The Formula and Data Model for Calculating New Hire Ramp Rate
One of the most undervalued (and often unknown) formulas staffing executives miss is ramp rate. Ramp rate is the rate at which your new hires including your sales reps and recruiters are ramping up to achieve quota attainment. Knowing your ramp rate is critically important for several reasons. As you add new reps and recruiters your growth goals inevitably increase which means you have to build a credible budget and forecast to justify the investment and demonstrate the ROI. You can’t do this without knowing your new hire ramp rate. Understanding the formula and data model for calculating ramp is also important for making your sales onboarding repeatable and scalable. The two go hand in hand!
Knowing your ramp rate is also important because it ensures that the expectations of all vested parties including front line managers, executive leadership and your new hires all share the same realistic expectations for quota ramp-up. By tracking and measuring quota ramp rate, sales enablement managers, training, learning and development leaders can also prove the effectiveness and “worthiness” of their new hire onboarding efforts. Tracking quota ramp rate also allows you to quickly identify high performers and laggards early in their tenure with your organization.
There are a few reasons why staffing firms don’t track new hire quota attainment ramp rates. The most common include:
- Lack of sales process configuration with their CRM/ATS
- Inability to track and measure length of sales cycle and other key metrics
- Lack of formal sales/recruiter onboarding process
- Inability to track new hire onboarding effectiveness
- Lack of quota (reps/recruiters are not assigned quotas)
Another common reason staffing firms don’t track ramp rate is due to the uncertainty of how long it should take a new hire to be at full quota. While every recruiter and every sales rep and every organization is different, and there is no “one-size-fits-all” process for ramping to quota attainment, but you can follow my formula and data model for calculating new hire ramp rate below.
Onboarding Time + 90 Day Ramp-Up + Length of Average Sales Cycle = Quota Ramp Rate
With this formula, and the Menemsha Group sales onboarding program new sales reps should be achieving quota attainment by month six. The idea is that during the new hires ramping process, quota attainment is consistently ramping (increasing) month over month. How did I get to full quota attainment at month six? Here’s where my formula comes in. Let me walk you through it month by month.
Onboarding Time (30 Days)
Think of your sales onboarding time as the process in which they acquire and adopt the skills, knowledge and behaviors required to perform at and meet quota. This is the part of your new hire’s tenure in which you’re going to invest the most time training, coaching and mentoring him or her. During the first few weeks, your new hires shouldn’t be expected to close any deals. Instead they should be learning about your customers, your ideal buyer personas, the buyer’s journey, and customer success stories including your value proposition(s). They should be listening to call recordings from your top performers to hear what “good” sounds like on prospect cold calls and discovery calls and role playing those common scenarios including frequently asked questions and common objections. If your sales onboarding is properly structured, your sales new hire should be competent (not perfect) in thirty days. To learn more about structuring your sales onboarding try my blog, structured onboarding, enabler to scaling your staffing business
90 Day Ramp-Up
After sales onboarding, plan on adding 90 days for ramp-up time. This is about the minimum amount of time it takes the average person to sell anything. The more complex the sales process and product or service offering, the more time required. For selling professional staffing services, we find that three months in addition to onboarding time is about right. Again, every organization is different and this is assuming you’re hiring salespeople with the right DNA (self-driven, coachability, natural sense of curiosity, intelligence, work ethic).
During this period, new sales hires should be demonstrating quantifiable improvements in their ability to:
- Write an effective prospecting email
- Write effective Linkedin messages
- Intelligently execute a sales prospecting call (cold call)
- Leave effective voicemail messages
- Schedule and execute discovery calls
You should be seeing an improvement in the conversion rates week-to-week and month-to-month. The net result of this improvement should be reflected in pipeline growth. The number of completed discovery calls and the subsequent job orders received should slowly scale up.
Average Sales Cycle Length, 60 Days
After accounting for onboarding time and 90-day ramp-up, you have to factor in the length of your average sales cycle into your ramp rate formula. Let's assume we define our average sales cycle length as the time lapsed between “Date of Discovery Call” to “Date of (first) Job Order Filled” (as opposed to “Date of Job Order Received” to “Date of Job Order Filled”). For most staffing professionals this generally takes about two months. There are exceptions and caveats to this however.
For example, ramping to quota attainment will be (should be) shorter if your sales new hire sold staffing or a very similar product previously. In this case, you can probably expect them to hit the ground running much quicker. But again, every product, service and organization is different. So even if your sales new hire had success selling for a competitor, it doesn’t mean that they’ll be able to sell your service right away. In some instances a seller might start taking job orders during the initial discovery call and in other instances it may be months after the discovery call in which the rep receives their first job order from that particular prospect.
So let’s go through an example. Suppose you hire a new sales rep to sell your IT staffing services. They will focus 100% on outbound prospecting for new business. Let’s also assume your sales new hire spent one year working for Enterprise Car Rental and the past 14 months selling for your competitor.
Let’s assume it takes 30 days to complete sales onboarding. We also need to add on an additional 90 days to ramp-up. Now let’s assume that your average sales cycle is sixty days. That means that you shouldn’t expect your sales new hire to be at full quota for a minimum of 6 months. For the purposes of this example, let’s assume quota attainment for a Year 1 Sales Rep with this level of experience is twelve placements. Finally, this example assumes no inbound marketing or lead generation.
Breaking Down The First Six Months
Onboarding, Day 1-30
As mentioned above, this is the part of your new hire’s tenure in which you’re going to invest the most time training, coaching and mentoring him or her, but they do have some production time. Here is what the production effort and results should look like during month one, onboarding. Production time (activity) is relatively light in month one because most of your new hire’s time is spent in sales onboarding (training time).
Month One Onboarding Goals
- Complete onboarding (training) and pass all competency exams
- Send 350 outbound emails/LinkedIn messages
- Make 225 outbound prospecting calls
Month Two (Day 31-60)
In month two your sales new hire has completed onboarding and can now dedicate 100% of their time to prospecting, as noted in the table below. Hence the significant increase in outbound prospecting activity. Essentially you see a lot of activity with little results. This is table stakes or the “ticket to get into the party.” You will see similar results with experienced sellers calling on new, cold prospects . Half the battle is simply getting your name out there and getting name recognition.
Month Three (Day 61-90)
A few things worth mentioning.
- Activity: At this point your sales new hire should have over 1,000 outbound sales prospecting calls under their belt and hundreds of emails and LinkedIn messages.
- Improving Conversion Ratios: Due to their high activity level your sales new hire should be learning, iterating and improving which is why you begin to see improvement in the conversion ratios from the previous month. This is also due to activity as your sales new hire is starting to gain name recognition.
Month Four (Day 91-120)
Conversion ratios continue to improve. Prospects your new hire called and emailed during months 1, 2 and 3 start to return phone calls. Momentum is building. Conversion ratios continue to improve!
Month Five (Day 121-150)
Good news, your new hire is receiving job orders from NEW prospects. They might not be the best job orders, but they are coming in. Don’t forget that we also have to account for the time it takes to source, screen, submit, interview and hire candidates. This is why you see quota attainment achieved in the following month and not in month five. Conversion ratios improve yet again over the prior month. This is why it is called RAMP-UP! Most managers think of "ramp-up" as ramping up more and more jobs and eventually placements. It certainly is but the point is, your conversions should be ramping up. This is what you have to track, measure and coach to.
Month Six (Day 151-180)
The combination of consistent sales activity coupled with learning, iterating and improving conversion ratios and accounting for the length of your sales cycle culminate with achieving quota attainment in month six.
Looking for more sales onboarding tips, check our eBook, Making Sales Onboarding Success Repeatable and Predictable.