Sales Force Sizing – Speaking the CFO’s Dialect

We can all relate to an instance where a strong business case died on the vine (i.e., in an approval meeting with the CFO), sparked by our inability to communicate its value in a dialect understood and spoken by the decision maker.  Like most languages with regional variations (Italy, for example, has more than 30 dialects, by some estimates), every corporation has cross-functional communication styles that resemble linguistic dialects.

Finance is no exception. CFOs speak in a unique dialect that differs from that of sales leaders, emphasizing pragmatic terms (i.e., earnings per share, revenue CAGR, cash flow variations). Sales leaders seeking funding need to learn “finance jargon” and position requests in a way that appeals to the CFO’s objectives.

Having spent the better part of my career in finance, supporting CFOs and business leaders directly, I’ve listed a few powerful levers you can pull (from lessons learned the hard way) to make an appealing case for sales force sizing:

1. Build productivity scenarios — Model top line (i.e., pipeline size, pipeline conversion rate, sales velocity) and bottom line (i.e., fixed and variable compensation) scenarios by FTE, and emphasize the confidence level you envision for “the realistic scenario.” This will set a strong foundation, adding credibility to the sales force sizing business case, while amplifying the odds of it being approved. Note: Make sure to consider constraints like productivity ramp up and attrition rates in your model to leave some wiggle room for negotiation.
2. Set KPI targets for new hires — Establish commercial targets at an individual seller level that are realistic (considering historical performance of new sales reps) and set the right expectations across functions. Note: To increase the CFO’s confidence, come prepared to discuss your strategy to monitor and report performance against new hire commercial targets (i.e., quarterly reviews with finance).
3. “Build vs. buy” — It is likely that the CFO will challenge you to improve your sellers’ productivity levels prior to approving investments in incremental headcount, listing uncertain market conditions and budget constraints (all valid arguments) as impediments to approve incremental budget spend. Come equipped to show how previous seller productivity enablement efforts failed to close commercial target gaps. Explain the variance that exists between your forecast and the targets set for you, and show how new hires will aid in closing the difference while delivering strong ROI.
4. Bring similar examples to the table — Look for examples from other teams/regional initiatives that succeeded in meeting commercial objectives by hiring new sales talent. This will help set the tone that a similar initiative can pay dividends (conditional on a thorough action plan).
5. Build your P&L “muscle” — Identify which P&L lines you have influence over, and the commercial assets (i.e., enablement, incentive programs) you can leverage to deliver on the business case targets you’re presenting. Note: It is not the CSO’s nor the head of sales operations’ responsibility to know the ins and out of P&L topline dynamics, cost of goods sold (COGS), or how SG&A will impact EBITDA. The key here is to quantify the potential impact from incremental headcount to the top and bottom line, while having a general understanding of which specific P&L lines this will influence (to be able to speak in finance terms).

When “negotiating” with the CFO, come with an aggressive incremental head count scenario and be prepared to make concessions to reach the desired number of incremental FTEs. There’s no one-size-fits-all solution nor a magic wand that will make the new sales reps appear out of thin air. You must balance strategy with numbers to get buy-in from finance that yields the resources you need to deliver against your commercial objectives. Don’t let that message get lost in translation!