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The Economics of Sales Onboarding, Sales Productivity, and Ramp

November 22, 2017 / by Daniel Hebert

 

What if you could improve ramp time by 5-20% next year? What financial impact would this have?

As sales enablers and leaders, we already know we’re about to hit the races with Q1 hiring and onboarding. And we all wish our reps would ramp within the first two months.

But let’s face it - not gonna happen!

Standard practice for ramp is to add 90 days to your sales cycle. So if your average cycle is 60 days, and you’re expecting your reps to ramp in two months, your expectations are already way off.

Let me say this: getting onboarding, ramp, and productivity right is a tough nut to crack.

The Bridge Group showed in their 2017 SaaS report that the top 3 challenges for sales leaders are productivity and performance (49%), recruiting and hiring (30%), and ramping new hires (26%). All prevalent issues as we’re approaching the first quarter of the new year.

On top of that, The Bridge Group also found that 41% of companies report 5+ months of average ramp.

 

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So, as sales enablers and leaders, what are we going to do to close the gap?

What Is Onboarding, Anyways?

Before I really get into it, I’m going to ask you this - how are you defining onboarding at your company? Is it bootcamp? Is it an orientation? Is it reps going through a spreadsheet and checking off boxes after they’ve read your documentation?

The single biggest mistake I’ve seen with organizations and their onboarding programs is they treat it like an event.

Onboarding has a major impact on the key challenges that the Bridge Group identified in their report. And treating it like a two-week event is not going to solve those challenges.

Companies Are Lagging Behind

When you treat onboarding as a journey, it pays off:

However, of those who do not hit initial performance milestones, almost half had no formal onboarding or training. Even worse, 60% of companies fail to set milestones or goals for new hires.

Want to take it further? Only 37% of organizations extend their onboarding programs beyond the first month.

So what’s a rep to do once you’re done with “onboarding?” Unfortunately, for many of the people I speak with, they have to fend for themselves and hope for the best.

How Does This Affect Revenue?

Ok, now let’s really get into it.

If you’re a believer in the productivity equation, then you need to pay close attention to your onboarding programs.

 

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Imagine you could add an extra $20K per rep, per year, in their first year. How would that affect your revenue?

It’s possible, and all you need to do is move the needle by 5-20%.

For sake of simplicity, let’s say your company has a monthly rep quota of $50k. Let me give you 3 scenarios:

 

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Now let’s look at what would happen during first year if you could move a Jim into a Trish or Carmen.

 

Screen Shot 2017-11-22 at 9.48.39 AM

 

Let me explain this a bit more:

  • The top 3 rows are ramp schedules. Scenario 1 ramps in 7 months while scenario 3 ramps in 5 months.
  • The next 3 rows are predicted bookings each month, according to the ramp schedule.
  • The bottom 3 rows are the differences in the bookings each month, comparing the different scenarios against each other.

Getting reps ramped and productive a few months earlier can add an additional $23k - $73k per rep, per year.

And, if your onboarding is great, you can extend the productivity of your reps over 3 years.

This would add a lot of revenue in 2018 and beyond if you’re ramping many new hires in this upcoming Q1!

How Do We Close The Onboarding Gap

If the math resonates with you, here’s what I suggest you do:

  • Redefine Your Onboarding: Is your onboarding really onboarding? Or is it more of an orientation? Are you providing training, mentorship, and practice? Are you looking at productivity metrics over time? If the answer is no, then this is where you should start. Make sure onboarding isn’t just a 1-week bootcamp with spreadsheets and checkboxes.
  • Extend Your Onboarding: Add a few extra weeks of training, mentorship, and support to your onboarding program. Use technology to create interactive programs. Provide micro-learning programs over a long period of time, or start a peer-to-peer learning program to help extend sales support while reps are ramping.
  • Attach CRM Metrics and Milestones to Your Onboarding: Build an optimal path to success, then measure how reps are progressing through that path. Are they hitting milestones on time? Why or why not? Compare cohorts against each other to find the best onboarding learning path, and make adjustments to your programs for the next cohort.
  • Measure Onboarding Metrics in Time Units: If you want to affect ramp TIME, you need to measure time metrics. Time to first discovery call. Time to first qualified opportunity. Time to first deal. Time to second and third deals. You want to identify the shortest path to success, and replicate for upcoming cohorts.

Make It Simple

It’s important to think of onboarding as a significant journey to a rep’s success. As sales enablers and leaders, you can’t spend enough time refining and improving your onboarding programs.

If you’re treating it as an event, or brushing it off as something you just need to do, stop. It’s too critical of a period to overlook.

There are many tools out there that can help with onboarding, including LevelJump. Choose something simple that works best for your organization. You don’t need a ton of bells and whistles in order to be successful.

If you want to learn more about accelerating ramp time for your reps, download our ebook: “How To Design A Sales Onboarding Program For Faster Ramp.”

 

What are some of the challenges you have with onboarding and ramp? Do you see opportunities to optimize your revenue by making onboarding better? Looking forward to hearing your thoughts in the comments below.

 

 

 

Topics: Onboarding

Daniel Hebert

Written by Daniel Hebert

Hey, I'm Daniel. I'm the Marketing Manager here at LevelJump. I've been helping B2B SaaS companies with creating marketing strategies that drive pipeline and revenue for 5+ years. Ask me any questions about marketing, lead generation, marketing & sales alignment, and sales enablement. If I wasn't a marketer, I'd be a chef!

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