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  • Writer's pictureAlex Handsaker

A CFO's Guide to Sales Capacity Planning

The role of CFO has evolved over the years from being just a number cruncher & guardian of finance to a strategic advisor with a strong steer on direction. One key area where this shift is evident is in Sales Capacity Planning, a critical process that requires your keen financial insight.

We'll delve into the essentials of Sales Capacity Planning from the CFO's perspective, focusing on key considerations, the impact of different organisational roles, and the delicate balance between cost-saving and driving growth.

Why CFOs Need to Be Involved in Sales Capacity Planning

CFOs are no longer just the custodians of financial data, roles have expanded to include strategic business decision-making, a change largely driven by a shift towards a more decentralized finance function. The evolution has brought the CFO closer to various business functions like Sales and Operations, leading to a deeper involvement in Sales & Operations Planning (S&OP).

The S&OP process is key in driving significant financial Key Performance Indicators (KPIs) and revenue performance, meaning you CFOs need to stay on top of these processes to ensure alignment of product demand and supply. Without a close involvement with the Sales Capacity Planning process, there's a risk that the plan that is deployed ticks either only the revenue growth or capital efficiency boxes.

The Inadequacies of Traditional Sales Capacity Planning

Traditional Sales Capacity Planning methods, primarily reliant on spreadsheets, are proving to be increasingly insufficient - Whilst reliable in the past, they're now accidentally a breeding ground for bad assumptions and shallow decision making.

Wild Assumptions

We've all been there - "If we set X to Y, does that show us hitting target?" It's all too easy to build a plan that looks good, but when it's filled with massaging of figures that don't match reality, it's highly likely that it's going to create a pretty bad outcome.

Limited Scope and Flexibility

Spreadsheets offer restricted scope in terms of data representation and analysis, struggling with the complex calculations and scenario modelling required in modern Sales Capacity Planning. Even our free sales capacity planning sheet has to make some pretty broad assumptions, just to make it workable in a spreadsheet.

Not only does this limitation create a rigid planning process that doesn't allow for quick adjustments, but it builds plans that aren't an accurate reflection of real life revenue team dynamics.

Lack of Real-Time Data

Every aspect of businesses seem to live on real-time data, but the most important plan you create seemingly gets left out? Without real-time data, you can't make accurate projections, adjust their strategies in response to changes in market conditions or flex for the real life personnel dynamics of people leaving and joining, and elements like the impact of promotions.

Time-Consuming and Error-Prone

The manual nature of spreadsheet planning is labor-intensive and prone to errors - Accidental formula alterations or deletions can have serious implications for business planning and decision-making, and it often doesn't get picked up until too late.

Moving to dedicated Sales Capacity Planning Software

In response to the limitations of spreadsheet planning, Sales Capacity Planning software has emerged as a far more efficient and accurate approach. These tools bring agility, accuracy, and efficiency to the planning process, making them indispensable for businesses planning for the future, as well as an invaluable collaborative angle

Real-Time Data and Insights

Sales Capacity Planning software provides real-time data and insights, enabling businesses to make informed decisions. By integrating with CRM systems, these tools offer a live view of business performance and facilitate accurate revenue projections.

Complex Modelling and Scenario Testing

Sales Capacity Planning software can handle complex modeling and scenario testing, allowing businesses to prepare for varying business conditions. This capability is crucial in an unpredictable business environment where market conditions can change rapidly.

Automation and Efficiency

By automating the planning process, Sales Capacity Planning software reduces manual labor and eliminates errors. It enhances efficiency by enabling quick adjustments to planning in response to changes in business performance or market conditions.

Sandbox Collaboration

In Clevenue's Sales Capacity Planning Software there's the added angle of seamless collaboration between leadership - Everyone has their own version of the plan that sits within a sandbox, a space where users can plan hires & spend amendments, or even sense test the impact of trimming down teams. Changes can then be pushed up the chain through approval. The plan then becomes the agreed blueprint for what the business does, instead of the more traditional spreadsheet best guess of team + spend + outcome.

The Impact of Sales Capacity Planning Software on Business Aspects

Adopting Sales Capacity Planning software can have a pretty big impacts on various business areas, from roles in sales to business metrics.

Sales Roles: Account Executives, Sales Development Representatives, and Hybrid Salespeople

Sales roles within an organization have become far more varied and complex, as sales processes continue to become less linear over time.

Whether it's Account Executives driving revenue, Sales Development Representatives filling the sales pipeline, or hybrid salespeople performing versatile roles, each contributes uniquely to the sales process.

Sales Capacity Planning software can help businesses balance these roles effectively. It allows for real-time tracking of performance and enables quick adjustments in sales strategies based on the performance of different sales roles.

Business Metrics: Deal Sizes, Deal Lengths, and Conversion Rates

Businesses metrics like deal sizes, deal lengths, and conversion rates are constantly shifting, and without an understanding of how that reflects as a revenue outcome with your planned hiring and team, you're essentially banking on your plan being able to absorb change without amendment.

The last few years have shown that to be a pretty short-sighted approach, with constant layoff rounds by companies that have over-extended, and miscalculated in their planning.

By providing real-time data and insights, it enables businesses to adjust their sales strategies and resources in line with these changing metrics.

Marketing and Sales Alignment

Marketing plays a pivotal role in lead generation, directly impacting the number of prospects for the sales team. Capacity planning software can help businesses align their marketing and sales efforts more effectively. By providing real-time data on lead generation and sales performance, it allows for quick adjustments in marketing strategies and sales resources.

The Relationship Between CRO, CFO and CEO in Sales Capacity Planning

In Sales Capacity Planning, the collaboration between the Chief Revenue Officer (CRO), CFO, and CEO is critical. The plan should consider the targets set by the board and investors, and balance them with the resources available to attain them.

Collaboration needs to go further than a multitude of spreadsheets, covering best case, worst case and predicted - None are correct or cover anywhere near the depth of questioning that should be aimed at a plan.

Using a sandbox based approach where every stakeholder can build their own changes to the plan, which can be merged into a final agreed plan is the future way of working.

Beyond Sales Forecasting: The Need for Revenue Projection

When sales forecasts are based on pipeline, it raises the problem of forecast only accurately showing as far into the future as your sales cycle.

With a 60 day sales cycle, leads for opportunities 61+ days into the future don't yet exist, and so any attempt to see further into the future is based on basic modelling approaches of revenue trends, which ignore all of the real world things that impact performance.

Ask yourself this: Would your forecast know if you planned to turn off marketing tomorrow?

Conclusion: The Future of Sales Capacity Planning

The future of Sales Capacity Planning is set to be more data-driven, efficient, and accurate. It's up to CFOs to embrace this change, which is essential to drive strategic decision-making and growth. Whether it's shifting from traditional spreadsheet methods to more sophisticated software or understanding the nuances between sales forecasting and revenue projection, staying ahead of these trends will position your business for long-term success.

Introducing Clevenue - The Future of Sales Capacity Planning Software

We believe that plans should be built in minutes, not months, and that planning is an easy, collaborative and ongoing task, not an end of year dash to the finish.

Better planning makes for more predictable and efficient growth, and less reliance on outside funding to keep afloat, and it's so much easier than spreadsheets.


Q: What is Sales Capacity Planning?

A: Sales Capacity Planning is the process of determining the sales resources needed to meet future sales goals.

Q: Why should CFOs be involved in Sales Capacity Planning?

A: CFOs bring strategic financial insight to the Sales Capacity Planning process, helping to balance cost-saving and growth-driving initiatives.

Q: What are the limitations of traditional spreadsheet-based Sales Capacity Planning?

A: Spreadsheet-based planning methods lack flexibility, real-time data, and are time-consuming and prone to errors.

Q: How does Sales Capacity Planning software address these limitations?

A: Sales Capacity Planning software offers real-time data, complex modeling capabilities, and automation, making the planning process more efficient and accurate.

Q: How does Sales Capacity Planning software impact business metrics and sales roles?

A: It helps businesses adapt to shifting business metrics and balance various sales roles effectively. It also facilitates better alignment between marketing and sales efforts.

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