is realistic. And this is usually the form that it takes. It usually comes into, okay, well, in order to hit our number, we need to hire this many people. We need to put this kind of budget behind marketing, et cetera, et cetera. But you have to test that with the reality. What do our historic numbers tell us about what hiring another 5 or 10 or 20 reps is going to do for our pipeline generation and our actual revenue production?
SPEAKER_46Awesome. Well, those are all the questions that I had for you today.
RACHAEL BUECKERTThank you so much for sitting with me and joining me on the podcast now that I'm the new host.
SPEAKER_52Awesome. Well, it's been fun. I wouldn't go so far as saying new host. No, I'm joking. I'm never going to host another podcast.
SPEAKER_59But you are one of our hosts now.
SPEAKER_14You're hosting your own sub-show and your own series, which is really exciting. But I'm not going away. I might still do some podcasting here and there.
RACHAEL BUECKERTNo, no. I was just yanking your chain. But yes, good plug for the CRO Stories show that will be coming out. Maybe the first episode might be coming out before this one airs.
EDDIE REYNOLDSCool. I'm excited. It's going to go check that out if you haven't already. I'm super excited about this series. So just to plug this, you're going and you're talking to CROs.
EDDIE REYNOLDSAnd I think this is going to really refine itself over time and getting an opportunity to hear the real world stories from these CROs about certain things that they did to tackle challenges and generate more revenue by improving their go-to-market engine.
EDDIE REYNOLDSAnd because we're a boutique consulting firm and we only have so many clients, many of whom are not comfortable sharing all their dirty laundry out in public, especially as they are in the midst of working on it, we are going out to the market and finding folks that have really great stories to tell and best practices that we can learn from to improve our own consulting and you can learn from as a listener on our podcast.
SPEAKER_60Exactly. So I'm super excited for that one.
EDDIE REYNOLDSYeah.
SPEAKER_60Well, thank you so much, Eddie, and I'll talk to you later. Awesome.
SPEAKER_16Thanks, Rachel.
