How to build a reliable GTM plan

James Geyer: Hello everybody. We’re back for the latest episode of boardroom RevOps, where we’re bringing you valuable tips from RevOps experts so you can make it to the C-Suite. I’m James, co-founder of RevOps, the RevOps BI platform. Super excited to welcome Jaap Westrik to boardroom RevOps today. He is the founder of Modern Revenue, which is a growth execution consulting firm and a former managing director at Winning by Design.

Jaap, great to have you on.

Jaap Westrik: Thank you for having me. Uh, thanks for the account team, AccountAim team as well.

James Geyer: Of course, yeah. Getting through that time of year for annual planning. And so for this episode, we’re gonna do a breakdown of capacity planning today. Jaap spends a lot of time here. Uh, but before we dive right in, Jaap, uh, I shared the briefest bit of your background.

Do you wanna share in a little bit more detail?

Jaap Westrik: Sure. No. So yes, uh, as you said, I’m, uh, I’m founder of Modern Revenue and Modern Revenue is a, is a bit of a niche consulting firm. It’s basically do is, um, I help companies cross-functional and go to market and finance on the growth strategy and specifically my focus is on, on helping recurring revenue companies and helping them improve their forecasting.

Accuracy by aligning the CFO, the CRO, but also the CMO and their teams on a common data language, a common data model, and a unified, uh, operating plan. And so I have both a finance and a go to market background, so I’m kind of like a dual citizen, uh, if you will. And so I spent a bunch of time at JP Morgan in investment banking, and then at winning by design I, uh, started actually bringing my finance expertise and finance frameworks to go to market consulting.

A world that is, you know, generally not. Particularly, you know, in go-to-market, people generally don’t have a fi a finance background. And as I started to do that work, I just gradually started to realize like how fundamentally broken the go-to-market finance relationship is in most companies. And, uh, it’s usually not an a question of like whether alignment is a problem.

Uh, it’s just really kind of like how bad it is. And so this, this dual skillset helped me or enabled me several years ago to recognize this underserved need in the market. To align the go to market functions and finance on a common operating lens. And so I would say that one aspect of my own background is being a bit of a lateral mover, which really set me up I think, for identifying this cross-functional problem.

I was a foreign policy major, then banking, then now go to market consulting. I can tell you these kind of pivots, uh, they do age you a little bit, so I’ll stay where I am right now. But it’s, um, it’s essentially really about taking the guesswork out of a lot of aspects around revenue and capacity planning.

So making, helping the go to market side become more data driven and more finance literate, and at the same time helping finance better understand the operating mechanics and how does sausage is actually made in go to market. So go to finance people, for example, don’t necessarily know what it takes to motivate, uh, you know, a salespeople organization.

So now I’ll quickly. Close this. I’ve helped about 30 plus, uh, technology companies, but also in other sectors, in kind of the areas we go to. Market and finance meet each other regardless of whether it’s a negotiation or a collaboration. And that typically, uh, goes into bottoms up revenue planning, capacity planning, a territory allocation, quota design, or quota allocation and, and compensation design.

James Geyer: That’s great. Uh, great to have you. Definitely a need in the market for, for what you’re talking about. I think the predictability on the go to market side is, is so important. Uh, of course data driven key to my heart, but then also actually, I think you put it really well showing finance, like what it takes to actually like, hit numbers.

I think I’ve heard from VPs of sales CROs of like, yeah, you know, finance says we just gotta grow 50% and it’s just easy to put into a spreadsheet, but they don’t always think about like, what actually has to feed the model to do that tactically.

Jaap Westrik: Yeah, and, and that is one, you know, maybe just quickly touch on that because if you think about finance skill sets, about 70% perhaps of finance.

You know, maybe let’s just look at CFOs, right? Maybe 70% of them typically have a controller background, more CPA kind of orientation, which is generally more backward looking. And that means, that means that living in the future is just something that’s a muscle that they don’t necessarily have always developed.

Then you have FP&A that’s typically good at budgeting and forecasting, but analytics and insights is often a weaker spot. And then you have strategic finance, which often is. You know, just consider to be about capital structure and, and, but from a go-to market finance perspective, you know, uh, strategic finance is really important and it’s really about setting up the finance function to proactively support the needs of an evolving go-to market organization.

James Geyer: Yeah, that’s great. Well, let’s dive right into capacity planning, Jaap. Um, let’s just start at the highest level for folks that, uh, the uninitiated. I’ll say like, tell me what capacity planning is in a nutshell and why it’s so important.

Jaap Westrik: Yeah. Now let’s, let’s maybe just delineate this a little bit. So I gotta focus really here is on sales capacity planning or maybe just actually quota capacity planning, right?

Because people who are not in sales, but probably CSMs, you know, can also have a quota. And so we leave the marketing out here because marketing is just, has different drivers, doesn’t have the incentive piece, it doesn’t necessarily work with quota. So it’s best if we skip that, at least for the, for the time being.

And so quota capacity planning is kind of like really the, the, the most proper way and the most like flexible label also. And it kind of covers all these quota carrying roles. So we’re talking about if you really start at the beginning of the funnel basically, or the bow tie as we think about it is, you know, think about sales.

SDR, BDR. AEs, account management and then CSMs. And they can be both on onboarders renewal focused or growth focused. And so a quote, a capacity model really is a quantitative model that has financial inputs primarily around compensation and bookings, but also a lot of non-financial stuff like inputs and outputs that are not necessarily very intuitive.

What it does is it helps you plan your revenue growth by using quota performance to forecast, uh, bookings and from their revenue.

James Geyer: That’s great. Tell me, and this might get into like some of the inputs you just mentioned, uh, that were non quota related, but you made an interesting comment to me in the past around, you know, capacity quotas, productivity, compensation, all very interconnected, and it’s kind of hard to do one without the other.

Like, tell me a little bit more about that. Like, why can’t you solve one without touching all the others?

Jaap Westrik: So how they’re interconnected? Well, you know, in the end, if you, if you just focus on the CRO, CFO, you know, relationship, it’s, it actually doesn’t start just with capacity planning. It starts with alignment on revenue goals, right?

And on, on the business goals. And, and that is, you know, kind of a combination of top down and bottoms up information like historical performance and benchmarks. And so that alignment is really key and based on, you know, the revenue goal. Then you look also at what the revenue strategy is going to be going to execute, and how do you, you know, what is like the proper sales process and what kind of roles and responsibilities do you need?

So org design comes in there, um, and that kind of like, you know, spells out the, the jobs and or, or the roles of responsibilities you need and the management layers you need to have in place and the overall structure to deliver the revenue plan. And so CROs commit to a revenue plan based on approved sales investments.

And those sales investments should be determined based on territory account opportunity, potential data. But also understanding really, for example, like about productivity estimates, understanding time allocation, understanding really where there are inefficiencies that can be, uh, that can be resolved. So you need really alignment on, you know, definitions, metrics, and you need a sufficient amount of accurate opportunity.

Or, you know, uh, territory and productivity data in order to size these investments correctly and allocate them, uh, in the right, uh, in, in the right places. So, so capacity planning is really the foundation for, you know, other down, uh, downstream planning processes as well. Territory allocation, you know, which is really about allocating the opportunity to the sales rep, you know, based on which they can, uh, you know, based on which they can perform.

And also it’s, it reflects, you know, the time and effort required, uh, to convert the opportunities that they can work on into actual bookings. And so that then impacts quota setting because the allocated opportunity should ultimately delineate what quotas should be set at, and also how. You know, quotas, what kind of quotas should be set, right?

Should it be just bookings or should it maybe also be logos If you’re looking for, to drive, for example, land and expand, and then quotas ultimately impact the pay performance relationship tends to be the place where, at the moment, where finance starts to pay attention. And so the pay performance relationship makes quotas really integral to compensation design, so, so getting the capacity planning right is actually really key to driving sales effectiveness overall.

James Geyer: Yeah. And so important for just like retention and survivability of the function, right? Like if your productivity math doesn’t result in a high enough compensation for reps, good luck recruiting, um, good luck retaining as well, right? So it’s always kind of this triangulation I imagine.

Jaap Westrik: It is a lot of that.

And so it, it is one of the key issues actually in this kind of work is when, um, you know, when a company comes to Modern Revenue or to any to you, we come with a problem is to understand where is actually the source of the problem and to fix things where they’re broken. So, you know, I’ve had situations where people say our comp plan is broken and we need to fix it so we can increase our win rates.

Now how do we know whether the win rates. Have actually something to do with compensation. Most likely they’re not. Win rates can be the function of, you know, a poor process, or it can be and maybe, uh, ultimately, uh, originate from issues in first line management. So fixing things where the broken is, is really key.

And for that you need data. And to have data, you need alignment.

James Geyer: Yeah, so just to recap, um, like quota capacity planning in general, so it is effectively understanding how you can hit your bookings or revenue target and you’re working backwards from what is typical productivity for reps over the previous X quarters or X years to understand what is actually reasonable to then understand head count, to then understand how you set quota, which then feeds into compensation as well.

Is that the right summary there? The goal is like, how do we hit. The target for next year? Do we have the right staff in place? How do we compose their book? Is that, is that the right summary?

Jaap Westrik: Yeah, that’s kind of, if you really focus it on AEs, um, things basically get a bit more complicated when you, for example, look at SDRs or you look at CSMs.

It’s not just about like some bookings number because these are not hunter roles necessarily. Mm-hmm. And they, and the, and those quotas are also connected in SDR quota ultimately, or capacity should be, should be related to the amount of outbound, uh, you’re looking to drive and to what extent, AESA, for example, self sourcing opportunities, right?

So these things matter. And one way to look at it is you, I mean, you could do the top line at the top down, of course, right? So you say, okay, here’s what we need in revenue, and here’s ultimately what it translates to in bookings and the timing of it, the number of sales reps we needed, and the number of ramp reps.

Ramped sales rep units we need. But one thing to also really understand, important to understand is actually, you know, what is actually the available productive capacity that you have in a typical kind of role? And this kind of analysis is, is specifically relevant. To roles where, you know, perhaps capacity planning is more based on activity rather than ultimately outcomes.

And I’m thinking here specifically about SDRs, like, you know, meetings and opportunities, right? Of course, these, um, uh, you know, ultimately you need the outcomes. You need the pipeline opportunity, like a sales opportunity that is ultimately transferred to sales and accepted by sales and taken forward. But what is the work that an SDR needs to do in order to actually deliver on their target number of opportunities?

And for that. What helps I think, sometimes is taking a first principle approach. It’s more bottoms up. It’s like how much time is there actually available in a typical FTE on an annual basis? And a lot of companies completely overlooked this. And ultimately the goal of that is to get to utilization. Uh.

The starting point is like, you know, a year has 365 days, that’s about 250 business days. Then you take out 10 holidays, 240 days. That is then, you know, 20 work days a month. Then you need to actually start to adjust for verification. And the best way is just to apply that across the board, right? So PTO, maybe 10%.

You factor that in. And then there’s another important factor that is utilization, as I already mentioned, and that is kind of like. Every job has a whole bunch of stuff that is not necessarily core to the role, right? It’s not necessarily, mm-hmm. An SDR should be, you know, doing cold calling, sending out emails, things like that.

And I’m talking about the pre AI area here, era here. But, um, uh, you know, and ultimately to get to meetings and, and to opportunities, but how much of that can they actually do in a day? And utilization kind of gives you an idea of, okay, people need to do a whole bunch of admin stuff. People have meetings and town halls and there’s all kinds of other stuff that doesn’t necessarily directly translate in opportunities into opportunities.

And what you, what I see typically is like if all like the companies that I’ve worked with in my experience is utilization rarely goes above 70%, which means that if you are making all these adjustments that I just talked about, you have about five, five and a half hours a day in which, you know, you can basically for, for which you can basically plan all those activities.

Now, if you don’t need to pump out a bunch of emails, like how long does that take? Uh, making calls, booking meetings, and that gives you a nice bottoms up understanding of those activity based kind of like roles or at least that have more of an activity focus and it’s often overlooked. And people mis plan or win rates drop, people complain about pipeline, they blame the SDRs and they blame marketing.

And so it’s really important then to start looking at, uh, you know, whether that value is, is properly modeled.

James Geyer: Yeah, that’s great. I think we touched on AEs at the highest level in the beginning. I think we’ll talk a little bit more about that in like, uh, the later part of the conversation you touched on the SDRs is super fascinating.

Tying the top, uh, down approach at the bottom of, of approach. Any other, uh, nuances from different types of sellers, maybe like am for example, that’s worth discussing.

Jaap Westrik: Yeah, that is, uh, very much so. AMS is actually account managers. It’s actually kind of a, you know, a bit of a complicated role. But also, let’s say this way, once you get post the close win and you actually have an account in the door and the capacity planning gets both easier and it gets harder, it gets easier because you have all the account insight, hopefully, right?

You have the relationship, maybe, you know, hopefully you have good adoption and usage data and you know, you have. If you have a, you know, if you’re an enterprise and you have a really structured process around renewals, assuming that an AM is also on the hook for gross retention, you know, there’s really no reason why you should miss your forecast.

But if it gets into expansion, for example, you have a limited universe, like with an ae, the universe, you know, can probably be expanded. There’s some, you know, little murkiness about like how much opportunity there is in a particular territory. With an am it’s an a sound book of assigned book of business.

Shifting accounts around in the year, you know, is usually, uh, uh, you know, less ideal and, and creates lots of, uh, friction and distractions. Definitely. And so if you’re basically saying, well, we need an NRR, our NRR should be 120, 120% this year should be improving from whatever level it is at. Okay? For that, we need a certain amount of making sure that we hit our gross retention target, and then we need a certain amount of expansion.

Expansion comes in the forms of. Of, you know, cross sell, but also upsell. Upsell. You can have upsell at renewals, which is probably a whole lot easier to do than when you’re doing an out of cycle upsell. Mm-hmm. And so the key thing here is to this, this is one thing that I always like tell my clients. A lot of this is about finding the.

Path that really gives you the visibility into what drives the capacity, and then cutting out all the noise. I would say like a lot of what the meca, what, what capacity analysis and capacity modeling, uh, involves, especially when you do it for the first time or you have, um, let’s say doing a new sales motion, for example, new revenue motion, um, is about actually figuring out what doesn’t matter and just kicking that out of the way and just really focusing on, uh, you know, on, on the couple of key drivers.

And that very much, um, uh, is, is is around booking definitions.

James Geyer: Yeah, that’s a good segue. Uh, we can get into booking deficit, but I also wanted to ask, you know, it’s, it’s kind of related to the things that don’t matter. Like what are the biggest mistakes or blind spots you see leadership teams make when like trying to model capacity?

Jaap Westrik: Boy, but the biggest one really, it actually starts with alignment. People say like, oh, the data is bad, right? Uh, yes. Uh, data, bad data comes from misalignment. It means that the strategy, the strategic objectives are not properly flushed out, not properly aligned on. There’s lack of common definitions, common data model, and also not.

Like a consistent cross-functional planning process. And so that alignment piece starts first. And people think sometimes like, okay, you know, let’s get, um, an SPM tool, a sales performance management tool, or this other type of technology, or let’s hire a bunch of RevOps people so we can figure this out.

Or let’s make sure that the CRO and the CFO are going on a business trip together where they can bond, right? That’s not where, where alignment start to start with the CEO or. Maybe in cases of VC or PE backed companies with ownership. Um, so then that means like if there’s misalignment, there’s usually, typically insufficient, late and infrequent planning, which means that you are getting, uh, the wrong types of forecasts.

So planning is critical. One other thing I see very often is, is people like companies change strategy or they go up markets, they add new revenue motions, they go from perpetual OnPrem to SaaS subscription or usage, and they don’t make adjustments to org capacity quota and compensation And, um. You can, can really have very regrettable effects already setting in early on in the year, especially if you’re an enterprise or maybe federal where you have massive sales cycles.

It’s very difficult to course correct that once the performance year is ongoing. And so we, we spoke about not fixing things where they’re broken and then a very huge one last one I’ll mention this is not accounting for ramp and turnover, very common. Um, and, you know, capacity, getting, capacity quota and compensation wrong drives all of that.

Um, and then also hiring, right? Are you hiring enough in order to have enough. You know, boots on the ground in order to hit your plan and do, are you doing that early enough? So I would say, and, and then I mentioned utilization. Those are kind of like the typical, uh, things, but there are more.

James Geyer: Yeah, that’s a great checklist for sure.

Plenty of things to, to think about. You mentioned misalignment in there as the first or second common mistake. You know, how do different call it executive personas, CRO, CMO, CFO, CEO, like view this task or problem of capacity planning differently. Like where do these misalignments happen? I think you mentioned definitions, you mentioned data model.

Are these the usual suspects or are there kinda other things to look out for?

Jaap Westrik: Yeah, well there is, if you just focus on CRO and, and, and CFO, these are very different types of roles and personas and backgrounds, and there’s very few, uh, you know, CROs in finance and vice versa, right? That just rarely happens.

And CRO typically, historically, at least, was always like, CRO delivers growth. They deliver the plan, uh, they wanna get paid. Uh, they want the sales people to get paid and they want there. And if RevRack is not easy, then. Finance has that, that is a problem for finance to solve. The CFOs at the same time want to hold the line on efficiency, especially in the current environment.

More uncertainty, COVID, tariffs, inflation, all of the stuff, uh, and focusing on efficiency. ROI. Bay performance relationship is really important, but the, the misalignment there often happens is, is that the CRO, the CFO says, here’s what we need in order to deliver the company plan. The CRO says, here’s what I need in order to execute on that.

The CRO thinking that the COO asking for more than the CFO wants to give, and so. With efficient growth being, you know, kind of like the, the mo, neither the CRO or the CFO can do that alone. They need to do it together. So they need to make joint trade offs, and for that they need to have common goals, uh, an ex, like an end-to-end data model in connected planning.

Yeah.

James Geyer: Yeah. Tell me more about like the end-to-end data model. I, what does that mean? Maybe call it one layer deeper for folks that aren’t sure tactically what to think about, like a common data model.

Jaap Westrik: Yeah, so common data model is, if you think about it really of about the revenue continuum or the customer journey, it goes all the way from the top of the funnel into strategic finance.

So that means that if on strategic finance, they’re doing marketing, uh, investment planning, or they’re helping marketing do that, that means that they’re working with marketing related definitions. That are not the same on, that are not just consistent across marketing and finance, but also across in into sales.

It also, for example, extends into CSM because very often if you know, you’re, let’s say do top of funnel planning or marketing planning, uh, you’re looking for, for insights about, you know, buyers and, you know, behaviors and understanding really, uh, you know, pain points, et cetera. A lot of those insights are typically already in your user base.

And that user base is overseen by CSMs. So if CSMs then need to talk to marketing, they should be talking about units in terms of definitions and units that both can understand. And ultimately what it comes down to is like much of go to market ultimately is. You know, it is non gaap. It’s about bookings and it’s about operational mechanics.

How do you then effectively translate that into, you know, the billing piece into, into revenue recognition? All these definitions should be connected end to end, but there are also horizon horizontal layers, right? Word level, for example, you know, maybe LTV is. Adjusted for, like, basically it’s more based on discounted cash flow because you know, that’s, investors think in terms of company valuation at the finance level, they maybe just look at it, you know, maybe not on based on discounted cash flow, but on gross margin they factor gross margin in.

Um, at the marketing side, you know, I’ve seen LTV decisions, uh, or, or definitions that don’t factor in churn. And then, okay, then let’s look at churn. Because churn varies widely by segment and the benchmarks, uh, do as well, right? And then maybe you have a multi, uh, a multi-year churn book. So all of these things need to be sufficiently parsed in order for everybody along the customer journey to be able to understand, uh, the definitions.

James Geyer: Really helpful. Um, we could probably talk about that for another hour. Yeah. Sadly we’re coming up on, you know, 5, 6, 7 minutes left. So let’s talk quickly about like, advice on kind of how to execute, uh, quota capacity planning in a bit more detail. I think you’ve covered a lot of key themes so far in the conversation.

Anything else you add? If someone is approaching capacity planning for the first time, like where they should start, like really tactically, if they’re gonna kinda run this process internally.

Jaap Westrik: Yeah, it starts really, let’s say, uh, if you have data, it starts actually working. It starts with actually getting like a nice, like clean historical data foundation in place from, you know, that ultimately can then help you also define the common definition.

Define common definitions, right? And so generally company data is structured into two pillars. It’s customers and employees. So for capacity, that comes down to having clean CRM data and clean like people or human resources data specifically around compensation and actual payout. Um, and then you need to look at what’s.

Are kind of like the productivity drivers from a capacity, you know, assuming that you know, you have done your work on the revenue planning ramp is, is probably the key one. And it is really a function of so many factors. It depends on, you know, how well you onboard, how well you enable, depends on sales cycles.

So you need to kind of like segment ramp appropriately. And you can do that based on your own historical data. But if you don’t have that, let’s say two or three years, there are benchmarks for that as well. But it is very segment in motion specific. And then there are other levers like, you know, total compensation.

Uh, actually, yeah, productivity per rep, which is also kind of like the, you know, the, the, uh, the OTE multiple, like what is the relationship between, uh, the quota that you assign to a rep and the compensation they make. So you should, you should have a handle, a, a, a good handle on all of those to understand like what it’s, what is required to deliver the booking plan.

Uh, what do you need in terms of total headcount, kind of like hiring volume. Volume and the kind of fully, the fully ramped FTEs, uh, that you need to, uh, to, uh, to execute.

James Geyer: Yeah. I love it. And I especially agree with just like getting your historical data set in place for so much of the work we do with clients as well.

It’s like that’s step number one, regardless of what type of process or analytics you’re running, I think so many companies struggle with this. So it’s, I know you spent a lot of time here as well. I think it’s absolutely key.

Jaap Westrik: Yeah.

James Geyer: so I, I know some folks, like when they think about capacity planning.

It’s kind of what I would call like a messy process. It’s maybe done once a year. It’s like a little bit ad hoc. It’s a little bit, um, I’m not gonna call it a finger in the air, but there’s not a lot of structure to it. I know you talk about bringing like continuous structure to capacity planning. Like any other tips or things we haven’t covered to go from like that messy ad hoc state to like a structured capacity planning of muscle.

Jaap Westrik: Uh, yeah. Um, it is, so, so it requires this kind of like operational understanding of go to market and also understanding, uh, like how accounting works, right? Um, and it’s, it’s, you know, a key thing here is, is that ultimately in order to pro do proper capacity planning and budget allocation, you’re gonna need.

Finance on board, you’re gonna need to work with finance as a CRO, and that means that finance would need to understand really about what is actually going into these jobs. And actually there is a bit of a, you know, sort of like lateral mover internship kind of like, or, or shadowing process that you could potentially do if you’re finding yourself struggle with, you know, you know, basically convincing finance that you need extra SDRs or AEs or CSMs, you know, uh, invite the CFO to a sales call.

Ask someone in finance to actually join an SDR qualification meeting, um, or join a renewal call, things like that. Um, those are, those are, you know, kind of like, I mean, they’re not gonna give you like specific data, but at least it opens, it widens the aperture of a. Finance person and it’ll be, make, it will be easier than to align on, on, on the trade offs.

And so, yeah, and you know, I’ve repeated it all like, you know, the common definitions, but finding also a way of understanding, basically doing the top down planning, but also the bottoms up. And the bottoms up is about getting the, getting, having really accurate or sufficiently accurate opportunity data, but also this.

You know, kind of available productive capacity piece. I bet you that’s, uh, you know, for example, utilization. Most, most finance and and sales leaders don’t think about that. And that is already kind of like a blind spot or a gap that if you covered that early on, you know, uh, you’re, you’re far more set up for success.

James Geyer: Yeah. I wanted to ask, I took a note earlier, you mentioned, um, a common mistake for folks is when they’re changing motions, when you’re moving up market, they don’t change some of their capacity planning or like supporting infrastructure. Like how do you account from a capacity planning perspective?

Capacity planning perspective for these different, like, business motions, you know, it could be PLG velocity sales and SMB enterprise. Like what needs to change? How do you think about these differently?

Jaap Westrik: Yeah, th those are, those are often very difference. And, you know, the customer journey and the buying process, you know, is, uh, are ultimately the foundation, right?

So if you deal with the kind of higher velocity or maybe self-serve like PLG high velocity typically, for example, you already know, okay, what kind of roles and responsibilities are needed to execute? Like basically. Convert those opportunities into closed-won deals and therefore, and then bookings, right?

And what, what are kind of like the unity economics we can sustain as well. So having a two stage sales process, for example, with an SDR and an AE doing, you know, like small SMB deals, uh, or, or, or PLG, your, your investors are not gonna, or, and your CFO are not gonna be particularly happy with the unity economics, uh, you know, at the end of the, the quarter of the year.

And so define the sales process there and the motions. And then from there. It’s about that org design. If you, for example, go up markets, you know, that’s where things are often just changing. Let’s say your SMB mid marketing, you’re gonna go to enterprise, you deal with longer sales cycles. So you need to understand real how that impacts, for example, a ramp, right?

Because if a rep comes on board, often the ramp period is tight or, or let’s say. S so like significantly connected to the length of the sales cycle. Mm-hmm. And then there’s, and it’s really difficult to correct these things, especially, you know, when the sales cycles are longer and generally the investment, like as per rep is higher.

Once it is in motion, it’s very difficult to, to correct it in the performance here. So if you’re a vc, uh, a VC backed, uh, startup with, you know, runway limitations. You’re a public company that needs to deliver on a, on on earning and growth expectations, or you are a PE company on the IRR clock. If you get it wrong at the beginning of the year, you won’t really be able to correct it until you get into the next performance year because making capacity quota and compensation changes in year is really, really difficult.

And as we know, the hiring takes time. The ramping takes time.

James Geyer: Yeah, well put, sadly, we’re almost out of time. Uh, we were basically out of time. So one last, one last question for you. Jaap, I think we covered pretty well. A lot of the signs of things might not be working well from a capacity planning perspective, like misalignment.

I think your example, you know, finance and revenue not being aligned on when a new hire needs to be made is like a great symptom of that. On the flip side, like what’s a sign that all of this is working really well?

Jaap Westrik: So very accurate forecasts. And that is, you know, and in, and in most cases it just depends on all, like all of this planning and having proper data and taking the guesswork out out of revenue and capacity planning.

Right. Uh, I know like for example, if you, if you look at Mark Benioff, I know, I think Mark Benioff is known to be, uh, uh, you know, kind of like having this gut call about like, okay, this is our plan, this is the number of reps we need by that time. And he tends to be right, like. Most of the time now, how many Marc Benioffs do we know?

I’m only aware of one. And so for those of us who are not Marc Benioff, we need other, other method. And so to get to that, you know, if you actually get to high accuracy, that means you’re, uh, you’re, you’re on the right track. Also, compensation, actually delivering the outcomes or the strategic mm behaviors and the strategic outcomes that both the CRO.

And the CFO had in mind because as we talked about earlier, uh, those tend to differ. So were they actually on the same page about what the outcomes should be and were those outcomes delivered? And in the end, you know, is your sales, uh, your sales investment or your sales plan, is it actually self-funding?

Because ultimately with, you know, the right allocation of quotas and the right performance distribution. The plan should actually, you know, pretty much fund, uh, itself, the underperformance should be paying, uh, for the over performers. And then also, are you ti are you hire, are you retaining your reps, right?

Mm-hmm. And, and then lastly, if there’s disagreements, how does it get resolved? Do you need to go up to the CEO? Who’s not gonna be happy to see, you know, and solve your problem? Or actually, do you have data that can actually settle the differences? Those are some signs that, uh, that I would, uh, call out.

James Geyer: Really excellent checklist and something, everything everyone should be striving for too. I think that is like kind of like the job of RevOps in a nutshell. So I think, uh, this is really well put. Jaap learned a lot and I really appreciate you coming on. This was great. Thanks

Jaap Westrik: James. Really appreciate it and hope to be back one day.