Practical Guide To Calculate Sales Ramp-up and Ramp Period Churn (With Free Template)

Introduction

When creating a Sales forecast in a sales-led organization, two of the key assumptions involve:

1. Sales Ramp-Up Period: how long does it take for a Sales to reach their quota? And more generally how much can we expect from a Sales during the first months after joining ;
2. Sales Rap Churn during ramp-up: how many Salesrep will fail or leave during the ramp-up period.

In this article, I’ll propose a methodology to define those, based on empirical data.

This will only work if you have enough historical data (I assume at least 15 Salesreps hired in the past)

The Approach

In order to define the statistical ramp-up period for new sales, we should look at:

• Average MRR every month after joining
• % (monthly) Quota attainment every month after joining

Average MRR every month after joining

Average MRR per Sales each month after start date

In the above chart, I have aligned all Sales in terms of month of arrival (named M0 for the month of arrival, M1 for the month after arrival, M2 for the following, and so on).

This quickly helps to show that on average a Sales closes:

• M0: 187€ MRR
• M1: 1,347€ MRR
• M2 & M3: around 2K€ MRR
• M4 and above: around 2.3–2.4K€

% (monthly) Quota attainment every month after joining

% Quota Attainment per Sales each month after start date

In the above chart, we see that the ramp-up period is quite short as Sales reach 88% of their quota in Month 4.

Ramp-Up Salesrep Turnover

Another important assumption is to determine the expected Salesrep churn/turnover during the ramp period.

This can have a material impact on Revenue forecasting and therefore has to be factored in.

% Salesrep churn per month after joining

In the above table, we are calculating the number of Salesrep departed each month after joining.

We see that there are 2 Sales reps left in M5, corresponding to 4% of the total sales reps in the analysis.

This goes up to 11% in M8.

Therefore, if I’m willing to forecast new hire revenue growth, I’d better take that into account for accurate forecasting.

To Go Further… Seasonality

By using Month 0 (M0), Month 1 (M1), etc. we naturally compare different months in the year depending on the arrival date.

Therefore, in order to get a more accurate analysis, it’s possible to remove the impact of seasonality.

In order to do so, I have added a tab to input the % of the yearly Sales every month of the year — for example:

Example of seasonality

Without seasonality, we would have 8.33% everywhere (1/12th).

% Quota Attainment per Sales each month after start date — with Seasonality

Now, in the above analysis, I divide the Sales in the month by the seasonality ratio and I multiply the 1/12th, which therefore removes the seasonality effect.

We see that results are a bit different… but it’s all dummy data so let’s not overanalyze this :-)

So What?

Clearly I don’t recommend strictly using this data to define the ramp period targets.
However this gives a general idea — and backing this type of inputs with data helps generate more buy-in.

In my opinion, the ramp period target must be simple, rounded, and rather fixed over time.

From this example I would use the following:

M0 = 0%
M1 = 50%
M3 = 100% (or 75% then 100%)

Ramp-up period essentially depends on:
1. Sales Cycle Length
2. Quality of your onboarding & hiring processes

Ramp-up periods I have seen working quite well:
- Small Businesses: 0%/50%/75%/100%
- Mid Market: 0%/0%/50%/100%
- Enterprise: quarterly — with 0% in Q1, 50% in Q2 and 100% in Q3 and onwards

The Template

Note: this analysis has been built on a calendar month basis but it could have been done differently.

If you want to use my template, it’s free > here
Just copy it in order to be able to use it!

Don’t hesitate to like and share the article.

How to use the template?

1. Create a CRM report with Opportunity Name, Opportunity Owner, Close Date, and MRR (or ARR) ;
2. Copy it in the tab “Opportunity” ;
3. Input the list of your Sales reps (past or current) in the “Sales Team” tab. Ensure you don’t forget any. It’s possible to use the UNIQUE formula from Opportunities. For each, input the arrival date and (if applicable) departure date as well as the quota ;
4. Adjust the names & line numbers in the Ramp-Up Tabs ;
5. Input your seasonality values if you want to adjust from seasonality.